Changes In Tax Rates Research Articles

The Impact of the HPP Law on Changes in MSME Income Tax Rates and Modernization of the Tax System on MSME Taxpayer Compliance

The Law on Harmonization of Tax Regulations (UU HPP) has brought significant changes to the taxation system in Indonesia, especially regarding income tax rates for Micro, Small, and Medium Enterprises (MSMEs). This study aims to analyse the influence of the Law on HPP and the modernization of the tax system on MSME taxpayer compliance. The research method uses a quantitative approach with data collection through a survey of MSME actors in various sectors. The results of the study show that the reduction in income tax rates on MSMEs increases the level of taxpayer compliance. In addition, the application of technology in the taxation system facilitates tax reporting and payment, which in turn encourages MSME involvement in fulfilling their tax obligations. Tax modernization contributes to transparency and efficiency, so that MSMEs feel more comfortable in carrying out their tax obligations. The results of this study are expected to provide input for policy makers in formulating more effective strategies to improve tax compliance and encourage the growth of the MSME sector in Indonesia

Distributional, tax rate, and revenue implications of property tax homestead exemptions

AbstractThis paper provides a non‐technical exposition of what homestead exemptions accomplish. When homestead exemptions are not capitalized, they may result in increased tax rates. It is possible that the tax rate increases so much that eliminating exemptions could even lower the tax payment of a taxpayer who previously claimed an exemption. When we allow for full capitalization of both exemptions and tax rate changes, those who get the exemptions have no gain because the appreciation of their parcels increases their tax bill enough so that their tax payment is the same as it would have been without the exemption.

The Impact of Applying International Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed on the Iraq Stock Exchange

Objectives: The study aimed to examine how international accounting standards affect the taxable base of Iraqi banks listed on the Iraq Stock Exchange. Methods: A stratified purposeful sample of 33 participants was selected, including top management from financial departments of the National Bank of Iraq, Commercial Bank of Iraq, and Bank of Baghdad, as well as accountants and auditors. Data was collected using a questionnaire and analyzed through SPSS software. Results: The findings indicated that accounting information provides essential financial and accounting data necessary for calculating income, expenditure, and profits for tax purposes. This data enables government agencies to estimate the tax base more accurately. Furthermore, financial transparency and reporting include disclosing changes in tax rates compared to the previous accounting period. Specific international accounting standards, including Standards 9, 12, 15, 16, 21, and 36, were found to significantly influence the taxable base of the banks. Conclusion: The study concluded that banks should develop deferred tax asset and liability management strategies to reduce deferred tax impacts on financial statements and improve performance. Additionally, banks should periodically review and adjust their accounting and tax practices to comply with local legislation and international accounting standards, particularly in the areas of financial instruments, income tax, revenue recognition, fixed assets, and exchange rate changes.

Who gains from corporate tax cuts?

Goods producers increase their capital expenditure and employment in response to a cut in marginal corporate income tax rates or an increase in investment tax credits. In contrast, companies in the service sector mostly use any tax windfall to increase dividend payouts. We base our conclusions on a novel measure of U.S. firm-specific tax shocks that combines changes in statutory tax rates faced by each firm with narrative identified legislated U.S. federal tax changes between 1950 and 2006.

Behavioural patterns of leaders versus followers in setting local sales tax policy

AbstractSales tax has been a popular revenue source for local governments in 38 US states. In this fiscal climate, both horizontal and vertical tax competition are frequently observed. Local governments are concerned about adverse impacts thereof on their revenue as mobile shoppers react to tax rate changes by purchasing in lower‐tax jurisdictions. So far, few studies have accounted for potential endogeneity in the behavioural patterns of leaders versus followers in setting local sales tax policy. Using a 40‐year panel dataset from Texas, this study identifies leader municipalities in changing sales tax rates and examines how municipalities asymmetrically respond to multi‐tiered rate changes. The findings depict a crowding‐out story in vertical tax competition and reveal crowding‐in effects in horizontal competition, with leader municipalities immune to both effects.

Capital gains realizations

If there are important nondeductible costs to long-term investing, then higher capital gains tax rates may encourage or discourage investors from realizing accumulated gains. This ambiguity suggests that the sizeable observed effects of capital gains taxes on realizations may partly reflect factors other than the time value of money, such as investor anticipations of future tax rate changes.

Can changes in corporate income tax rate affect corporate innovation?

