Corporate Income Research Articles

Analyze the impact of the transition from business tax to VAT on the tax burden of transport enterprises in various regions of China

In recent years, the transportation industry has enjoyed the benefits brought about by changes in the national tax policy. The purpose of this paper is to analyze the impact of the change from Business Tax to Value-Added Tax (BT-to-VAT) on the tax burden of transport enterprises in various regions of China. Based on the cross-regional characteristics of the transportation industry, China is divided into four regions: eastern, central, western and northeast. Research hypothesis – the tax reduction effect of the BT-to-VAT tax burden is not only related to the characteristics of the enterprise itself, but also related to the regional environment and market integration factors of China. Using the Difference in differences (DID) method, the data covers 22 listed companies from 2009 to 2020. The paper analyzes the internal characteristics of the enterprise itself, the influence of the external environment and the degree of industrial integration on the enterprise, and the reasons for the difference. Empirical research shows that BT-to-VAT reduces the tax burden of enterprises, the eastern region has the least impact on the ratio of corporate income tax expenses to operating income, while the central and western regions have relatively greater impacts. The scale of the enterprise and the level of economic development have a positive effect on the financial efficiency of the enterprise, while the non-current assets ratio and the degree of market integration have a negative effect on the tax burden. This research is beneficial to provide reference for enterprises in different regions to improve their management and to formulate macro policies by relevant national departments.

НОРМАТИВНО-ПРАВОВЕ ЗАБЕЗПЕЧЕННЯ БУХГАЛТЕРСЬКОГО ОБЛІКУ ТА ЗВІТНОСТІ ЗОВНІШНЬОЕКОНОМІЧНИХ ОПЕРАЦІЙ

The article determines main factors having negative effect on the balance of external economic relations. To overcome negative consequences of corporate income ‘concealment” and its manual transfer to low-tax jurisdictions the main measures for implementation of Action plan on BEPS and main rules of transfer pricing have been analysed. It has been proved that the determining place in the issues of transfer pricing belongs to the creation of adequate information support of administrative decision taking process in the field of effective FEA operations, which generator is a qualitatively organized and legally regulated FEA record keeping system. The main changes pertaining currency supervision over compliance by residents and non-residents with the tax legislation according to the Law of Ukraine “On Currency and Currency Operations” have been studied. Ineffective organization of FEA operations accounting was proven to prevent establishment of a durable control system over currency operations for reduction of penalties. An important task of accounting system was found to be the provision of an adequate documentation process and establishment of a fault-free document circulation for implementation of border, customs and other types of control. In course of the study normative and legal regulation of the system of foreign trade operations record keeping and reporting was found to ensure the understanding of principles of organization of accounting and reporting on foreign economic activity of business entities, evaluate the effect of this activity on competitiveness of a company and efficacy of FEA operations on the international market, clearance of goods and cargo, crossing customs boarders, to facilitate acceleration of financial and other types of interaction of a large number of business subjects. The hierarchical scheme of normative and legislative provision of accounting of export, import, re-export, re-import and transit operations, in which international, national and company levels have been determined. Separate levels of legal provisions of accounting, which regulate foreign trade operations, will allow, depending on the objects involved in foreign trade operations, to strictly comply with the laws of Ukraine and other countries when keeping records of these transactions in the accounting system and transfer this information to financial statements and the Report country by country.

