Deductible Expenses Research Articles

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.

Analysis of interest expense deduction in transfer pricing dispute in Indonesia

This study provides a comprehensive examination of interest expense disputes within the context of transfer pricing in Indonesia. Multinational enterprises frequently employ transfer pricing mechanisms to reduce their tax obligations, often leading to legal challenges in tax courts. The research employs a qualitative methodology, focusing on a detailed analysis of several tax court verdicts related to interest expense disputes. The primary dataset comprises appellate verdicts available from the official tax court repository. The study identifies key factors influencing the outcomes of such disputes, including the strength of the evidence presented, the consistency between recorded contracts and actual economic conditions, coherence between transfer pricing documentation and real-world practices, the legitimacy and rationality of the loan arrangements, utilization of reliable comparability data, and substantive arguments concerning the applicability of the Debt-to-Equity Ratio (DER) for assessing interest expense reasonableness. Furthermore, the research underscores crucial considerations for taxpayers, such as the role of DER in determining expense reasonableness, the regulatory framework governing interest-free loans, methodologies for applying the arm’s length principle in interest expense transactions, and the importance of meticulous documentation in transfer pricing files (TP Documentation).

Fertility Intentions Among Reproductive-Age Women - Three Provinces, China, 2023.

Low fertility rates have become the most important risk affecting the balanced development of the population in China. About 80.0% of childless women had fertility intentions, 31.9% of women with one child and 11.3% of women with two children intended to have a second and third child, respectively. Women with one child who had an agricultural Hukou, were younger than 30 years old, were remarried, and had received a deduction or reimbursement for childbirth expenses during their first delivery were more willing to have a second child. Women with two children who had an agricultural Hukou and a upper-middle personal income, were self-employed, and had two daughters were more willing to have a third child. In China, women's willingness to have more children is not optimistic. To increase their desire for more children, creating a more favorable fertility environment for reproductive-age women and providing more preferential fertility policies for pregnant women will be necessary.

Whether or not the difference in exercise of employee stock options is included in deductible expenses: Focusing on the Supreme Court Decision 2023du45736 decided on October 12, 2023

Whether or not the difference in exercise of employee stock options is included in deductible expenses: Focusing on the Supreme Court Decision 2023du45736 decided on October 12, 2023

Occupation and demand for health services in Italy: Ways and means to reduce the opportunity costs imposed on patients

This paper explores whether and to which extent employment condition and working hours influence individuals’ decision process in consuming primary care. The hypothesis is that the higher the workers’ opportunity cost in terms of earning forgone, the less the demand for General Practitioner (GP) visits. Using survey data provided by the Italian National Institute of Statistics (ISTAT), we estimate a negative binomial regression model of GP visits as a function of employment related variables, controlling for a rich set of individual demographic characteristics, socio-economic variables, health status, supply and geographical factors. We show that self-employed workers, managers and cadres use significantly less primary care services notwithstanding the access is free. We conclude that they have higher opportunity costs than white and blue collars since they suffer more from the loss of earnings related to the absence from work. Self-employed individuals often face barriers to accessing healthcare services, such as lack of employer-sponsored health insurance and concerns about lost income during time off for medical appointments. As a result, they may delay seeking healthcare until their condition becomes more severe, leading to poorer health outcomes. Managers and cadres, on the other hand, may have greater access to healthcare services due to higher income levels and better job benefits. However, they may still face challenges such as long working hours and job-related stress, which can impact their ability to prioritize their health and seek timely medical care.From a policy perspective, our results suggest potential policy interventions aimed at addressing barriers to healthcare access for self-employed workers and promoting equitable healthcare utilization across different employment groups. Policy recommendations may include measures to enhance financial support (tax deductions for medical expenses, subsidies for health insurance premiums, or grants to cover the costs of healthcare-related absences from work), increase healthcare accessibility (enhancing the availability of mobile clinics, and extending operating hours for primary care facilities to accommodate the needs of working individuals) and raise awareness about preventive care among self-employed workers (workplace wellness programs, and incentives for regular health check-ups, screenings and healthy lifestyle choices, can encourage managers and self-employed workers to prioritize preventive measures). These policy implications are essential for ensuring equitable and universal access to healthcare services for all workers, regardless of their employment status.