The relationship between corporate income tax rates and innovation is a critical international issue. Existing studies often overlook the potential mechanisms of market competition and productivity heterogeneity. This paper addresses these gaps by integrating these elements into a unified mathematical analysis framework. Using China's corporate income tax reform as a quasi-natural experiment, this study empirically tests the model. The findings reveal that decreases in tax rates significantly foster innovation, while increases have the opposite effect. The underlying mechanism involves market competition, with the impact of tax changes being more pronounced in firms with higher productivity. This study deepens the understanding of the nexus between corporate income tax and innovation, providing new insights to refine tax policies that promote innovative economic development globally.

Differential Bunching Impacts Across the Income Distribution: Evidence from Tax Administrative Data

We investigate the behavioural responses of individual taxpayers to changes in marginal personal income tax rates applying empirical bunching methodology to tax administrative data from Zambia over the period from 2014 to 2021. We find evidence for excess bunching at the first kink in the tax schedule for all years but less evidence of bunching at the second and third thresholds. While bunching is considerable and behavioural responses are observed to changes in the location of the kinks over time, bunching at reference points (’round-number bunching’) also appears large. Implied elasticities of taxable income are however not remarkable, and comparing actual and estimated counterfactual wage distributions reveal that missed tax revenue arising from the excess bunching is limited. This is consistent with the observed bunching reacting sharply and immediately to changes in the location of the kink points over time, suggesting that observed behavioural change is driven by reporting behaviour rather than real economic responses.

Euro area inflation differentials: the role of fiscal policies revisited

This paper provides a comprehensive empirical analysis of the role of discretionary fiscal policy for inflation differentials across the 19 euro area countries over the period 1999–2019. The results confirm existing (older) literature that it is difficult to find robust evidence of the fiscal policy stance or impulse impacting directly on inflation differentials. We do find, however, support for an indirect effect of discretionary fiscal policy on inflation differentials working through the output gap channel. There is also some evidence that fiscal policy may be especially potent in influencing inflation differentials—with fiscal tightening cooling (and fiscal expansion increasing) inflation pressures—when the economy is above its potential. Finally, going from the overall fiscal stance or impulse to individual fiscal instruments, we find that value added tax rate changes and public wage growth are statistically significant determinants of inflation differentials in our sample.

Influence of Tax Understanding, Service Quality, and Rates on Bandung MSMEs' Tax Compliance with Trust as a Moderator

The summary of the DJP's annual reports from 2017 to 2020 indicates that the achievement percentages are unstable (fluctuating). MSMEs are among the taxpayers contributing to taxation. This study examines and analyzes the influence of tax understanding, service quality, and tax rates on the compliance of MSME actors in Bandung. As a development aspect, this study adds the level of trust as a moderating factor in the relationship between changes in tax rates and the compliance of MSME actors in Bandung. This research model uses multiple regression analysis. The targeted respondents are Online (Digital) MSME Taxpayers in Bandung. The sampling method used in this study is Convenience Sampling, with a total sample of 100 respondents. The analysis tool utilized in this research is the structural least square model (SEM) – partial least square (PLS) using the SmartPLS 3.0 application. The results indicate that understanding tax regulations, the quality of tax services, and changes in tax rates influence taxpayer compliance. Additionally, understanding tax regulations, quality of tax services, and changes in tax rates impact MSME taxpayer compliance with trust in the tax authorities as a moderating variable.

Save It for a Rainy Day: Evidence from State Corporate Income Tax Rate Changes

ABSTRACT We examine the effect of state corporate income tax rate changes on firms’ liquidity management. Using a difference-in-differences design, we find that firms hold more cash when they are experiencing an increase in state corporate income tax rate. More specifically, on average, a 1 percent increase in state corporate income tax rate leads to a 2.51 percent increase in firms’ average cash holdings. We also find that the effect is stronger in firms with low and risky cash flows, more growth opportunities, and more financial constraints. We find no evidence of this relationship when the state corporate income tax rate decreases. Overall, these findings suggest that firms conserve more cash to mitigate tax-induced frictions, which is consistent with the precautionary motive of cash holdings. Our paper speaks to policymakers that the increase of state income tax rate has real effects on firms’ cash holdings. Data Availability: All data used in this study are from publicly available sources. JEL Classifications: H25; H710; M41; G33.

The Power of Tax Authority and Tax Compliance: Does Tax Literacy Matter?