ОСОБЛИВОСТІ МІСЦЕВОГО ОПОДАТКУВАННЯ ЯК ОСНОВИ ФОРМУВАННЯ ДОХОДІВ ОБ’ЄДНАНИХ ТЕРИТОРІАЛЬНИХ ГРОМАД В УКРАЇНІ

The scientific article is devoted to the peculiarities of the formation of the system of tax revenues as sources of income of the budgets of the united territorial communities. The system of local and national taxes and fees, which are credited to local budgets, is analyzed in order to determine their "weight" in budget revenues. The Budget Code of Ukraine establishes the share of national taxes that is credited to local budgets of territorial communities. According to Art. 64 of the Budget Code of Ukraine to the general fund of the local community budget includes 60 percent personal income tax, 10 percent corporate income tax, corporate income tax and financial institutions, as well as part of the rent for the use of certain natural resources. These norms are well-founded and aimed at encouraging local governments to create new jobs and new enterprises. After all, the deduction of 60 percent of personal income tax to the local budget determines the interest of local governments in creating new jobs. Local governments cannot influence the determination of the national tax rate. Also, they can not establish any benefits for the payment of this category of taxes. At the same time, the determination of the conditions for the payment of local taxes belongs to the competence of the OTG governing bodies. The norms of legislative acts that establish the system of local taxes and fees have been studied. The peculiarities of local taxation were studied on the example of the budgets of territorial communities of Kharkiv region and the powers of local self-government bodies to establish the conditions for accrual and payment of local taxes and fees were clarified. Proposals have been developed to increase the financial independence of local governments at the level of territorial communities through tax tools, as well as to improve the legal regulation of taxes and fees at the level of budgets of united territorial communities. To improve the economic and legal mechanism of taxation of the united territorial communities, it is proposed to: 1) introduce a local fee for advertising and holding mass entertainment events in public places and other.

Prosečna efektivnost poreza na dobit na primeru kompanija na listingu Beogradske berze

The fiscal policy of a country is a crucial source of successful and normal functioning of that country's economy. The implications of fiscal policy can be reflected in both the private and the functioning of the public sector of a country's economy. Public finance is an area of economics dealing with the analysis of tax policy and government spending policy. One of the important areas of public finance research is corporate income tax. Corporate income tax is a direct tax imposed at the national level for the purpose of taxing the profits of certain companies, whether state-owned or privately owned. The aim of this paper is to look at the actual amount of profit tax paid, i.e. by observing the profit before taxation of companies listed on the Belgrade Stock Exchange. The paper considers the effective tax rate of companies and points out the deviation of the same from the legally prescribed corporate income tax rate in the Republic of Serbia and the implications of corporate income tax on the company's business results. The paper presents graphical and tabular representations of the effective tax rates of each company as well as the average effective tax rate of companies listed on the Belgrade Stock Exchange in relation to the law in the period from 2013 to 2020 in the Republic of Serbia. Finally, a statistical analysis of the presented results is given in order to understand more precisely the deviation of the effectiveness of corporate income tax of companies listed on the Belgrade Stock Exchange as well as the analysis of the correlation between the growth of the average pre-tax profit and the growth of the average effective corporate income tax rate.

Does Government Reduce the Corporate Income Tax Rate Increase Employment? Evidence from China

Does Government Reduce the Corporate Income Tax Rate Increase Employment? Evidence from China

Earnings Thresholds in Chinese High-Tech Enterprises: The Role of Corporate Income Tax Incentives

To encourage corporate investment in innovation or R & D and to foster innovative firms, the Chinese government established standards for the certification of high-tech enterprises in 2008. Business entities that meet these standards are entitled to tax deductions. The criteria include the proportion of R & D expenses to sales exceeding a certain percentage in the prior 3 years among different sales in the current year. The purpose of this paper is to investigate whether this criteria influence management’s preferences for an earnings threshold. This study collects data from 2008 to 2018 from the CSMAR database. All of the 1932 listed high-tech enterprises are included, with a total of 7547 samples. The results indicate: sales of 50 - 200 million yuan in the current year and a proportion of R & D expenses to sales in the prior 3 years before manipulating sales or R & D expense; sales above 200 million yuan in the current year, and that most of these firms’ proportion of R & D expenses to sales before manipulating sales or R & D expenses achieved the required ratio to qualify as a high-tech enterprise. Specifically, the results suggest that 88.83% of the listed high-tech enterprises in China focus on R & D activities or innovations, regardless of whether they qualify as a high-tech enterprise according to the Chinese government. However, a few of the samples’ proportion of R & D expenses to sales are below 3% in the prior 3 years when their sales exceed 200 million yuan in the current year before the manipulation of sales or R & D expenses. Of these firms, half have a proportion of R & D expenses to sales exceeding 3% after the manipulation of sales or R & D expenses. Overall, the results also support the presence of prospect theory in Chinese-listed high-tech enterprises, because mangers tend manipulate earnings by adjusting sales or R & D expenses to obtain tax benefits.

