Differences In Tax Rates Research Articles

Evaluation of Water Saving and Economy Impact for Tax Reform Policy Using CGE Model with Integrated Multiple Types of Water

As one of the important policy measures to promote water conservation and efficient utilization, the evaluation of water resources tax reform policy regarding its water saving and economic impact (WSEI) is a fundamental prerequisite for policy implementation. In this study, multiple types of water production modules, including surface water, groundwater, and unconventional water, were integrated into a CGE model. Hebei Province, the first pilot area in China, was used as a case study. Through a “with–without” comparative analysis scenario, three water resources tax policy simulations were designed to address the three key issues, and the results showed that the implementation of water resources tax policy would have a certain negative impact on industry economic output in the short term, but it could effectively suppress the use of conventional water and promote the utilization of unconventional water, which is beneficial for long-term water resource conservation and sustainability. The imposition of higher differential tax rates on high water-consuming industries is more effective in further promoting the use of unconventional water and reducing the use of conventional water to achieve water conservation targets. Moreover, providing tax refunds as subsidies to water-using industries could alleviate the economic impact of water resources tax and promote water conservation. From the perspectives of water quantity, water use efficiency, and economic impact, the optimal policy scenario (S3) was selected, involving implementing differential water resources tax rates of 23% for high water-consuming industries and 18% for general water-consuming industries, coupled with tax refunds and subsidies for sectors. Based on this, corresponding recommendations in terms of differential tax rate setting, tax utilization, government regulation, and agricultural water resources tax collection were provided. These findings can offer a scientific reference for the formulation and implementation of water resources tax policies in other regions.

Incentive Mechanism of BIM Application in Prefabricated Buildings Based on Evolutionary Game Analysis

Prefabricated buildings have become a key area promoted in the new urbanization. Implementing BIM is one of the crucial supports for accelerating the development of prefabricated buildings. In order to effectively promote the development of BIM+ prefabricated buildings, this paper establishes an evolutionary game model between the government and prefabricated construction enterprises. The replication dynamic equation is employed to analyze the strategy choices of both participants, and the Matlab simulation is adopted to explore the evolution process of enterprises to actively use BIM. Results show that the application of new technologies can be effectively promoted by increasing the unit price of carbon trading, enlarging the tax rate difference, advancing technology, improving the level of enterprise effort, and enhancing social awareness to reduce the payment-to-income ratio of enterprises using BIM. Additionally, reasonable administrative measures, policy subsidies and fines will also positively affect government incentives and the strategy choice of enterprises using BIM. Therefore, a reasonable government incentive system can promote the development of BIM+ prefabricated buildings to a certain extent.

Податкове регулювання будівельного сектору житлової нерухомості

The purpose of the article is to study the theoretical aspects of tax regulation and its role in the system of state regulation of the construction sector of residential real estate. The article examines the theoretical foundations of tax regulation, defines its levers, and tools, and considers the general characteristics of the mechanism of their influence on economic processes. State regulation with the help of tax measures is a complex mechanism that combines various tax levers that affect obtaining positive financial and economic results of business entities, meeting the needs of society, and increasing investment motivation. The use of taxation in the system of state regulation takes place based on relationships between subjects that operate in the market and as a result push for changes. Quite a variety of factors that create conditions for the application of tax regulators.
 The thesis is proved that the tax regulation of the development of the construction sector of residential real estate in Ukraine should be implemented through the provision of tax payment preferences. Tax benefits are the main form of tax incentives. The main types of tax benefits are considered and summarized, namely full or partial exemption from paying taxes; tax discounts by destinations, objects, and payers; differentiation of tax rates; postponement of payment or cancellation of debt; tax investment credit.
 It is noted that the promotion of the development of economic processes should be correlated with tax regulators, who will be able to act as a driving force for the activation of the construction industry while emphasizing the role of taxation in the reproductive process and in the creation of a public product. The importance of state tax regulation for the effective development of the construction sector of residential real estate in Ukraine is determined by the fact that the management of tax processes is carried out at different levels, because of which there is a need to regulate the system of connections and relations in all links and at all levels. Based on the results of the study, it is proposed to use tax incentives of an innovative and investment nature as a tax instrument of state support.

