Corporate Tax Research Articles

Scaling Up Tax Strategies: Investigating the Moderating Effect of Leverage on Firm Size, Asset Intensity, and Tax Management

This study examines the relationships between firm size, asset intensity, leverage, and tax management in Indonesian manufacturing companies. Utilizing a panel data approach from 2020 to 2022, the research finds that firm size and asset intensity significantly influence tax management practices, highlighting larger firms' advantages in implementing effective tax strategies. Conversely, leverage does not significantly mediate the relationship between firm size or asset intensity and tax management. These findings suggest that while asset intensity provides firms with opportunities to optimize tax deductions, the impact of leverage on tax management strategies is limited. The research underscores the importance of understanding these dynamics for business leaders aiming to enhance tax efficiency and compliance. Additionally, the study provides practical recommendations for firms and policymakers to improve tax management practices in the manufacturing sector. Overall, the research contributes valuable insights into the factors affecting corporate tax strategies in Indonesia.

Fintech development, corporate tax avoidance and firm value

Fintech development, corporate tax avoidance and firm value

Corporate Tax Planning: Making Sense of Canada's Clean Energy Investment Tax Credits

Corporate Tax Planning: Making Sense of Canada's Clean Energy Investment Tax Credits

Intra-Group Financing: Analysis of the Coexistence of the Arm’s Length Principle with the General Anti-Abuse Rules

The deduction of interest expenses for corporate tax purposes has attracted the attention of tax policymakers and multinational enterprises owing to concerns about base erosion and profit shifting. Prior to the transposition by Member States of the Anti-Tax Avoidance Directive that established a minimum standard, national rules to limit the tax deduction of interest expenses and anti-abuse rules to tackle perceived aggressive tax planning lacked uniformity and consistency at EU level. This resulted in legal disputes, especially in cross-border intra-group financing cases when transfer pricing based on the arm’s length principle is also applied. The Court of Justice of the European Union has set general guidelines and an interpretative framework. However, the opinion of the Advocate General in the X BV case (C-585/22), suggesting a departure from the Lexel case (C-484/19), raises significant concerns. In the authors’ opinion, this approach could lead to an overreaching application of the GAAR even to arrangements subject to the arm’s length principle that, based on economic rationality and substance, is intended to treat in the same way cross-border intra-group and third-party structures and transactions.

The impact of asset specificity on corporate tax avoidance: Do financial constraints and product market power matter?

Our findings reveal that asset specificity significantly enhances corporate tax avoidance, with firms exhibiting lower cash effective tax rates. Firms with higher asset specificity also engage in more aggressive tax avoidance strategies, including tax dodging and long-term tax planning. Additionally, our analysis indicates that the positive impact of asset specificity on tax avoidance is less pronounced in firms with lower ESG performance but is more pronounced in those facing negative demand shocks or operating during periods of economic policy uncertainty. We also find that financial constraints and product market power mediate the relationship between asset specificity and tax avoidance, with financial constraints serving as the dominant economic channel. These findings offer new insights into the factors driving corporate tax avoidance and highlight the complex interplay between asset specificity, financial constraints, product market power, and tax planning strategies.

Employee education and corporate tax outcomes: Evidence from firm-level reporting

Employee education and corporate tax outcomes: Evidence from firm-level reporting

The Guarantee Function of Transfer PricingDocumentation and Its Role in Tax Risk Management

The article discusses the crucial role of transfer pricing documentation in the operations and taxation of entitiesengaged in transactions with related parties. It includes an analysis of the guarantee function of transfer pricingdocumentation, which involves providing tax authorities with information to assess the market nature of transactionsand protect taxpayers from challenging the terms of these transactions. The mechanisms of this documentation,its practical application, and the benefits it brings to taxpayers are also discussed. The article presentsexamples from the case law of administrative courts and analyzes the regulations on transfer pricing in corporateincome tax.