Corporate Income Tax: We Tried the Stick, How About the Carrot?

Corporate Income Tax: We Tried the Stick, How About the Carrot?

ПОДАТКОВІ РІЗНИЦІ ПІДПРИЄМСТВА: ДОКУМЕНТУВАННЯ, ОБЛІК ТА ЗВІТНІСТЬ

The purpose of the article is to disclose the procedure for the application of tax differences by enterprises in the calculation of tax liabilities, for income tax, taking into account the electronic documentation of tax calculations. The actual rate of income tax of transport companies in 2015-2020 differs from the base rate of income tax to the adjustment of the pre-tax financial result on differences (tax differences). It is proved that the procedure for applying the differences involves the implementation of four interrelated stages in the calculation of tax liabilities for income tax. The first stage of accrual of income tax liabilities is to determine the annual income of the enterprise for the last reporting year in accordance with the provisions of paragraph 134.1.1. of the Tax Code of Ukraine. The second stage is the comparison of the annual income of the enterprise for the last reporting year with the critical value (UAH 40 million), including electronic documentation of the decision to apply the adjustment or refusal to adjust the financial result before tax on the difference. The third stage is to determine the differences of the enterprise from the list of differences from articles 138–140 of the Tax Code of Ukraine. The fourth stage is the calculation of four indicators (the amount of the difference by which the pre-tax financial result increases, the amount of the difference by which the pre-tax financial result reduced, the amount of the difference between the two previous indicators, income tax). The company makes electronic documentation of differences through the submission of the Tax return for corporate income tax and Annex DI to line 03 of the Tax return for corporate income tax. Submission is carried out through service «Electronic office of the payer» (E-cabinet, State Tax Service of Ukraine).

Global Corporate Income Tax Competition, Knowledge Spillover, and Growth

Global Corporate Income Tax Competition, Knowledge Spillover, and Growth

The Impact of China's Preferential Tax Policy on the Development of the Alternative Fuel Vehicle Industry

In order to promote the high-quality and sustainable development of the alternative fuel vehicle industry, the Chinese government has given strong tax policy support. In China, the corporate income tax rate is uniformly 25%, and the government gives tax incentives to high-tech enterprises that meet the relevant appraisal standards: the tax rate is reduced by 15%. The purpose of this work is to analyze the impact of China's tax policy on the production of vehicles using alternative fuels and to assess the significance of tax incentives for the formation of significant incentives for the development of this production. The hypothesis of the study is to confirm the need to provide incentives for high-tech production of vehicles using alternative fuel to maintain a positive financial result of such production. This paper uses the OLS analysis model. Deriving data from the annual financial reports of BYD, Geely, SAIC Motor and Great Wall Motor from 2011 to 2020, analysis is carried out of the impact of income tax rate and debt ratio on net profit margin. Research has confirmed that income tax is positively correlated with net profit margin, and the debt ratio is negatively correlated with the corporate net profit margin. The higher the debt ratio, the less conducive to the improvement of the company's net profit margin. Corporate net profit margins are more sensitive to changes in income tax. This also provides an effective way to improve the tax policy to promote the development of new energy vehicles. Tax policy is the most effective tool for the government to carry out macro-control, helping to avoid the harm caused by "market failure" and guiding the development direction of the production of vehicles using alternative fuels.

