Corporate Tax Research Articles

대형마트의 발전 방향

Due to a combination of sales regulations and lack of innovation, the growth of large marts is stagnating and profitability is deteriorating. Accordingly, this study examined the impact of large smarks on the national economy, especially on production, added value, employment, sales of suppliers, and tax revenues, through industry correlation analysis and other algebraic calculations. As a result of inter-industry analysis, large marts increase the annual production, added value, and employment by KRW 10 trillion, KRW 11 trillion, and 210,000 people in the wholesale/retail and product brokerage service industries, respectively, and by KRW 43 trillion, KRW 38 trillion, and 320,000 people, respectively, in the industry as a whole. In addition, large marts increase supplier sales by KRW 14 trillion per year and tax revenues by KRW 917.3 billion per year (corporate tax KRW 264.5 billion + value-added tax KRW 652.8 billion). Therefore, it can be said that the impact of large marts on the national economy is truly enormous. Therefore, the government needs to help large marts become competitive by reevaluating populist regulations on large marts that are not helpful to the national economy and open the way for large marts to provide better products and services. In addition large marts need to demonstrate its entrepreneurial spirit and innovate in products and services so that people continue to visit the large marts.

주주과세제도의 문제점과 개선방안

[Purpose] The distribution of company property to shareholders has become smoother since the revision of the Commercial Act in 2011, including allowing reserve reduction dividends. However, the related shareholder taxation system still needs to be revised. The purpose of this study is to improve the shareholder taxation system in case of reserve reduction dividends, paid－in capital increase, and capital reduction. with awareness of the problem that the shareholder taxation system is inadequate. As a result, this study aims to propose a realistic tax law amendment.
 [Methodology] Analysis of relevant overseas cases (USA, Germany, Japan) and related previous studies were investigated and presented.
 [Findings] First, there is an inadequacy in that when dividends are reduced by reserve, if dividends exceed the acquisition price of stocks held by shareholders, taxation is not imposed. In relation to this, the Corporate Tax Act stipulates that taxation will be imposed from 2023, but the Income Tax Act has not yet been revised. Accordingly, a revision of the Income Tax Act was proposed. Second, in Korea, capital reduction is treated as dividend income and taxed. However, the economic nature of capital reduction is closer to the transfer of stocks by shareholders. The current calculation structure of fictitious dividend income is also very similar to the capital gains method. Therefore, this study proposed that fictitious dividends be taxed as capital gains under the Income Tax Act. Third, if the compensation received due to resignation, withdrawal, or reduction in investment exceeds the acquisition price of the stock, it is taxed as a fictitious dividend. At this time, there is a problem in that dividend income varies depending on the acquisition price. Accordingly, this study proposed dividing the profits distributed to shareholders into the return of capital and the distribution of profits.
 [Implications] This study has implications in that it suggests ways to improve the shareholder taxation system that can minimize friction with the current tax law and increase legal stability.

Methodology for Analyzing the Effects of tax Incentives for VAT and Corporate Income Tax in the Republic of Tajikistan

In 2022, a new edition of the Tax Code was introduced in the Republic of Tajikistan; changes are primarily aimed at supporting business. The task of assessing the effects of tax benefits for VAT and corporate income tax as the most significant taxes in fiscal terms seems relevant. VAT is considered the most complex in this context due to its indirect nature and high social component in relation to the economy of the Republic of Tajikistan. The authors have developed a number of indicators showing the effects of tax benefits for VAT and corporate income tax from the state’s position; Some indicators were proposed in the literature for the first time. The methodology developed by the authors implies further empirical research over a time interval of 2–5 years from the introduction of the new edition of the Tax Code of the Republic of Tajikistan and can be used to analyze tax incentives in other developing countries.

