Corporate Tax Research Articles

Smart Answers to GLoBE Challenges Faced by a Small Country

In this note, the authors highlight the challenges that Hungary, a small country with a low corporate income tax rate, faced in implementing Pillar Two. The intention was to comply with the global minimum tax rules while keeping as much of the country’s attractiveness to foreign investors as possible at the lowest cost to the state budget. This was achieved by a range of targeted measures which may serve as a best practice for other countries in a similar situation.

Balancing profit and planet: The effect of corporate tax rates on environmental quality and innovation in Asian Countries

In contemporary literature, extensive research has focused on the influence of environmental taxation on the environmental performance of industrial sectors. However, it is still uncommon in the existing literature how corporate statutory tax rate (CTR) affects environmental performance. Therefore, this study aims to empirically investigate the relationship between CTR and environmental quality (ENQ) as well as environmental innovation (EIN). To conduct this analysis, we utilized 19 years of financial data spanning from 2001 to 2019 across all 48 Asian economies. Our research employed both panel quantile regression (PQR) and system GMM models for the regression analysis. The empirical findings reveal that the corporate statutory tax rate has a positive impact on CO2 emissions, leading to deterioration of the environmental quality, while simultaneously exerting a negative influence on environmental innovation, inhibiting green innovation. These effects of the CTR on ENQ and EIN remained consistent even when controlling for factors such as economic growth, foreign capital, financial development, and environmental taxation. These findings have significant policy implications, suggesting the need for a reevaluation of current tax policies and the introduction of tax rebates for companies striving to enhance their environmental sustainability. This study contributes to the literature by shedding light on the adverse consequences of high taxation on the environmental performance of businesses.

Assessing the impact of taxation on the effective tax rate and operational risk of capital investment projects under optimal capital structures

This paper proposes two metrics to correctly measure under optimal capital structures the impact of corporate statutory tax rates (a) on the effective tax rate, and (b) on the operational risk of capital investment projects and their parent firm's project portfolio. For illustrative and explanatory purposes as well as for ensuring a realistic coverage of a wide spectrum of risky capital investment projects, both metrics are applied to a stationary in mean and variance stochastic NPVτ model under the Canadian open-class corporate taxation system. The Marshallian partial equilibrium adjustment mechanism is brought into play to ensure through efficient financial markets that firms operating within any domestic economic sector are concomitantly subjected to financial equilibrium conditions, thereby enabling firms to converge in the very short run to an optimal after-tax leveraged net cost of capital. This paper concludes that current macroeconomic neo-classical rate-based marginal effective tax rate (METR) metrics systematically and significantly underestimate business organizations' microeconomic NPVτ-based corporate effective tax rates. Furthermore, increasing both the corporate statutory tax rate and the cross-correlation coefficient between portfolio projects will markedly increase a parent firm's project portfolio operational risk while impeding its capacity to reduce it.

Systematic Literature Review (SLR): Analisis Rekonsiliasi Fiskal Atas Laporan Keuangan Komersial Terhadap PPH Badan yang Terutang pada Perusahaan

The aim of this research is to analyze fiscal reconciliation of commercial financial reports against corporate income tax that businesses must pay, as determined by the systematic literature review (SLR) approach. determining the amount of income tax due following fiscal adjustments and determining whether the recorded income or costs match the relevant tax measures. In order to explain this issue, this research gathers, evaluates, and synthesizes pertinent prior work from a variety of approved journals, including Sprott, Google Scholar, and Pop. Systematic Literature Review (SLR) is the research methodology employed in this study. Fifteen reviews of the literature address the research subject for 2019 and 2024. According to the study's findings, every organization prepares fiscal reconciliation and commercial financial reports with the same inconsistencies. Thus, there are disparities in the calculation of corporation tax payable as well.