Impact of sports sponsorship on early career athlete performance: Czech case study

The purpose of this study is to investigate the correlation between sponsorship and the performance and development of early career athletes transitioning from junior level to professional sports, because this issue has not been fully explored in the Czech Republic. The reason is the almost absolute absence of financial or material support for such early-career athletes, when their transition from junior categories and the entire junior category is almost always exclusively financed and supported by their parents and families. We also emphasise the absolute absence of legislative provisions that would give supporters of such athletes at least a tax or other advantage. The research is based on research of Cardenas (2023), Hong and Fraser (2023) and Moolman and Shuttleworth (2023) and aims to assess how financial and material support provided by sponsors can enhance an athlete’s performance and long-term career trajectory. A mixed method approach was adopted, combining quantitative analysis through surveys and performance data with qualitative interviews. Data from 173 early career athletes from various disciplines were analysed using t-tests and ANOVA statistical methods to assess financial stability, access to better training, and community participation. Results indicate that sponsorship significantly contributes to better performance metrics, with sponsored athletes showing a 20% improvement in competition results compared to nonsponsored athletes. Furthermore, sponsorship financial support improved training opportunities and access to elite facilities, which was shown to increase athletes’ performance by 15%. However, some challenges related to sponsorship obligations, such as marketing commitments, were highlighted by athletes, underscoring the pressures that sponsorship can introduce. The implications of this study suggest that effective sponsorship strategies can play a vital role in an athlete’s career development, offering not only financial stability but also opportunities for personal branding and increased community engagement. Another implication is a possible consideration for legislators in the context of preparing a legislative framework enabling tax or other benefits for companies and organisations sponsoring or supporting these young athletes. More research is recommended to explore the long-term impact of sponsorship on athlete mental health and career sustainability, as well as the differences in sponsorship effects across various sports disciplines.

Does Firm Size Buffer Tax Aggressiveness? Examining Financial Distress and Capital Intensity

This study investigates the relationships between financial distress, capital intensity, and tax aggressiveness, focusing on the moderating role of firm size. Utilizing a sample of property and real estate companies listed on the Indonesia Stock Exchange from 2021 to 2023, the research employs quantitative methods to analyze the influence of financial distress and capital intensity on tax aggressiveness. The findings reveal that financial distress significantly increases tax aggressiveness, indicating that firms facing economic challenges are more likely to pursue aggressive tax strategies to enhance their cash flow. Additionally, capital intensity is positively associated with tax aggressiveness, as firms leverage their capital assets for potential tax benefits. However, the study finds that firm size does not significantly moderate the relationships between financial distress or capital intensity and tax aggressiveness, suggesting that the effects of these variables are consistent across different firm sizes. These results underscore the complex dynamics of corporate tax behavior and highlight the need for firms to carefully consider their tax strategies in the context of financial conditions and capital structure. The research contributes to a deeper understanding of tax aggressiveness in emerging markets and provides implications for corporate managers and policymakers regarding tax planning and regulation

The Impact of Cryptocurrency Exposure on Corporate Tax Avoidance Among US Listed Companies

This study examined the association between corporate cryptocurrency activities and tax avoidance outcomes, utilizing data from US public firms covering the period from 2015 to 2023. Financial data were sourced from Compustat, while details regarding cryptocurrency activities were manually extracted from 10-K and 10-Q filings. Our analysis employed a fixed-effects regression model to examine the impact of these activities on cash effective tax rates (ETR). The findings indicate that firms engaged in cryptocurrency activities tend to have a lower ETR compared with those without such involvement. Notably, this effect was predominantly observed in companies directly engaged in cryptocurrency activities, such as accepting cryptocurrency as a payment method or actively trading cryptocurrency on an exchange platform. In contrast, firms involved in crypto mining or initial coin offerings did not exhibit a similar association. Our findings offer significant regulatory insights for governance bodies concerned with the implications of corporate cryptocurrency activities on tax strategies.

Pengaruh debt to equity ratio (DER), long-term debt to asset ratio (LDAR), dan discretionary accrual terhadap pajak penghasilan badan terutang (Studi pada perusahaan jasa transportasi dan logistik di Bursa Efek Indonesia periode 2019-2023)

This study aims to examine the significant effects of the debt to equity ratio (DER), long-term debt to asset ratio (LDAR), and discretionary accrual on corporate income tax payable in transportation and logistics sector companies listed on the Indonesia Stock Exchange during the 2019–2023 period. The study employs a quantitative approach with purposive sampling, resulting in a sample of 11 companies from a total population of 37 companies. Data analysis was conducted using multiple linear regression analysis with the assistance of IBM SPSS 26 software. The results indicate that, partially, the debt to equity ratio (DER) has a positive and significant effect, the long-term debt to asset ratio (LDAR) has no significant effect, while discretionary accrual has a negative and significant effect on corporate income tax payable. Simultaneously, the debt to equity ratio (DER), long-term debt to asset ratio (LDAR), and discretionary accrual have a significant impact on corporate income tax payable.