CEOs’ Pre‐Career Exposure to Religion and Corporate Tax Avoidance

AbstractIn response to the burgeoning interest in CEOs’ pre‐career experience, this study focuses on their pre‐career exposure to religion. We argue that CEOs who were exposed to religion before starting their professional career will be imbued with the values that prioritize social obligations. Moreover, these imprinted values become activated in the context of corporate tax payment, such that firms with a CEO who attended a religious university are less likely to avoid tax. We further explore how CEOs’ present social context, including political corruption, corporate social performance and present exposure to religion, provides situational cues that moderate the baseline relationship. An analysis of a sample of US listed firms from 2000 to 2019 provides general support for our predictions.

The Impact of Dividend and Tax Avoidance on Earning Management of Companies

Using a sample covering practically all dividend-paying oil and gas companies companies in Pakistan during 2011–2020, we document that earnings management in these companies is driven by two concurrent forces: the willingness to pay (tax-exempt) dividends and avoiding unnecessary company income tax. Moreover, we show that the need for income increasing earnings management enabling current dividend distribution is mitigated by the amount of retained earnings from prior years. This article adds to the existing literature by providing empirical evidence for dividend and tax-driven earnings management in private oil and gas companies facing neither political pressures nor capital market incentives for earnings disclosures.

Transfer pricing reforms in the context of BEPS: challenges remain

The presence of affiliated entities in different countries and the independence of tax systems make it easy to shift profits from jurisdictions with high corporate tax rates to jurisdictions with low rates. Transfer prices and the arm's length principle are used to prevent profit shifting. The article identifies the peculiarities of transfer pricing reform in the context of the BEPS plan, analyses changes to Ukrainian legislation and opportunities for its improvement.
 The article analyses the amendments to the Tax Code of Ukraine aimed at ensuring the implementation of the BEPS plan. The shortcomings of these amendments are outlined and amendments are proposed to improve the legislation. The author also examines the compliance with the BEPS guiding principle, which provides for the taxation of profits where profit-generating economic activities are carried out and where value is created. It is established that the amendments to the Tax Code of Ukraine do not ensure the implementation of this principle.
 In addition to the problems of practical implementation of the provisions of legislation, the article identifies conceptual shortcomings of the proposed improvements to the transfer pricing methods, which practically do not ensure the achievement of the set goals. An alternative method of pricing based on the market assessment of value added, which is determined by the sum of the firm’s factor income, wages and profits, is substantiated. Instead of the concept of “transfer price”, the concept of “fair market price” is introduced, which is determined by the sum of value added, depreciation and expenses, representing the added value of all previous stages of the production and/or distribution cycles. The proposed approach excludes the concepts of “affiliated entities”, “transfer prices” and “arm’s length principle”. The existence of a unified system of value added tax in the European Union allows for the unification of the tax system in terms of direct and indirect taxes as a result of the introduction of fair market prices.
 Amendments to the legislation have been proposed to allow for automatic solution of the following tasks.

Corruption prevention practices and tax avoidance: The moderating effect of corporate board characteristics

This paper examines the impact of corruption prevention practices on tax avoidance from a neo-institutional theoretical perspective. Our study also contributes to the existing corruption and tax literature by considering the moderating effect of corporate board characteristics on the association between corruption prevention practices and tax avoidance. Based on a sample of FTSE 350 United Kingdom (UK) listed firms, our findings illustrate that a firm’s commitment to good anti-corruption practices is linked with lower tax avoidance. Furthermore, corporate board characteristics complement anti-corruption practices in minimizing corporate tax avoidance. Our findings provide useful evidence to governments, regulators, and other stakeholders who aim to determine best business practices that could help in reducing the risk of corporate tax avoidance. In general, our findings are robust to alternative measures of tax avoidance and different types of multivariate regression methods, namely ordinary least squares, two-stage least squares and Tobit regression techniques.