Unveiling the Variation in Corporate Tax Base Distribution Under the Formulary Apportionment

Abstract This paper reflects the tabled novel framework for corporate taxation in the European Union, founded on the Formulary Apportionment methodology and envisaged inclusion of intangible assets in the allocation formula. The objective is to simulate the variation between the currently used Separate Accounting and tabled Formulary Apportionment distribution of corporate tax base of companies active in the European Union. This paper exploits secondary microeconomic panel data obtained from the Orbis database for 77,087 subsidiaries affiliated with 2,283 parent companies observed from 2011 to 2019. The results reveal that the most significant relative declines of over 15% in the corporate tax base would be faced by Luxembourg, Malta, Cyprus, the Netherlands, and Ireland. In contrast, the biggest relative gains were accounted for Greece, Romania, Hungary, Estonia, and Latvia. If cross-border consolidation of losses is incorporated in the envisaged corporate tax framework, the EU-wide aggregate tax base reduces by 15, 67% over the examined years.

Business taxes, management delegation, and growth

We examine the interaction between agency issues and business taxation in a growth model with an endogenous market structure. Agency issues arise from two types of management delegation: day-to-day production and research and development (R&D) activities. We calibrate the model to the US economy. A reduction in profit tax fosters business dynamics, R&D investments, and income growth in the short and medium term but hampers long-term growth. Lower-quality governance dampens short-term income gains and amplifies long-term growth losses. Additionally, we compare the effects of profit tax cuts with those from dividend and executive income tax cuts. Our analysis includes a welfare and inequality evaluation of profit tax reforms.

Tax avoidance, CSR performance and CEO characteristics: Evidence from developed and developing countries

We explore the association between tax avoidance, CEO characteristics, and corporate social responsibility based on environmental, social, and corporate governance (ESG) ratings, with a specific focus on financial firms in both developed and developing countries. Despite extensive literature on CSR and tax behavior, there is a gap in understanding how these elements interact within the financial sector across diverse economic environments. Using a dataset comprising 996 financial firms from 51 countries, spanning the period from 2002 to 2021, we find a significant negative association between ESG performance and tax avoidance for firms in developed countries, suggesting that firms in developed countries with higher ESG engagement tend to pay more taxes. The results in developed countries also indicate that governance and the social pillar are the factors contributing to the reduction of tax aggressiveness. On the contrary, our results reveal a significant positive relationship between CEO duality and tax avoidance for firms in developing countries. These results not only fill the existing research gap by providing empirical evidence in the links between ESG, CEO characteristics, and tax avoidance in the financial sector but also underscore the importance of institutional differences between developed and developing countries. Our results remain robust when using alternative estimators that control for heteroskedasticity and endogeneity. Our findings have important implications for policymakers and market participants, highlighting the need of a strong corporate governance and tax regulation that consider both ESG performance and CEO attributes.

Corporate Tax Aggressiveness and Firm-Specific Influences in the Industrial Sector in Malaysia

Corporate Tax Aggressiveness and Firm-Specific Influences in the Industrial Sector in Malaysia

Eligibility of Litigation on Re-assessment for Separate ‘Tax Amount’ Reducing the Tax Amount to be Paid and Related Issues ― Focusing on Deduction of Input Tax under the Value-Added Tax Act and Loss Carryover under the Corporate Tax Act ―

Eligibility of Litigation on Re-assessment for Separate ‘Tax Amount’ Reducing the Tax Amount to be Paid and Related Issues ― Focusing on Deduction of Input Tax under the Value-Added Tax Act and Loss Carryover under the Corporate Tax Act ―

PENGARUH LEVERAGE, PROFITABILITAS, DAN STRUKTUR MODAL TERHADAP PAJAK PENGHASILAN BADAN DENGAN BIAYA OPERASIONAL SEBAGAI VARIABEL MODERASI STUDI KASUS SEKTOR PERUSAHAAN KEUANGAN

In the tax system, corporate income tax is a significant type of tax. Law number 36 of 2008 concerning income tax states that corporate income tax is imposed on tax subjects for income received or earned in the tax year. It is necessary to understand how certain factors can influence the amount of income tax that must be paid by financial sector companies registered on the IDX in the 2019-2022 period. The factors that are the focus of the research are leverage (debt ratio), company profitability, and capital structure. Apart from that, the research will also examine whether operational costs act as a moderating variable that can influence the relationship between leverage, profitability, and capital structure and corporate income tax. This research aims to analyze and test the influence of Leverage, Profitability and Capital Structure which have a positive and significant influence on corporate income tax