Country-by-Country reporting, corporate tax avoidance, and supply chain structure: A bunching analysis based on income manipulation by Chinese multinational corporations

Due to the endogeneity issue arising from the voluntary manipulation of MNCs own operating income, we employed bunching analysis to investigate the impact of Country-by-Country reporting(CbCR) on tax avoidance behavior of Chinese multinational corporations. The study found that multinational corporations' operating income exhibited bunching at 5.5 billion RMB. Within the bunching interval, the distribution of actual-value enterprises was 111 % higher than that of counterfactual enterprises, with an elasticity of 0.0359. Tax avoidance by multinational corporations significantly decreased within the manipulation interval, leading to a noticeable increase in taxable amounts. A series of robustness tests confirmed the validity of the above conclusions. This suggests that CbCR could serve as an important policy tool to combat tax base erosion and profit shifting. Furthermore, CbCR led Chinese multinational corporations to increase their investment scale while reducing profit shifting, but also resulted in a decrease in employment and a more concentrated supply chain structure. Careful evaluation is needed regarding the future expansion of the scope and target users of CbCR.

CORPORATE TAX AGGRESSIVENESS RESEARCH LANDSCAPE: BIBLIOMETRIC MAPPING

The self-assessment mechanism in Indonesia allows companies to independently calculate and report their tax liabilities, potentially encouraging aggressive tax practices. This study aims to identify research trends, main themes, and key factors in Corporate Tax Aggressiveness from 2014 to 2024. The method involved searching for research articles with the keyword "Tax Aggressiveness" in international journals indexed by Scopus, national journals indexed by Sinta through the Garuda website, and national journals using Publish or Perish, resulting in 400 articles. These articles were analyzed using the VOSviewer application. This research utilizes bibliometric analysis to map Corporate Tax Aggressiveness trends over the past decade. The results show a significant annual increase in publications, with VOSviewer identifying 5 clusters and 56 items related to Corporate Tax Aggressiveness research. The study concludes that academic interest in Corporate Tax Aggressiveness is growing, highlighting the importance of this topic in tax literature. The recommendation is to use the identified factors in future research on tax aggressiveness.

Retraction notice: CEO power and corporate tax avoidance in emerging economies: does ownership structure matter?

Retraction notice: CEO power and corporate tax avoidance in emerging economies: does ownership structure matter?

Transformation of Traditional Corporate Tax Planning into AI-Driven Corporate Tax Planning

Corporate tax planning has traditionally relied on manual processes and expert judgment to minimize tax liabilities. However, the rise of artificial intelligence (AI) presents new opportunities to transform these practices through automation, real-time analysis, and predictive capabilities. To conduct this research, a comprehensive review of academic literature, case studies, and existing AI tools in tax planning was carried out. The proposed AI-based tax planning model was developed based on these findings and validated through simulations and expert feedback. The study also examined the process of integrating AI systems with existing corporate tax structures to assess the feasibility and effectiveness of implementation. Results show that AI-driven corporate tax planning significantly enhances accuracy and efficiency compared to traditional methods. The AI model provides real-time analysis and predictive insights, enabling businesses to optimize tax strategies while ensuring compliance with evolving regulations. Tax authorities also benefit from AI implementation, gaining more transparent and equitable tax structures, along with stronger supervision capabilities. The proposed model can be developed into customized software tailored to individual companies, seamlessly integrating with existing corporate systems. These findings indicate that AI has the potential to revolutionize corporate tax planning by streamlining tax management and optimizing outcomes. For businesses, AI enables personalized tax strategies that adapt to specific data and regulations, improving both compliance and long-term tax optimization.

Transfer Pricing End-of-Year Adjustments in Korea

While Korean transfer pricing regulations legally allow year-end transfer pricing adjustments after the filing of a corporate tax return, it is advisable to adjust transfer prices throughout the fiscal year with a well-established business plan and robust transfer pricing documentation.