International double taxation: Interpretation in the Indian context and general mitigation Measures

International Double Taxation poses a complex challenge with diverse interpretations, especially in the Indian context. This paper investigates the nuances of double taxation, focusing on legal principles, double taxation avoidance agreements (DTAAs), and their implications for residents and permanent establishments. It analyzes India's engagement in double taxation treaties, considering monistic and dualistic principles, legislative processes, and recent judicial developments. Case studies from French and Indian courts offer insights into treaty interpretation. The paper examines relief methods such as Exemption, Credit, Tax-sparing, and Expense Deduction, emphasizing their application within Indian tax treaties. Notably, Permanent Establishment (PE) significance in international taxation is explored through relevant case law. Conclusively, the paper underscores the importance of addressing international double taxation in the globalized era. It argues that while various relief methods exist, the Exemption method is most effective in mitigating double taxation, contrasting with the partial relief provided by the Credit method. The choice of relief method varies across nations based on financial considerations. This comprehensive exploration contributes to understanding international double taxation in the Indian context, highlighting legal interpretations, treaty dynamics, and mitigation measures. It advocates for harmonizing global approaches to achieve more effective and equitable solutions in international taxation.

Evaluasi Penerapan Perhitungan Pajak Penghasilan Pasal 21

This research aims to evaluate the application of income tax calculations article 21 at the Mardi Wiyata Malang Foundation. This type of research is a case study, the research population is 429 permanent employees of the Mardi Wiyata Malang Foundation. Sample selection using the purposive sampling method selected 19 employees as the research sample. Quantitative descriptive data analysis techniques. The problem in this research is that the calculation, payment and reporting of income tax article 21 of the Mardi Wiyata Malang Foundation is not efficient because it makes deductions for PPh Article 21 that are too large. The proof is that the in-kind allowances provided by the Foundation are included in taxable allowances and there is a deduction for office fees amounting to IDR 10,798,573.00 - which exceeds the maximum limit for deductions for office expenses of IDR 6,000,000 in accordance with the Law on Harmonization of Tax Regulations. The cause of this problem is that the treasurer of the Mardi Wiyata Foundation, especially in the tax sector, does not understand the calculation of PPh Article 21 based on the HPP Law. As a result, Foundation employees experienced losses due to excessively large tax deductions. The results of quantitative descriptive analysis using the calculation of Income Tax Article 21 according to the HPP Law are more efficient.

Analysis of Amendment to Article 17 of the Income Tax Act: The Impact of Changing Rental Expense Deductions from Itemized Deductions to Special Deductions

Analysis of Amendment to Article 17 of the Income Tax Act: The Impact of Changing Rental Expense Deductions from Itemized Deductions to Special Deductions

Tax policy competition under destination‐based taxation

AbstractWe extend Bond and Gresik (On the incentive compatibility of universal adoption of destination‐based cash flow taxation, International Tax and Public Finance, October 2022) by analyzing the equilibrium capital expense deduction policies that arise when countries compete for multinational investment under destination‐based taxation. Bond and Gresik proved that destination‐base cash flow taxation cannot arise as a tax competition equilibrium. We show that policies that allow for no deduction (income taxation) and those that allow a partial deduction can arise in equilibrium. In the former case, public good provision will be efficient. In the latter case, weak over‐provision of the public good will arise.

Improving the accounting of assets held under economic management

This Article reviews the main issues that arise while accounting for publicly owned assets under the economic management of public institutions, state- and municipal-owned enterprises, and of other similar entities. Such issues are related to the way of documenting, recognizing, valuating, and setting the useful life span of assets, as well as registering the assets received under economic management. In particular, this Article tackles some accounting aspects related to the subsequent costs incurred for the asset recovery at the expense of the entity's own resources, subsidies and funds received from the public authority that transferred the assets into economic management. In order to address the issues of accounting for favorable and unfavorable differences related to the operations of returning the aforementioned assets, there have been specified the categories of revenues and expenses to which they need to be reported. Likewise, some fiscal aspects of transactions with assets held under economic management have been investigated, including the specificities of VAT application, deduction of expenses and taxation of revenues recorded following the performance of the above-mentioned transactions. The basic research methods used: analysis and synthesis, induction and deduction, interpretation and comparison, review of normative acts which enabled us to substantiate some essential findings for the resolution of relevant research-related issues. The authors’ recommendations will lead to improving the accounting for the assets held under economic management, ensuring a higher degree of veracity and comparability of the information disclosed in financial statements.