Terror and taxes: how attacks impact corporate tax avoidance

Purpose The purpose of this study is to examine the effect of terrorist attacks on tax avoidance. Further, the authors identify the possible channel leading to our main result and examine the role of social pressure. Design/methodology/approach Data pertaining to terrorist attacks within the USA are procured from the Global Terrorism Database. The final sample consists of 45,524 firm-year observations from 1993 to 2017. The methodology uses ordinary least squares regressions. Findings The authors find that firms located in close proximity to terrorist attacks (i.e. impact firms) significantly decrease their tax avoidance practices after the attacks. The authors further find that these impact firms are willing to pay more taxes post attack when their headquarters are located in higher social capital regions. Originality/value Studies have mainly focused on the macroeconomic effects of terrorism, and only recently have researchers shifted their focus to firm-level impacts. The authors provide strong evidence that extends the second line of the literature by exploring corporate tax activities attributed to terrorist events.

ANALISIS KEPATUHAN PAJAK PENGHASILAN PASAL 21, PASAL 23 DAN PASAL 4 AYAT 2 PADA PT ABC TAHUN 2023

This research aims to analyze PT's compliance. ABC, a company that provides hotel information services, against Indonesian tax regulations. The main focus is on payment and reporting of Periodic Tax Returns for PPh Article 21, PPh Article 23, and PPh Article 4 paragraph 2. Apart from that, this research also aims to identify problems faced by the Accounting Services Office (KJA) which is responsible for this aspect. corporate taxation. The research method used is descriptive qualitative using primary data consisting of Periodic Tax Returns, proof of payment, as well as equalization documents for PPh Article 21, PPh Article 23, and PPh Article 4 paragraph 2 PT. ABC and secondary data from interviews with two informants, namely supervisors and senior staff at KJA. The research results show that overall, PT. ABC was less compliant in fulfilling their tax obligations in the three aspects investigated. Several cases of delays in tax payments and reporting were found, as well as corrections in tax calculations carried out by PT. A B C. Delays in submitting data and changes in data that are not immediately reported as well as a long payment application process within the company are problems faced by the Accounting Services Office (KJA) as a tax consultant for PT. A B C.

FIRM SIZE MEMODERASI MANAJEMEN LABA DAN CORPORATE SOCIAL RESPONSIBILITY TERHADAP TAX AVOIDANCE

This study aims to test and analyze the effect of earnings management and corporate social responsibility on tax avoidance with firm size as a moderating variable in non-cyclical consumer sector companies listed on the Indonesia Stock Exchange for the period 2018-2022. This type of research is quantitative research using multiple linear regression analysis methods, using eviews12. The population in this study amounted to 123 companies, the sample selection used purposive sampling method so as to obtain 24 companies. The test results in this study indicate that simultaneously earnings management and corporate social responsibility have a significant effect on tax avoidance. Partially, corporate social responsibility has not significant effect on tax avoidance, while earnings management has no significant effect on tax avoidance. Firm size is able to moderate the relationship between corporate social responsibility and tax avoidance. However, firm size is not able to moderate the relationship between earnings management and tax avoidance

PENGARUH PENGUNGKAPAN CSR, KEBIJAKAN DIVIDEN, KEPEMILIKAN INSTITUSIONAL, LEVERAGE, PROFITABILITAS, DAN TAX AVOIDANCE TERHADAP NILAI PERUSAHAAN

The objective of this study is to investigate the effects of corporate social responsibility (CSR) disclosure, dividend policy, institutional ownership, leverage, profitability, and tax avoidance on firm value. The intention is to comprehend how these elements affect firm value amidst the dynamic market challenges, thereby providing insights to stakeholders. The research population consisted of consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange during 2021-2022, with sample collected through purposive sampling, resulting in 21 companies and yielding 42 sample units. The analytical methodology employed multiple linear regression supported by SPSS 29. The research findings highlight that dividend policy and profitability have an effect on firm value, consistent with signalling theory. However, CSR disclosure, institutional ownership, leverage, and tax avoidance do not affect firm value

Інституціональний базис для регулювання ринку логістичних послуг в україні та її регіонах з боку держави