Assessment of the Impact of Direct Taxes on Public Investment in Agriculture in Nigeria

This study investigates the impact of direct taxes on agricultural funding. For this analysis, the petroleum profit tax, personal income tax, and corporate income tax were employed as direct taxes. These are the three largest direct taxes chosen for this analysis. Agricultural finance has long been a cause of concern, forcing the entire country to suffer from acute hunger as a result of unnecessary apathy. Furthermore, Nigeria now has a high degree of hunger index at 28.3, placing the country 103rd out of 116 countries in the 2021 Global Hunger Index record. This research considers all of these problems and aims to assess the extent to which direct taxes may alleviate the load by providing more direct tax revenues to agricultural enterprises. The evaluation is carried out by collecting secondary data from the Organization for Economic Cooperation and Development (OECD) on chosen direct taxes and agricultural spending from the Central Bank of Nigeria's Statistical Bulletin. The study period runs from 2010 to 2020. The study used a multiple regression technique to present real evidence that all of the direct tax types analyzed had a minor impact on agricultural finance, with the exception of personal income tax, which has a positive and considerable impact on agricultural growth. This leads to the request that Nigerian tax rules be altered to allow for significant use of tax revenue for agricultural loans. The insignificance of petroleum profit tax and corporate income tax to agricultural funding necessitates more effective tax processes and a crackdown on malfeasance among tax authorities.

Тенденції формування доходів Державного бюджету України.

In the conditions of acceleration of rates of economic growth the question of formation of the State budget of the country acquires special urgency. The purpose of the article is to analyze the main trends in budget revenues in Ukraine, the study of the proportion of taxes in the overall structure of the revenue side. The purpose of the study led to the formation of the following tasks: study of the main items of the State budget revenues of Ukraine, their comparative analysis and proposals for increasing the revenue base of the State taking into account social inequality and peculiarities of mentality. In the course of the analysis such methods of scientific cognition as analysis, comparison, statistical, graphic were used. In the course of the research it was determined that the following types of revenues occupy the largest share in the country's revenues: value added tax, corporate income tax, excise tax. Value added tax has the greatest fiscal potential, as the tax base is concentrated within the consumer needs of individuals and legal entities. The process of consumption is continuous, which is why value added tax can be considered a stable source of budget revenues. However, the high share of taxes in the overall revenue structure is not able to provide the current expenditures of the country, so there is a need to expand sources of funding. The authors proposed a number of measures aimed at increasing the State budget revenues: transition to long-term budget planning, expanding the tax base by introducing luxury taxes, introducing rational property taxation, transition from proportional to progressive personal income taxation system. At this, the authors emphasize the gradual introduction of tax changes, as an instantaneous change of direction can lead to an increase in the level of the shadow economy. Such measures will increase budget revenues and minimize the need for credit resources (public lending).

Władztwo podatkowe jednostek samorządu terytorialnego państw UE w obszarze podatków dochodowych

Purpose – The aim of the article is to assess the level of fiscal sovereignty of sub-central government units in the EU countries in the area of inome taxes (Personal Income Tax and Corporate Income Tax). The analysis covered 22 of the EU countries that are OECD members states as well as the United Kingdom. Research method – The descriptive analysis has been applied in the article. Fiscal efficiency of income taxes in the budgets of local and regional government units has been analysed on the basis of quantitive methods. The information used in the article comes from two electronic databases – OECD Revenue Statistis 2022 and Taxes in Europe Database v3 of the European Commission. Results – The role of income taxes as a source of local and state government revenues is significant in most of the analysed countries. The revenues are often transferred to sub-government units without fiscal sovereignty. In the majority of studied countries, it takes the form of tax sharing. This means that the empowerment of local or regional authorities in the area of income taxes is restricted. Originality/value/ implications/recommendations – The study has been based on the rich material, which covers not only data concerning the level of fiscal efficiency, but also tax structures.