Tax Planning, Corporate Tax Avoidance and Real Earnings Management: GMM Approach in Nigeria

The study examines the effect of tax planning and corporate tax avoidance on Real Earnings Management (REM) in Nigeria. Data were gathered from the financial reports of 58 listed non-financial firms for twelve years, from 2010 to 2021. Preliminary analyses such as descriptive statistics, correlation matrix, and variance inflation factor were conducted. The Generalized Method of Moments (GMM) was employed to identify a possible effect on REM. The study revealed that tax planning has a positive and significant effect on REM, while corporate tax avoidance has a negative and significant influence on REM. Also, leverage revealed a negative significant effect on REM, while firm growth has no significant effect on REM. However, firm size has a significant positive influence on REM. The study concludes that tax planning and corporate tax avoidance have a significant influence on REM. Thus, the study recommends that tax authorities should ensure that firm management engages in lowering capitalization limits, ensures first-in, first-out instead of last-in, reduces nonobligatory expenses for short periods, and ensures moderate deferred tax expenses in order to reduce REM through tax planning.

Tax optimisation in the tax risk management process. Tax-legal analysis and selected managerial issues

ObjectivesThe aim of the article is to theoretically present ways of legally optimising the taxation of entrepreneurs' income, by using the appropriate construction of legal regulations and legal and organisational forms of business. The issues of tax risk in the context of tax management are also presented. The goal of management is to reduce economic risk and to protect against its consequences.Material and methodsResearch in the social sciences, is inspired by numerous and diverse needs. Therefore, we will reduce the existing needs to two main types, to which certain types of research correspond. The first is combined with needs of a theoretical or cognitive nature, that is, it includes all those needs that are associated with the development of a particular science. The second is combined with the various needs of practice.ResultsIncome taxes also have a negative impact on the assets (equity) of entrepreneurs. The reduction in wealth results from the burdening of entrepreneurs with both wealth taxes and corporate income tax in the case of capital companies and, in the case of partnerships, with personal income tax for distributions made to partners.ConclusionsBoth of these risks describe a potential reality, i.e. the possibility of coming into conflict with the tax authorities. Their realisation is random, with the so-called double randomness - both the timing of the event (conflict) and its depth, i.e. the consequences, are unknown. These effects are mainly financial (arrears incurred, financial sanctions, etc.), although loss of credibility, for example, may also be involved. Importantly, both risks are linked to uncertainty, but each with a different one. Speculative risk is linked to the uncertainty of whether an illegal act will come to light.

IT SECTOR TAXATION IN UKRAINE: FEATURES AND CURRENT TRENDS

IT SECTOR TAXATION IN UKRAINE: FEATURES AND CURRENT TRENDS

Global corporate tax competition leads to unintended yet non-negligible climate impacts

Global corporate tax competition leads to unintended yet non-negligible climate impacts

Global corporate tax competition challenges climate change mitigation

Global corporate tax competition challenges climate change mitigation

Modelling Wealth and Wealth Inequality in Bulgaria

This paper analyses net wealth and net wealth inequality determinants in Bulgaria, for the 2000-2020 period. The econometric results suggest that the introduction of corporate and individual flat tax rates in 2007 and 2008 contribute to households’ net wealth creation but have no significant association with inequality variables. Interest rates on mortgage loans, cost of debt, budget surpluses and inflation have a negative association with wealth, while the value of houses, arable land, equity, interest income, budget deficits contribute to net wealth growth. The top percentile increases its wealth share supported by the value of houses, equity and positive current account to Gross Domestic Product (GDP) values, however the cost of debt and GDP per capita are in a negative association with top percentile inequality. The bottom half of the population increases its wealth share with higher GDP per capita values and higher consumer loans rates, however inflation affects it negatively. Inflation and investment income are in a positive association with the Gini coefficient, while interest rates on consumer loans, cost of debt, GDP per capita, Government revenues, dividend income, equity, and the value of houses reduce inequality.