The transformation of the Ukrainian economy towards market relations has brought to light significant imbalances in the logistics sector. A lack of an adequate theoretical framework and a clear state policy in this area has led to several problems. These include insufficient information support of logistics processes, a limited number of large logistics operators, and a need for more research and development in logistics. These factors complicate the optimization of trade flows and reduce the competitiveness of Ukrainian enterprises, making it an urgent matter that requires immediate attention. This publication aims to provide a detailed study of the system architecture and the evolution of forms of state regulation in the logistics sector. The architecture of the state regulation system in logistics provides a structured and comprehensive approach to managing logistics processes at the state level. It includes several main components that interact to ensure the effective functioning of the logistics services market. It is necessary to implement modern approaches to the state regulation of logistics services to ensure the Ukrainian economy’s sustainable development and improve citizens’ quality of life. These approaches can potentially revolutionize the sector, bringing about significant improvements. In particular, the priority task is to create a single digital window platform that will combine all permitting procedures into a single electronic service. At the same time, the government should actively work on harmonizing Ukrainian customs legislation with European standards, which will significantly simplify customs formalities and speed up the movement of goods. Implementing these measures will help increase the competitiveness of Ukrainian businesses and attract foreign investment, paving the way for a brighter future for the Ukrainian logistics sector. It is crucial to ensure close cooperation between the state and business. Regular consultations, transparency of regulatory procedures, and flexibility of legislation are critical factors for attracting investment and stimulating innovation. Introducing special tax regimes, such as corporate tax rebates for companies investing in infrastructure development and support for start-ups and innovative companies, will help modernize the industry and increase efficiency. However, the most significant step is harmonizing Ukrainian legislation with European standards. This is not just a formality but a significant milestone that will facilitate Ukraine’s integration into the European Economic Area, opening new opportunities for the Ukrainian logistics sector and paving the way for its growth and development. Keywords: state regulation, institutionalism, institutional framework, logistics, logistics sector, logistics regulation.

The Impact of the Global Minimum Tax Reform on China and Its Countermeasures

Abstract Significant corporate tax reform was agreed upon by more than 140 nations in 2021, with implementation set for 2023 and beyond. Many people throughout the globe are discussing the possible effects of the Organization for Economic Cooperation and Development (OECD) planned adjustment to the global minimum tax (GMT) on their respective economies. The OECD has formulated a “two-pillar” scheme for international tax rules for 137 countries and regions within the overall framework. Pillar 2 is to set the tax rate at 15%, the world’s lowest corporate tax. The GMT is a reclassification of the taxing authority mechanism for the profits of multinational corporations, which has made significant adjustments to the global tax coordination and governance mechanism. People living in China and earning money from China must pay university fees, which are all of a nationality. Progressive rates ranging from 3 to 45% apply to the complete income. Therefore, taking the initiative in policy is crucial to address this challenge actively. This article makes an in-depth assessment and prediction of the impact of the GMT reform on China’s tax system and enterprises and proposes countermeasures. However, approximately 20% of the earnings can be exposed to the 15% tax rate that governments can apply. If the entire process is mixed in tandem, the tax rate equals 0.2%. Hence, an important amount of tax revenue can proceed down the drain. From the numerical outcomes, the minimum tax with jurisdictional blending was set at 12.5% under Pillar 2; the disparity between the sample’s top and lowest EATRs would decrease by 2.8% points.

PROSPECTS OF ECONOMIC INTEGRATION OF UKRAINE WITHIN THE FRAMEWORK OF THE ASSOCIATION AGREEMENT WITH THE EU

The article examines the prospects of economic integration within the framework of the association agreement with the EU. It is noted that modern studies on the integration of Ukraine into the EU most often consider the problems of the Ukrainian dimension of European and Euro-Atlantic integration, Ukraine's acquisition of the status of a candidate for EU membership in the conditions of the war in Ukraine , the state European integration policy of Ukraine: theory, methodology, mechanisms, reengineering in international business. The main prospects for further economic integration of Ukraine into the EU are offered: strengthen responsibility for corruption schemes in the economy and in the field of intellectual property rights; implement the Tax Policy Strategy, which should take into account all sectoral aspects of the Association Agreement with the EU; strengthen control over public procurement; apply real tools to stimulate energy efficiency and innovative development (tax credit or tax discount), environmentally safe production (emission limits, correction factors, etc.), establish a tax-free minimum income of citizens and apply real control over persons receiving tax benefits. It is justified that the level of innovative activity should be stimulated primarily by tax benefits. It is shown that in foreign countries, the emphasis is primarily on the financing of innovative research by private companies, which allows them to obtain an innovative product, which can then be sold both inside the country and outside its borders. In Ukraine, for the most part, the state is not interested in such processes and does not create certain preferences for persons developing innovative products. It is proposed to introduce an innovative tax credit, which will allow subjects of innovative activity to reduce the tax burden from corporate income tax or postpone its payment. Thanks to this approach, Ukraine can obtain innovative products that will be in demand on the world market.