ENSURING FINANCIAL SELF-SUFFICIENCE OF TERRITORIAL COMMUNITIES: EXPERIENCE OF EU COUNTRIES

Introduction. The change of the administrative-territorial system at the basic level and the reform of the public administration system in Ukraine in 2014–2020 took place on the basis of the experience of the EU countries regarding the decentralization of administrative and financial powers in favor of local self-government. Today, the first stage of reform has already been com­pleted, because territorial communities as the basic units of the administrative-territorial system have been formed throughout the territory of Ukraine, as well as redistribution of spending powers and revenue sources between different levels of management. Accordingly, the issue of ensuring financial self-sufficiency of territorial communities for the long term is being updated. Decentralization in European countries took place in different periods, and therefore, the tasks that today face the Ukrainian state and local self-government in particular, these countries have already solved with one or another measure of efficiency, which makes it possible to talk about the possibility of adapting the acquired experience to domestic realities. The purpose of the article is to study European practices of ensuring financial self-suffi­ciency of basic administrative and territorial formations for the further implementation of the most effective practices in domestic realities. Results. The practice of developing the public finance system on the basis of decentral­ization in the EU countries was studied, the difference between the levels of decentralization of territorial communities in different countries and the tendency to exceed the level of decen­tralization of expenses over the level of income decentralization was revealed. Emphasis is placed on the key principles of ensuring financial self-sufficiency of territorial communities in the European Charter of Local Self-Government. The existence of a financial "cushion" for territo­rial communities in the form of distributed resources from supranational funds is substantiated. Given the lack of such a mechanism in Ukraine, the need to study European practices for accu­mulating sufficient financial resources for community development is argued, including taxes on economic activity (personal income tax, corporate income tax, local business tax, property taxes on commercial real estate and land) and local borrowing.

Influence of Corporate Income Tax to Loan Loss Provision: Evidence from Uzbekistan

This article is devoted to the analysis of the impact of corporate income tax on compulsory reserves created by commercial banks for possible loan loss provision. In the majority of countries banks are required to create compulsory reserves for potential loan loss provisions, and the corporate tax regime applies tax deductions to these compulsory reserves. The corporate tax system facilitates timely coverage of potential loan loss provision. In addition, corporate taxation is an essential factor in the transparency of banks’ financial statements. The research has revealed that reserves for potential loan loss provision are used primarily for profit regulator purposes, not to regulate capital. This implies that when deducting the amount of total reserves for tax purposes of banks the loan loss provision is positively related to the corporate income tax rate. The analysis of the selected commercial banks has confirmed that the impact of corporate income tax is more significant for the timely admitting potential loan loss provision when deducting general reserves from the tax base, mainly for the purpose of taxing banks’ profits. According to the results, an increase in the tax rate by an average of 1% could lead to an increase in the amount of required loan loss provision by 3.9%. This means that when total reserves are deducted for tax purposes, the underlying hypotheses that compulsory reserves for loan loss provisions are positively correlated with the corporate income tax rate and that the amount of loss reserves is increased at the income tax rate have been confirmed. In general, the following aspects are crucially important in the taxation of profits of commercial banks: which method is more convenient for loan loss provision (write-offs or formation of reserves); entire or partial compliance between the taxation and regulation of reserves for loan loss provision; imposing restrictions on the application of tax deductions to reserves for possible loan loss provisions.

Determinants of the Temporality of Corporate Income Tax Litigation by Large Brazilian Banks in the CARF

Determinants of the Temporality of Corporate Income Tax Litigation by Large Brazilian Banks in the CARF

Važnost odloženog poreza na dobitak u osiguravajućim društvima - slučaj Republike Srbije

Insurance companies in the Republic of Serbia (RS) are required to report deferred income tax in accordance with the International Accounting Standards (IAS) 12 - Income Taxes. They recognize deferred tax assets and deferred tax liabilities on the balance sheet or deferred tax expenses and deferred tax income on the income statement. This paper examines the materiality of the deferred income tax in Serbian insurance companies, as well as its impact on assessing profitability and corporate income tax burden. The research conducted from 2017 to 2020 covered 16 insurance companies, and has shown that the effective tax rates in an average Serbian insurance company are lower than the prescribed rate of income tax. The research results have shown that typically, deferred tax does not materially represent a significant item in a statement of financial position of insurance companies. In addition, when assessing profitability and corporate income tax burden of insurance companies, deferred income tax is not a significant item on a balance sheet.