The Medical Expense Deduction: Physicians, Medicine Men, and Spirituality

The Medical Expense Deduction: Physicians, Medicine Men, and Spirituality

The R&D Expense Deduction Policy and Enterprise Innovation: A Literature Review

The R&D Expense Deduction Policy and Enterprise Innovation: A Literature Review

Análisis comparativo de las reformas tributarias para el cálculo del impuesto a la renta de personas naturales bajo relación de dependencia

This investigation examines the evolution of Income Tax payments for individuals engaged in dependent employment in Ecuador over the years 2021, 2022, and 2023. Utilizing a descriptive and quantitative methodology, the study conducts a comprehensive review of the tax reforms enacted during this period, emphasizing the Organic Law of Simplification and Tax Progressivity, the Organic Law for Economic Development and Fiscal Sustainability post-COVID-19 pandemic, and the Family Economy Strengthening Law. The research centers on the impact of these reforms on the computation and payment of income tax, specifically addressing the elimination of personal expense deductions and the introduction of new rebates linked to the basic family basket and family dependents. The findings indicate a substantial increase in the tax liability for the year 2022 relative to 2021, attributed to the removal of deductions. Conversely, in 2023, the implementation of new rebates significantly mitigated the tax burden, particularly for taxpayers with family dependents. This analysis underscores the critical role of fiscal policies in ensuring the equity and efficiency of the tax system, providing a robust foundation for future reforms aimed at enhancing fiscal sustainability and taxpayer welfare.

The Effect Of Corporate Social Responsibility As A Deductible Expense On Tax Aggressiveness

The Effect Of Corporate Social Responsibility As A Deductible Expense On Tax Aggressiveness

Revisiting the Interaction of the Interest Expense Deduction and the Foreign Tax Credit

This Article demonstrates that the most appropriate proxy for allocating and apportioning U.S. interest expense is one that first identifies the incremental U.S. deduction benefit attributable to the inclusion of foreign income. Now that the positive section 163(j) limitation enhancement attributable to the inclusion of foreign income into the section 163(j) computation can be readily determined, the allocation and apportionment regime should allocate that amount of U.S. interest expense (and only that amount) because that methodology actually matches the amount of the allocation and apportionment of U.S. interest expense to the actual interest deduction benefit derived from the inclusion of foreign income. The Article sets forth the manner in which this reform proposal would harmonize the section 163(j) disallowance regime with the allocation and apportioinment regime of section 861 and also discusses the advantages that the Article’s reform proposal has over competing paradigms.

PENGARUH LEVERAGE, UKURAN PERUSAHAAN DAN FAKTOR LAINNYA TERHADAP PENGHINDARAN PAJAK

The purpose of this research was to determine the effect of leverage, company size and other factors on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange by obtaining empirical evidence. The factors used as independent variables in this research are leverage, company size, capital intensity, profitability, audit committee, and sales growth which can influence the occurrence of tax avoidance as the dependent variable by using the Effective Tax Rate (ETR) measurement. The population used in this research are all manufacturing companies listed on the Indonesia Stock Exchange during the 2019-2021 period. The sample selection was carried out using a purposive sampling method with predetermined criteria and resulted in 58 companies with 174 data that met the criteria and could be used as research samples. Data analysis in this research used multiple regression methods with several tests. From the tests and analysis carried out, this research shows that leverage has a positive effect on tax avoidance because greater leverage will increase interest expense as a deductible expense thereby reducing the level of tax expense and profitability has a negative effect on tax avoidance because the amount of profitability illustrates the amount of company profits that increase tax expense while other factors, namely company size, capital intensity, audit committee, and sales growth have no effect on tax avoidance. Keywords : Tax avoidance, leverage, capital intensity, profitability