Purpose: Our research aims to prove the influence of tax authority power (coercive and legitimate), tax morality, perception of fairness, and religiosity on tax compliance. Also, we test the moderating effect of tax literacy on the influence of the relationship between perceived fairness and coercive power on tax compliance. Methods: This research used 199 respondents determined by convenience sampling, snowball sampling technique. Data were analyzed using Partial Least Squares based Structural Equation Modeling (PLS-SEM). Result: We report that legitimacy power, tax morale, and religiosity positively influence tax compliance. On the other hand, coercive power and perceived fairness do not influence tax compliance. Moreover, our study reports that tax literacy has a role in reducing the influence of perceived fairness on tax compliance. Novelty: Our study contributes to expanding literature in two important ways. First, we re-examined the influence of the power of tax authority on tax compliance of university employees who experienced a change in university status from a public university to a state university with legal entity status (PTN-BH)-causing a change in tax rates. Second, we expand the slippery slope framework by proving the role of tax literacy in increasing the influence of the power of tax authority on tax compliance.

Pengaruh Perubahan Tarif Pajak dan Metode Penghitungan Pajak dengan Dikeluarkannya PP Pasal 23 Tahun 2018 Terhadap Tingkat Kepatuhan Wajib Pajak UMKM

This research aims to determine the effect of changes in tax rates and tax calculation methods with the issuance of PP Article 23 of 2018 on the level of compliance of MSME taxpayers. This research adopts quantitative research methods with the Tax Service Office in Central Maluku as the research object. The main population comprises 251 UMKM in the food and beverage sector, officially registered with the Central Maluku Trade Service. The testing methods applied involve normality tests, validity tests, reliability tests, F tests, and T-tests. The research results show that changes in tax rates and tax calculation methods in PP article 23 of 2018 simultaneously affect the level of taxpayer compliance of UMKM employees at service offices—Central Maluku tax. Meanwhile, from partial testing, it was concluded that changes in tax rates and tax calculation methods in PP Article 23 of 2018 had. A partial effect on the level of taxpayer compliance of UMKM employees at the Central Maluku tax service office.

Analyzing Financial Synergy Through Leland's (2007) Framework and Ensuring Shariah Compliance in Sukuk Issuance

The objective of this study is to determine whether issuing sukuk as part of separate financing of a project would increase the value of business. This study adopts Leland Framework (2007) to measure the impact of several variables in separate financing to the value of the firm. The findings revealed that changes in maturity period, tax rate, interest rate and standard deviation can bring similar or different effects depending on each variable. It can be concluded that the separate financing using hypothetical sukuk issuance has a positive effect on the firm. This is visible from the value of the change in optimally levered firm as well as firm value in this paper which both are positive. This shows that the variables above have an impact on the optimal capital structure as well as the results of structured financing. This study further proposes to modify Leland’s model (2007) by using a stochastic model rather than a static one, considering that some sukuk use a profit-sharing contract.

Consumer Prices in German Food E‐Retailing: the Impact of the Value Added Tax Cut in 2020

SummaryIn July 2020, the German government reduced the VAT rate for six months in order to stimulate private consumption and support the economy, which had been weakened by the Covid‐19 pandemic. It was crucial for the success of the tax cut that retailers passed it on to consumers by reducing retail prices. This article applies a fixed effects estimation model to analyse the price effects of the VAT reduction in grocery e‐retailing. It uses price data collected directly from the websites for major food categories of four food e‐retailers, Bringmeister, MyTime, Real and Rewe. The tax reduction overall was largely passed on to consumers by price reductions. However, the pass‐through rates, i.e. the extent to which the tax rate change was translated into lower prices, varied among the stores, ranging from 16 to 134 per cent, with the highest rate being for Bringmeister. The pass‐through rate for Rewe was 84 per cent. Also, the timing of the pass‐through varies. The highly divergent pass‐through rates were below the expectations of politicians and the announcements made in advance by food retailers, suggesting some strategic pricing within and between stores. For future VAT reduction initiatives, the results of this study and consumers' reactions to price changes should be considered in more detail in order to complete the assessment of the effectiveness of such measures.

Behavioural Responses to Wealth Taxation: Evidence from Colombia

Abstract We study behavioural responses to personal wealth taxes in Colombia. We utilise tax microdata from 1993 to 2016 linked with the leaked Panama Papers to investigate offshoring to the country’s key tax havens. We leverage variation from discrete jumps in tax liability and four major reforms to the wealth tax system, including changes in tax rates and duration, using bunching and difference-in-difference techniques. We find compelling evidence that taxpayers instantly reduce the wealth they declare in response to a wealth tax. Moreover, these effects can persist for years even after the wealth tax is no longer in place, providing the first evidence of a hysteresis effect for a temporary tax policy. The response is driven by misreporting items that authorities cannot cross-verify, such as overstating debt and understating non-third-party-reported business assets. Additionally, the wealthiest taxpayers respond to wealth tax increases by hiding assets in hard-to-track entities in tax havens.