Loss expectation and income shifting

This study examines the effects of expected losses on the income-shifting strategies of multinational corporations (MNCs). Using a set of worldwide MNC affiliates, this study first finds empirical evidence for ex ante adjustments of income-shifting strategies according to reverse incentives for potential losses. The results also support the existence of limited flexibility introduced by Hopland et al. (2018, 2021). Second, the estimates of income shifting measured using expected tax rate differences reveal that the traditional methodology of using statutory tax rate differences is subject to an estimation bias. This estimation bias varies depending on the loss expectation status and tax-rate levels of the affiliates.

Personal income tax: development prospects

The article is devoted to personal income tax. During the analysis of scientific publications, the practice of income taxation in foreign countries, the approaches to the establishment of differentiated tax rates depending on the income received are revealed. The author's vision on the application of tax incentives for individuals is presented, and measures to improve the taxation of personal income are proposed.

Immigrant inventors and local income taxes: Evidence from Swiss municipalities

This paper studies the relationship between local personal income tax rates and the attractiveness of municipalities as residential locations for immigrant inventors in Switzerland. Exploiting sharp differences in top income tax rates across state borders, I find an elasticity of the probability that an inventor takes residence in a border municipality with respect to the top net-of-tax rate of around 3.2. Additional evidence suggests that inventors’ residential location choices are consequential for the localization of entrepreneurial activity and local knowledge spillovers.

Onshore and offshore profit shifting and tax revenue losses in the European Union

The lack of coordination of tax policies across the European Union allows multinational enterprises to engage in profit shifting to avoid their fair share of tax payments. This paper estimates the amount of profit shifting and potential corporate tax revenue losses in EU countries. Company-level data was exploited to determine the impact of offshore and onshore tax rate differentials on profits before taxation reported by foreign-owned companies based in the EU. It is demonstrated that the locations where multinational enterprises decide to relocate their income are directly influenced by tax differential size and indirectly affected by the adoption of anti-tax avoidance rules in the host country. The results show that offshore profit shifting is considerably higher than profit shifting within the EU. These findings provide up-to-date insights and guidance for policy-makers at the EU level regarding the appropriate policy measures required to mitigate profit shifting and tax revenue losses. • Heterogeneous tax policies across the EU incentivize tax avoidance by MNEs. • Tax rate differentials are the main triggers of profit shifting. • The adoption of anti-tax avoidance rules tends to reduce profit shifting behaviour. • Offshore profit shifting is considerably higher than profit shifting within the EU. • Low-tax-rate EU countries attract most of the profit shifting within the EU.

The impact of the COVID-19 pandemic on corporate tax avoidance: evidence from S&P 500 firms

PurposeThis study aims to examine the impact of the COVID-19 pandemic on corporate tax avoidance (TA).Design/methodology/approachThis study used a panel data set of US publicly traded firms listed in the Standard & Poor 500 index. Based on available information in the DATASTREAM database covering the 2019–2021 period, three proxies for TA are used, namely the current effective tax rate (CUETR), the cash effective tax rate and book-tax differences (BTD). Multiple regression models including industry and year fixed effects are estimated. Additional analyses are performed using BTD components i.e. temporary and permanent BTD, and testing the impact of the COVID-19 pandemic across industries.FindingsThe results show that the outbreak of the novel coronavirus (COVID-19) affected positively the CUETRs and negatively BTD, indicating a reduction in TA, in the postpandemic period. Further analyses provide evidence that this effect is the same, regardless of the degree of industry failure probability, but it is more driven by the reduction of deferred tax expenses (temporary BTD component). These findings suggest that the US publicly listed firms have experienced a serious drop in their income in the postpandemic period, following the markets closure and the quarantine periods that hampered business. Therefore, with lower profits, they are not willing to evade taxes.Social implicationsThis paper enriches taxation research during economic crises. The research findings have important policy implications. On the one hand, the fiscal policy should stimulate growth to allow firms to tackle the challenges they confronted post-COVID-19. On the other hand, the global economic crisis caused by the pandemic has led to a major deterioration in public finances and has raised inequalities across households. Therefore, it would be necessary to review public fiscal policies to achieve a balance of equity, growth and sustainability. In this context, tax reform focusing on tax progressivity could counter in part the negative economic effects of the COVID-19 pandemic and led to economy recovery.Originality/valueThis study contributes to the growing body of literature on the COVID-19 effects with a special focus on corporate practices. This study provides first evidence on the effect of the COVID-19 pandemic on manager’s behavior from taxation perspective. This study also enriches taxation research during economic crises.