УЧЕТ НАЛОГОВЫХ РАЗНИЦ В СВЕТЕ ПРИМЕНЕНИЯ ФСБУ 6/2020

The purpose of this study was to study the modern features of accounting and tax accounting of fixed assets in Russian organizations and develop recommendations regarding certain provisions of the accounting policy of a commercial organization. The article uses such research methods as the study and generalization of normative-legislative acts and scientific literature, logical and comparative methods of study. In connection with the introduction of the FSBU 6/2020 standard, starting with the reporting for 2022, the usual procedure for accounting for fixed assets has changed significantly: completely new terms have been introduced, one depreciation method has been canceled, and for the other three it is necessary to take into account the salvage value of fixed assets, the cost criterion has changed classifying property as fixed assets, introduced a mandatory check for depreciation, and more. In this connection, the article discusses how accounting and tax accounting can be brought together, as well as specific calculated examples of the appearance of tax differences that lead to the complication of financial accounting for companies applying PBU 18/02 “Accounting for settlements on corporate income tax”. It should be noted here that small businesses have the right not to apply RAS 18/02, and they also use significant simplifications in the field of accounting for fixed assets: they have the right not to change the initial cost of fixed assets when changing liquidation estimated liabilities; do not check fixed assets for impairment; disclose in the financial statements information on fixed assets to a limited extent in accordance with 3 FSB 6/2020, therefore, the recommendations given in the article relate mostly to medium and large businesses.

КОНТРОЛЬ РОЗРАХУНКІВ ІЗ ПОДАТКУ НА ПРИБУТОК

The article is devoted to organizational and methodological principles of monitoring income tax calculations. Administrative and accounting controls are distinguished among the types of internal control. Administrative internal control is used to improve the efficiency of the enterprise, and accounting internal control is used to protect assets and reliably reflect them in accounting. The main functions that internal control performs are defined. Objects that are not affected by controlling subsystems are considered, namely some elements of accounting policy, tax differences, errors and falsifications. It is indicated that the components of internal control include self-control of the performer, functional control and institutional control. The persons who are responsible for the conscientious implementation of internal control at each component are identified. Further, the article examines the state financial control over income tax calculations, since it is an integral part of the state financial control of entrepreneurial activity. It is determined that the State Fiscal Service of Ukraine conducts desk, documentary and factual inspections. There are several measures that are recommended to be implemented at the enterprise on the eve of a desk check in order to identify violations that can be corrected independently and thus avoid penalties. The procedure for carrying out a planned documentary check at the enterprise is considered. Cases that are recorded in the tax code of Ukraine and may become reasons for conducting an unscheduled documentary check at the enterprise are given. The algorithm for conducting a tax audit of income tax by regulatory authorities is disclosed, which includes preparatory, research and final stages, at each of which a number of activities are performed. In the system of state financial control over the payment of corporate income tax in Ukraine, there are numerous problems that reduce its fiscal efficiency, and therefore require improvement. It is proposed to create a system ofstate current control over the activities of a business entity and strengthen responsibility for tax offenses.

The double burden of maldistribution: a descriptive analysis of corporate wealth and income distribution in four unhealthy commodity industries

ABSTRACT The health and ecological harms created and spread by firms active in many unhealthy commodity industries (UCIs) have received considerable attention from the public health community. However, less focus has been paid to analysing the distribution of wealth and income – important social and economic determinants of health – by these industries. This study aimed to examine long-term trends in wealth and income distribution by publicly listed corporations active in four UCIs: fossil fuels; tobacco; ultra-processed foods; and alcohol. Quantitative analysis of a range of data was conducted for firms listed on stock exchanges in the United States (US). Wealth and income distribution metrics were analysed at the industry level, including effective corporate tax rates and shareholder value ratios. The equity ownership structures and investor location of 20 of the largest firms were also explored. Since the 1980s, US-listed firms in the examined UCIs have distributed much less of their wealth and income to governments and much more to shareholders and investors mostly based in high-income countries. The study provides evidence that firms active in UCIs create a ‘double burden of maldistribution’: their externalised social and ecological harms disproportionately affect disadvantaged population groups and governments in low- and middle-income countries; whilst, simultaneously, they are increasingly transferring wealth and income to a group over-represented by a small and privileged elite. The identified distributive injustice warrants increased policy attention.