OTT구독료 소득공제 도입 논의와 타당성 검토

Since the income deduction system for the expense amount of credit cards and cash receipts was first introduced at 「Restriction of Special Taxation Act」 in Korea, the benefits have also been expanded for traditional market use, public transportation use, and cultural expenditure. In particular, the cultural expense income deduction included the purchase of books and newspapers, ticket payment for performance halls and museums, and the purchase of movie tickets from July this year. In addition, the Ministry of Culture, Sports and Tourism ordered research services to incorporate OTT monthly subscriptions into credit card deductions as cultural expenses, and the National Assembly proposed a partial revision to the 「Restriction of Special Taxation Act」 in July this year. This is because tax cuts on OTT subscription fees can help not only promote people's cultural life but also secure the competitiveness of the OTT industry.
 Tax reductions should be able to take effective measures to achieve the policy objectives pursued by the government, along with a close review of the effects of each income class from the perspective of tax egalitarianism. However, the current credit card income deduction system aims to reveal the tax base of businesses rather than reduce the tax burden on the people, and there is a limit to continuously and stably operating the system due to the limitation of the sunset period under the 「Restriction of Special Taxation Act」.
 Therefore, tax cuts for OTT subscriptions should be legislated in consideration of the improvement of the system to maintain the current cultural expense deduction in preparation for the reduction or abolition of credit card income deductions in the future. In the long run, it is necessary to consider revising the 「Income Tax Act」 etc, not the 「Restriction of Special Taxation Act」, to introduce tax benefits for cultural expenditures as special tax credits or to designate them as VAT exemptions. On the other hand, tax cuts for companies should also be designed to benefit from the revitalization of the cultural content industry. However, in order to prevent tax avoidance of overseas companies, it is necessary to incorporate it into a system that can manage the sales of OTT subscriptions of the operator, such as the current cultural expense income deduction system used by the Ministry of Culture, Sports and Tourism.

Recent Decision of the Spanish Supreme Court on the Elimination of Double Taxation under the Spanish Corporate Income Tax Act

In this note, the author comments on the recent Supreme Court decision in Case 7910/2020 (14 November 2022), which addresses the elimination of double taxation under the Spanish Corporate Income Tax Law. Specifically, the case, which concerns the interpretation of the tax credit method for the elimination of double taxation, addresses (i) the determination of the deduction base and how expenses are computed in determining net income and (ii) the deductibility of foreign tax expenses from the tax base. The author analyses the application of the Supreme Court thesis to the exemption method, concluding that even though the decision clarifies the treatment of foreign taxes in the context of the rules for the elimination of double taxation, it is not clear whether this decision supports the deduction of foreign tax expenses in the context of the exemption method.

Cancer treatment-related financial toxicity in Japan: a scoping review.

Financial toxicity during cancer survival has been studied mainly in the United States; 47-49% of cancer survivors reported financial hardships and 12-63% reported debt owing to treatment costs. Financial toxicity is influenced by each country's economic status and healthcare system. We aimed to review the evidence on financial toxicity in Japan. A systematic search was performed using PubMed and Ichushi databases. We included English or Japanese peer-reviewed articles that (1) explored the experiences of cancer patients facing financial toxicity due to cancer diagnosis and treatment, (2) were specific to Japan, and (3) focused on the experiences of financial toxicities among cancer patients. Data were extracted focusing on the experiences of patients, families, and healthcare providers. The main themes were synthesized based on a previous study. The search yielded 632 citations from PubMed and 21 from Ichushi, and non-duplicates were identified. Of these, 31 articles were selected for full-text review. Literature was divided into studies describing the following elements: (a) risk factors for financial toxicity, (b) description of financial toxicity, (c) psychological reactions, (d) coping strategies for financial toxicity, and (e) impact on treatment outcomes. Only three studies reported comprehensive financial toxicity scores. Furthermore, treatment costs influenced physicians' treatment decisions, and patients and their families adopted various strategies to cope with treatment costs. Two studies showed that low current income and younger age were high-risk factors. As for utilization of the support system, approximately 70% of the patients used the high-cost medical expense system, 20% used the sickness benefit system, and 40% used the medical expense deduction system. Many cancer patients in Japan suffer from financial toxicity during cancer survival. One reason for this is that the awareness of the system supporting financial toxicity is insufficient and actual utilization is low. It is necessary to actively encourage patients to ask healthcare providers questions, improve the link between patients and the support system, reconstruct the support system design, and improve the method of publicizing the system.

“Retained Profit” or Making an Additional Contribution to the Company and the Possibility to Recognize Tax Deductible Expenses on Account of Notional Interest – Interpretation Difficulties under Article 15cb of the Corporate Income Tax Act

The subject of the study is CIT tax relief regulated by Article 15cb of the CIT Act (known as interest relief). This relief provides for additional tax deductible expenses, even though no expenses were incurred in the amount of multiplication result of additional capital contribution made to the company and/or profit contributed to the company’s reserve capital or supplementary capital and NBP’s reference rate applicable on the last working day of the year preceding the fiscal year increased by 1 percentage point. The author presents eleven interpretation doubts that arose during the four years of the relief being in force. Most of the doubts concerned individual tax decisions issued by the Director of the National Tax and Customs Information Office. The author subjects these interpretations to a critical assessment, presenting his own opinion, sometimes different from that of the tax authorities.