КОСВЕННЫЕ НАЛОГИ КАК ОБЪЕКТ РЕГУЛИРОВАНИЯ В ЕАЭС

The article discusses the issues of tax regulation of VAT and excises in the countries – members of the EAEU, the solution of which within the framework of harmonization is hampered by differences in tax rates and other points.

Parcelamento tributário como determinante da agressividade fiscal em empresas brasileiras abertas

ABSTRACT The aim of this article was to study the impact of tax installment plans on the tax aggressiveness of Brazilian listed companies. Despite the relevance and timeliness of the topic, there are no studies that examine the use of special tax installment plans as a determinant of the tax aggressiveness of Brazilian listed companies. Tax installment plans have been used repeatedly by Brazilian companies and the number of adherents has grown significantly over time, where this resource can be understood by companies from the perspectives of tax regularization and tax savings. The research contributes to the scientific knowledge on the subject by providing evidence on the determinants of tax aggressiveness, and it is believed that the government can use the results to improve the offer of tax installment plans and the understanding of tax legislation, such as through the development of restrictions on access to installment plans, by allocating them to companies in real financial difficulties, as well as through improvements in its inspection process, considering that companies that pay taxes in installments are more tax aggressive. The data were obtained from explanatory notes, through the Ministry of the Economy’s access to information service, and from the Economatica® database. The Special Tax Regularization Program (PERT) 2017 was used as a reference for tax installment plans, and tax aggressiveness was measured using the effective tax rate (ETR), ETR Cash, and book tax difference (BTD). The period analyzed is from 2017 to 2020, and the statistical method applied was multiple linear regression for panel data with random effects. The results show that companies that choose to pay their taxes in installments tend to take a more aggressive tax position. The evidence contributes to extending the theory of the determinants of tax aggressiveness and can help the government in its inspections and in improving tax installment offers and tax benefits.

ACCOUNTING CONSERVATISM AND CORPORATE TAX AVOIDANCE

This study investigates the effect of accounting conservatism on the corporate tax avoidance of listed non-financial firms in Nigeria. This study computes corporate tax avoidance based on the cash effective tax rate (CETR), GAAP effective tax rate (GETR) and book tax difference (BTD). Accounting conservatism was measured using negative accruals. The study employed an ex-post factor research design utilizing unbalanced panel data. The study covered 48 listed non-financial firms during the period between 2014 and 2020. Three regression models were developed and utilized in the study. The study has revealed that accounting conservatism has a negative and significant effect on both the GETR and BTD. It is recommended that the Financial Reporting Council of Nigeria should encourage promulgation of standards which improve conservatism in financial reporting, as it has been empirically proven to reduce tax avoidance practices by non-financial firms in Nigeria.