Environmental Policies and Tax Incentives in the Pillar Two Era: A Comparison of the EU and US Approaches

This article explores the interaction between global corporate taxes, specifically under the OECD’s Pillar Two, as implemented by the EU Minimum Taxation Directive (2022/2523) in the European Union and by the Corporate Minimum Tax (CAMT) in the United States, and fiscal incentives supporting environmental tax policies under the European Union’s Green Deal and the US Inflation Reduction Act (IRA). The article compares the EU and US approaches and reveals the impact on the investment strategies of MNEs, with a focus on the location of intangibles related to renewable energy technologies, as well as State aid considerations. The article proposes that, instead of marginalizing the green tax credits, they should be reshaped and made subject to a benchmark that supports sustainable innovation within the global tax framework.

Assessing the environmental and economic viability of floating PV-powered green hydrogen: A case study on inland ferry operations in Türkiye

This paper conducts a comprehensive analysis of the environmental impacts and costs associated with a floating photovoltaic (FPV)-powered green hydrogen production system for a ferry line in Türkiye, utilizing life cycle assessment (LCA) and life cycle cost assessment (LCCA) methods. The methodology involves regridding daily data from 13 Global Climate Models (GCMs) to a consistent 1° × 1° grid, comparing this data with ERA5 datasets using various statistical methods, and identifying the top four GCMs. These models are then used to forecast ambient temperature, wind speed, and solar radiation for 2023–2052. Based on these forecasts, the FPV system's component sizes are determined. The LCA, based on the GREET 2022 database, reveals that green hydrogen is the most environmentally friendly option, reducing global warming potential (GWP) by 77.5 % compared to marine diesel oil (MDO 0.1 % S), with more than 62 % of GWP for the hydrogen-powered ferry attributed to PV production. LCCA results indicate that, without subsidies, green hydrogen is not economically feasible for the selected inland ferry line. Carbon taxes are insufficient to bridge cost differences, highlighting the need for financial incentives. Reducing corporate tax to 10 % is identified as the most effective incentive, and the Production Tax Credit (PTC) option maximizes internal rates of return for green hydrogen producers. This study provides valuable insights for sustainable energy choices in maritime transport, emphasizing the importance of both environmental and economic considerations.

Corporate tax avoidance and narrative disclosure tone: a developing country perspective

Purpose This study aims to examine the link between tax avoidance, corporate governance and narrative disclosure tone using a sample of public companies in Pakistan. Design/methodology/approach Data for 125 companies listed on the Pakistan Stock Exchange (PSX) are collected over 10 years from 2011 to 2020. Sentiment analysis is conducted to determine the disclosure tone, and regression analysis is used to test the association between the variables. Findings This paper finds that firms that engage in tax avoidance tend to use a more positive disclosure tone and are more likely to engage in impression management. Moreover, promoting sound governance through board independence and gender diversity is associated with a less positive disclosure tone. However, firms with more family board members and higher foreign ownership are more likely to use a more positive disclosure tone. Practical implications Regulators can use this information to develop better guidelines to protect investors and ensure faithful disclosures to address both positive and negative news. Originality/value The study contributes to the literature by examining corporate tax avoidance as a determinant of narrative disclosure tone, a relationship that has not been widely explored. Moreover, as most disclosure tone research has been conducted in developed countries, this paper provides valuable evidence from a developing country.

Designing Net Asset-Based Income-Splitting Rules under Dual Income Tax

Abstract This article revisits the income-splitting regulations within the Nordic dual income tax framework. These regulations were introduced to counteract the inclination to transfer income between labor and capital income tax bases. They involve imputing a return on equity, considered as capital income, and taxing the residual portion at rates similar to those imposed on labor income. There are primarily two methods for computing imputed capital income. One method involves imputing a return based on the shares’ acquisition price (implemented in Sweden and Norway), while the other calculates a return using the net book assets of the company (utilized in Finland). This study examines the economic implications of the net asset-based splitting approach, an area not extensively explored in earlier literature. Our findings suggest that with appropriate selection of tax-parameter values, the net asset-based splitting system embodies the fundamental characteristics of a neutral corporate tax system akin to the ACE corporation tax. Consequently, our analysis indicates that the issues regarding incentive concerns in the Finnish taxation of closely held companies, highlighted in previous studies, stem more from erroneous parameter values rather than flawed underlying principles.