Corporate Tax Planning and Financial Performance of Listed Consumer Goods in Nigeria

The multiplicity of tax laws and heavy tax burden facing companies in developing countries such as Nigeria has resulted in the adoption of different strategies to reduce tax liabilities. The main objective of this study therefore was to examine the effect of tax planning on financial performance of listed consumer goods firms in Nigeria from 2013 to 2022. The measures of tax planning adopted in this study were effective tax rate, tax incentives, debt tax shield and capital intensity. Return on assets was the measure of financial performance. The research design adopted for this study was ex-post facto because secondary data was used. The population of this study consisted of 21 listed consumer goods companies in Nigeria and purposive sampling technique was employed to select 18 of these companies. The ordinary least square regression technique was used to analyze the data and the statistical package employed was E-views version 10. The findings of the study revealed that effective tax rate has a negative and insignificant effect on the return on assets (ROA); tax incentives has a significant positive effect on return on assets; debt tax shield has significant and positive effect on return on assets; capital intensity has a positive but insignificant effect on return on assets of listed consumer goods firms in Nigeria. Thus, it was concluded that tax planning activities impact on the financial performance of listed consumer goods firms in Nigeria. Based on the above it was recommended among others that the management of consumer goods companies should focus on long term tax planning rather than solely concentrating on reducing effective tax rate. The management of consumer goods companies should also explore and take full advantage of available tax incentives by capitalizing on applicable tax incentives provided by the regulatory environment.

California dreaming: Tech media giants and the re-conception of property, commodities and tax

Tech media giants are no strangers to controversy in relation to the payment of corporate tax, such as the cases of Apple and Facebook (Meta) in Ireland, Alphabet (Google) in the UK and Amazon in Luxembourg. While the tech media giants are not the only global corporations that take advantage of international tax avoidance opportunities, this paper argues that their hypermobility and unprecedented cash assets place them especially well to take advantage of these practices. Moreover, the nature of some of the commodities, such as information, software or intellectual property that can be moved at the touch of a button; or even a simple re-conception of where the property resides can mean a state gaining or losing billions of dollars. This paper will explore how tech media giants are redefining property and commodity forms and how this allows for creative tax policies. Moreover, the conception of where immaterial commodities, such as pure information, is located (or not located) challenges tax collection strategies for the state. To explore these conceptions, this paper discusses the ideology surrounding the tech media industry, a particular brand of liberalism coined the ‘Californian Ideology’: An ideology that can sometimes be described as transgressive, but also one that may legitimise tax avoidance. The ideology gives a somewhat nebulous definition of what property is (and isn’t) and its location or non-location, thereby negating justification for taxation.

Depreciation premium by medical companies in tax accounting as method of optimizing corporate income tax

Depreciation bonus — the possibility of a one-time reflection of up to 30% (or 10%) of capital expenditures in tax accounting, is an effective tool of tax policy, allowing the company to postpone the payment of tax to a later period, thereby stimulating it to update fixed assets. At the same time, it is important to know all the features of the reflection of this premium in tax accounting in order to avoid sanctions for violation of tax legislation. In this regard, the purpose of the study is to analyze the specifics and identify the features of recording a depreciation premium in tax accounting, as well as to present practical recommendations for optimizing income tax in medical organizations by applying a depreciation premium. The article discusses the specifics of calculating the amount of the depreciation premium and the conditions for its application by medical companies, reflects the conditions for its application, as well as the specifics of drawing up a tax policy in this area of taxation. Practical situations regarding the application and calculation of the amount of the depreciation premium, as well as a comparison of the amount of tax payments when applying this right and waiving it are given. Conclusions are drawn from the results of the study.