Екологічне оподаткування в європейському союзі та Україні: тенденції й перспективи

One of the key challenges for society is to ensure its sustainable development. Today humanity is at a turning point that requires a change in the vector of its existence by balancing economic, environmental, and social components. Environmental taxes are beginning to act not only as a source of income, but also as a lever of influence and a stimulating factor in changing the behavior of economic agents. The purpose of the study is to analyze the system of environmental taxation in Ukraine and the European Union and to identify areas for improving Ukraine's environmental policy. The following methods were used while writing the article: logical generalization, structural and functional analysis and comparison. The efficiency of environmental taxation is assessed through the prism of the fiscal function of taxes. The dynamics of environmental tax revenues in the EU countries and Ukraine during 2012-2021 is analyzed. The structure of environmental tax is studied. It is established that the environmental tax in Ukraine is aimed at controlling the level of pollution, while the EU countries focus on taxation of energy. The revenues from this tax and its share in the GDP structure of Ukraine are much lower than in Europe, which indicates the inefficiency of its fiscal function. The article considers the constraints to the development of environmental taxation in Ukraine. The incentives for sustainable development of the EU countries aimed at environmental protection are presented. Based on the experience of the European Union, the author proposes measures to improve environmental taxation in Ukraine which include: increasing the environmental tax while reducing the tax burden on wages; development of differentiated tax rates according to the amount of emissions and the region of pollution; creation of a special environmental fund for the accumulation and targeted and efficient distribution of revenues; introduction of a tax on the use and import of fertilizers and pesticides; introduction of accelerated depreciation and preferential credit. Keywords: sustainable development, ecologization, fiscal policy, environmental taxes.

Tax differences and international location strategies

This paper examines the influence of tax rate differences and international transfer pricing regulations on the profit-maximizing location strategies of a multinational firm (MNF). We show how a MNF that sells its products in multiple markets and manufactures multiple inputs used for its own production can optimize its tax strategy by jointly selecting the location of input production and the transfer pricing method. We find that a production technology with multiple complementary inputs results in a close connection between national and international transfer prices. Selecting different location choices enables the MNF to base international transfer prices on different arm’s length standards. The optimal location strategy and transfer pricing approach balances the gains from profit-shifting to the low-tax country with the losses that occur due to distorted quantity choices. The MNF’s trade-off between the gains or losses can be moderated by adjusting domestic transfer prices for transactions between the divisions in the high-tax country.

PENGARUH TUNNELING INCENTIVE, MEKANISME BONUS, BEBAN PAJAK DAN LAVERAGE TERHADAP KEPUTUSAN PERUSAHAAN MELAKUKAN TRANSFER PRICING

The development of the business world is currently a trigger for the growth of multinational companies whose operational scope is not only centered on one country, but in several countries. One of the problems faced by multinational companies is the difference in tax rates between countries. The development of the business world is currently a trigger for the growth of multinational companies whose operational scope is not only centered on one country, but in several countries. One of the problems faced by multinational companies is the difference in tax rates between countries.
 The population of this study includes all manufacturing companies of the food and beverage sub-sector listed on the Indonesia Stock Exchange (IDX) for the 2016-2020 period. The sampling technique uses the Purposive Sampling technique. Based on the criteria that have been established and obtained by 8 companies. The type of data used is secondary data obtained from the Indonesia Stock Exchange website. The analysis method used is panel data regression analysis.
 The results showed that tunneling incentives have no effect, bonus mechanisms have a positive effect, tax burdens do not affect the company's decision to transfer pricing and tunneling incentives,Bonus mechanisms and tax burdens simultaneously have a significant effect on the company's decision to make transfer pricing. Meanwhile, the partial bonus mechanism has a significant effect on the company's decision to transfer pricing.
 

Tax rate motivated profit shifting and base erosion by multinational corporations: Indian evidence