Efficiency and Welfare Effects of Fiscal Policy in Emerging Economies: The Case of Morocco

This paper studies the welfare cost of fiscal policy in developing economies where a significant fraction of the population is government spending-dependent, using as an example Morocco. We develop a Dynamic General Equilibrium model representing an economy populated by three types of households: Standard Ricardian households with access to the financial market, households who supply labor but have no access to the financial market, and non-active government-dependent households (who behave as hand-to-mouth agents). The paper computes welfare changes of different tax rates and alternative spending policies and quantifies the trade-off of fiscal policy across the different groups of agents. We find that: (i) Distortions from some taxes can be positive due to the presence of public inputs; (ii) Output efficiency can be gained by changing the tax mix while keeping constant fiscal revenues; and (iii) Social welfare gains can be obtained by increasing public investment and reducing government consumption and keeping lump-sum transfers constant.

Impact of tax changes on the risk premium of the WIG index

The presented article provides an empirical analysis of changes in the risk premium of stocks on the Warsaw Stock Exchange in response to changes in tax rates. The analysis uses a structural VAR model, identified with sign restrictions. This method turns out simple to use and proves to be effective in overcoming the problem of predictability of fiscal policy, which is especially important in studies using variables from financial markets. The results show an increase in the risk premium following a sudden tax hike, accompanied only by a temporary reduction in GDP growth. Meanwhile, an anticipated tax hike seems to lower risk premia while being more harmful to GDP dynamics.

STANDARD FORM OF THE REPORT OF THE REPORTING PERSON: ASSIGNMENT, OBJECTIVE ANALYSIS OF REQUISITES

Introduction. The individual who is employed or is the member of the governing body of the enterprise (institution) must report on the funds spent during the business trip or other official assignment. The purpose of the article is to substantiate the purpose of the report of the reporting person in accounting; to develop the proposals for improving the standard form of this document. Methods. Such methods of scientific cognition as content and retrospective analysis, historical, systemic and logical methods were used in the course of the study, also, the argumentation was applied. Results. Based on the thorough review of the transformation process of the standard form of the report of the reporting person, it was identified the periods when the additional details of this document in connection with the change of the personal income tax rate acquired the new version with delay. The report of the reporting person is characterized as internal, one-time, justifying, consolidated accounting document. The requisites of the standard form of this document were processed. The critical comments were made and the proposals regarding their content were developed. It was emphasized that, according to the current legislation, the mandatory requisites of the document must include: 1) the name of the business entity on whose behalf it was drawn up; 2) EDRPOU code / registration number of the taxpayer's account card / passport series and number (with the appropriate stamp); 3) the reporting person (surname, initials) and his/her registration number of the taxpayer's account card / passport series and number (with the appropriate mark). It was emphasized that the additional requisites of the standard form of the report should contain not only the algorithm of calculation of the amount of personal income tax, but also the military fee. Discussion. The legislatively established procedure for preparing the report on the use of funds/electronic money issued for business trips or under the report requires critical analysis. Keywords: report of the reporting person, over-spent funds, balance of the accountable amount, document requisites.

Do Tax Rates Encourage Profit Shifts By Multinational Companies In Indonesia?

Due to the COVID-19 pandemic, many companies have experienced a decline in financial performance which has the potential to cause financial difficulties. While the government has provided stimulus to help, there are concerns about increasing tax avoidance efforts and profit-shifting practices with businesses transitioning to digital models. However, there is a view that companies may prefer ethical behavior to safeguard their reputation in the midst of a crisis. This study analyses profit-shifting behaviour by multinational companies in Indonesia before and during the COVID-19 pandemic, focusing primarily on the effect of differences in Indonesia's income tax rates on average rates in countries where the group of companies operates. Descriptive analysis is used in this study to provide an overview and general information about the data obtained in the field which is a research variable and will be used as analysis material to answer research questions. The research sample involved 163 companies listed on the Indonesia Stock Exchange and met certain criteria, such as the calculation of corporate income tax according to the Income Tax Law and the exclusion of certain sectors. Data was analyzed for the period 2017-2022, covering the period before and during the COVID-19 pandemic, as well as changes in tax rates in Indonesia. The results show that the difference in Indonesia's corporate income tax rate with the average tax rate in the country where multinational companies operate has a negative and significant effect on profit before tax.