Implication of 4th Industrial Revolution on Tax Revenue Collection in Tanzania: A Case of Manufacturing Industries

The study assessed the implication of the Fourth Industrial Revolution (4IR) on tax revenue collection in Tanzania. Specifically, the study set out to establish the causality of investment in 4IR technologies, on manufacturing industries’ Value Added Tax (VAT); determine the influence of investment in 4IR technologies on manufacturing industries’ Corporate Tax and examine the effects of investment in 4IR technologies on manufacturing industries’ Employment Tax (PAYE). To achieve the research objectives, the study used a quantitative descriptive design to generate the required data. Moreover, the study used structured questionnaires for cross-sectional survey, administered with 225 production managers of manufacturing industries in Tanzania. It used probability sampling in the form of cluster sampling. Additionally, the study used the Least Square method to analyse the objectives of the study in addition to testing the hypotheses. The study found a positive and statistically significant causal effect between investment in modern technology, VAT, Corporate tax and Employment Tax (PAYE) of manufacturing firms in Tanzania, for the period under study. Implicitly, the emergence of 4IR does not necessarily occasion a decline in tax revenue collections (VAT, PAYE, and Corporate Tax) on the part of manufacturing firms in developing countries endowed with resources, like Tanzania, but rather complements and accelerates its growth. Thus, the study calls on the Tanzania Government to review and improve its Sustainable Industrial Development Policy of 2020 and the Integrated Industrial Development Strategy of 2025 to embrace, promote and support not only resource-based industries, but also technological based industries, to speed up industrialization within the country and ultimately improve and increase tax revenue collection. The government should also improve its investment policies and align them with technological changes brought by 4IR, to attract more foreign direct investments, importation and adaptation of 4IR technologies from developed countries that enhance productivity, turnover and tax revenue collections from the manufacturing sector.

Tax havens and transfer pricing strategies: Insights from emerging economies

AbstractThis study examines multinational companies in emerging markets, exploring their transfer pricing strategies for establishing tax havens. These companies employ various mechanisms (e.g., transfer pricing, profit transfers, and the reallocation of intangible assets) to minimize their tax liabilities. Today an increasing level of intangible assets facilitates smoother profit transfers to jurisdictions with lower tax burdens. Furthermore, these companies relocate their productive activities to tax havens, creating opportunities for corporate tax evasion and avoidance. Despite the efforts of governments and international organizations to propose the adoption of a minimum tax rate for different countries, these companies have been able to reduce or completely avoid paying taxes. Our study sample includes companies headquartered in emerging countries between 2010 and 2020. The study introduces some innovative elements, such as the variable “transfer pricing intensity,” which is derived from manual data collection. This variable enables analysis of the transfer pricing levels employed by multinational companies. In addition, a noteworthy contribution of this research is the use of an unconventional tax proxy known as AREA, which monitors the tax benefits associated with short‐ and long‐term debts. The results demonstrate that these companies employ a diverse range of instruments, often in combination, to reduce taxes in their conglomerates. These findings contribute significantly to a deeper understanding of the intricacies surrounding corporate tax optimization practices and provide valuable insights for governments in formulating robust policies that promote transparency and accountability in the international tax landscape.

Random forest model in tax risk identification of real estate enterprise income tax.

The text describes improvements made to the random forest model to enhance its distinctiveness in addressing tax risks within the real estate industry, thereby tackling issues related to tax losses. Firstly, the paper introduces the potential application of the random forest model in identifying tax risks. Subsequently, the experimental analysis focuses on the selection of indicators for tax risk. Finally, the paper develops and utilizes actual taxpayer data to test a risk identification model, confirming its effectiveness. The experimental results indicate that the model's output report includes basic taxpayer information, a summary of tax compliance risks, value-added tax refund situations, directions of suspicious items, and detailed information on common indicators. This paper comprehensively presents detailed taxpayer data, providing an intuitive understanding of tax-related risks. Additionally, the paper reveals the level of enterprise risk registration assessment, risk probability, risk value, and risk assessment ranking. Further analysis shows that enterprise risk points primarily exist in operating income, selling expenses, financial expenses, and total profit. Additionally, the results indicate significant differences between the model's judgment values and declared values, especially in the high-risk probability of total operating income and profit. This implies a significant underreporting issue concerning corporate income tax for real estate enterprises. Therefore, this paper contributes to enhancing the identification of tax risks for real estate enterprises. Using the optimized random forest model makes it possible to accurately assess enterprises' tax compliance risks and identify specific risk points.

Economic Globalization, Taxation and Public Expenditures: Evidence From OECD Countries

Globalization shapes the fiscal policies of countries, leading to changes in the structure of taxation and public expenditures. According to the theory of international tax competition, as globalization increases, countries use their tax policies to attract more mobile factors, resulting in tax competition. This competition causes capital tax rates to decrease and labor tax rates to increase, which is known as the efficiency effect of globalization. On the other hand, governments expand the welfare state to compensate for the increased economic risks resulting from globalization. This is known as the compensation effect of globalization. The purpose of this paper is to empirically test these hypotheses using a dataset of 26 OECD countries from the period 1990-2020. The study employed the Driscoll-Kraay estimator, which produces reliable estimates with robust standard errors in the presence of heteroscedasticity, autocorrelation, and cross-sectional dependency issues. The results indicate that economic globalization has a negative effect on corporate tax rates and a positive effect on labour tax rates. Additionally, it was observed that a high level of social spending is linked to an increase in economic globalization. These results emphasise that the efficiency effect and the compensation effect coexist and complement each other rather than being rivals.
 Key words: Globalization, tax competition, public expenditure, panel data 
 JEL Classification: E15, E62, C23

The Influence of Corporate Reputation, Available Slack, Company Size, and Leverage on Tax Avoidance

Research Aims: This research aims to examine the influence of company reputation, available slack, company size, and leverage on tax avoidance. Design/methodology/approach: The research sample consists of 139 company-year observations from companies in the mining and construction industry (SIC 1) listed on the Indonesia Stock Exchange during the period 2020-2022. Multiple linear regression is used as the data analysis technique to address the research hypotheses. Research Findings: The results indicate that company reputation and leverage have a significant negative effect on tax avoidance. Meanwhile, available slack and company size have a significant positive effect on tax avoidance. Theoretical Contribution/Originality: This research is expected to enrich the literature on factors influencing tax avoidance and provide a strong foundation for the government and regulators to optimize revenue from the tax sector by considering the factors influencing corporate tax avoidance in the mining and construction sectors.

The Effect of Female Directors, Board Size, Independent Commissioners, and Political Connections on Tax Avoidance With Integrated Reporting Quality as a Mediating Variable: Case Study of Non-Cyclical Consumer Goods Sector Companies Listed on Idx 2019-2022

The Effect of Female Directors, Board Size, Independent Commissioners, and Political Connections on Tax Avoidance With Integrated Reporting Quality as a Mediating Variable: Case Study of Non-Cyclical Consumer Goods Sector Companies Listed on Idx 2019-2022

Costs of Obtaining Revenues in Polish Corporate Income Tax on the Example of Compensation

This study is devoted to the issue of compensation for universities for theft of funds in the Polish corporate income tax. Generally speaking, it must be stated that in the literature there are quite extensive studies on corporate income tax, while the issue of compensation in connection with theft as a premise for recognizing this loss as tax-deductible costs was treated quite fragmentarily. It is worth considering whether the actions taken by the legislator allowed for the creation of a properly functioning model of tax-deductible costs. The main research intention is to characterize the impact of legal regulations in order to determine the scope of their impact on the tax law system. It is worth noting that from a theoretical point of view, for example, a university as a taxpayer should not be liable for illegal actions of third parties. For this reason, the question must be answered whether the concept of „due diligence“ will be important from the taxpayer‘s point of view. Therefore, it is necessary to analyze the culpable activity. It is therefore necessary to indicate to what extent and on what basis the legislator assumed that the developed legal solutions would determine a well-functioning structure of income in corporate income tax.