PurposeProfit shifting is a matter of great concern for governments internationally. It leads to the loss of tax revenues and puts multinational corporations (MNCs) in a disparate position. Lately, due to the aggressive stance of the Indian taxman, several Indian MNCs are planning to minimise their tax outflows. This paper aims to study profit-shifting drawing from the institutional theory for the Indian MNCs.Design/methodology/approachThe sample comprises 679 MNCs listed on the Bombay Stock Exchange or the National Stock Exchange with either Indian parents with foreign subsidiaries (553) or Indian subsidiaries of a foreign parent (126) for FY 2013–14 to FY 2018–19. A fixed-effect panel regression technique was invoked to examine tax rate differential motivated profit-shifting undertaken by MNCs with the moderating effect of international presence and patents.FindingsThe results suggest that MNCs shift their profits to take advantage of differences in global tax rates when they have an international presence in at least five tax countries. Further, profit shifting is likely towards no-tax compared to low-tax countries, with the presence of patents in an MNC group having no significant impact.Originality/valueLosses to the government revenue due to profit shifting by MNCs are rather severe in emerging economies. The study provides the first empirical evidence of the direction of profit shifting with the moderating effect of the extent of global presence and group patents, which would interest scholars in the field. The findings provide valuable insights to the policymakers, highlighting the urgent need to operationalise the general anti-avoidance taxation rules.

Controlling of Profit Distribution in Dividend Policy Shaping

The Russian stock exchange resumes its functions after a temporary break due to the special operation in Ukraine. A lot of companies tend to modify their finance behavior, for instance, methods of finance control are rather topical today, as both cash flow lines and approaches to dividend policy shaping are changing. The goal of the research is to identify dependence between dividend policy, key parameters of company work and investment behavior of the population. Today extra drivers of economic growth and tools of market stabilization are necessary. According to the theory of company value corporations would increase their capitalization and thus raise shareholders’ profits, while now shareholders are interested in developing a dividend portfolio, whose profits are comparable with deposits and investing into bonds. Finance behavior of market entities has altered, as des-intermediation is going down, further differentiation of tax rates took place, tax burden on investors (both legal entities and individuals) was optimized and investors were differentiated by finance groups with provision of adequate dividends for each group. The author points out that due to serious changes on finance market we need controlling of profit distribution and corporate dividend flows, as well as timely revealing of deviations in cash flows.

Corporate Social Responsibility (CSR) Disclosure and Tax Planning: A Study on Malaysian Listed Companies

CSR Disclosure is widely practiced for effective decision making and top management of tax planning in a business. The main objective of this research is to determine the CSR disclosure influence on tax planning in Malaysia listed companies as well as examine the relationship between tax planning and other factors influencing such as profitability, company size, leverage, effective tax rate (ETR) and book tax differences (BTDs). A sample of 557 companies from Malaysia’s listed companies for the period of 2014 to 2016 was collected and analysed. After controlling such as profitability, company size and leverage the regression results display tax planning has positive relationship respectively in BTDs. The first impact of polices makers is companies may use CSR activities to avoid negative impact irresponsibility engaging tax planning. Second, tax incentives given to public companies reduce Malaysia’s government burden to support the public and promote companies’ growth.

Корпоративное управление как механизм обеспечения устойчивого роста и финансового контроля

Many companies are changing their financial behavior and corporate governance model in order to achieve a sufficient level of competitiveness. Corporate governance is a process of overcoming the problems of a company’s growth and identifying sources of funding, one of which is emission. At present, the problem of the relationship between corporate governance and other aspects of management, for example, with competitiveness and the search for investments, is poorly consecrated. A change in the format of financing inevitably affects the nature of corporate governance - one or another version of insider corporate governance arises. The purpose of the article is to assess the impact of the corporate governance model on the company’s growth indicators and its competitiveness. Currently, additional drivers of economic growth and tools for strengthening competitiveness are needed. If earlier, companies tried to increase the capitalization of companies, increase the efficiency of the use of resources and production, and thus increase the income of shareholders, now shareholders are interested in creating a competitive stable company with stable growth prospects. The problems of optimizing the structure of equity capital, its dependence on the stage of the life cycle, capitalization, break-even point, the number of shareholders and the status of the company are constantly being discussed. The financial behavior of market entities has changed, the volumes of disintermediation have been reduced, further differentiation of tax rates has occurred, which leads to the need for: formation of a mechanism for sustainable growth and strengthening the competitiveness of the company; creation of stable profit distribution schemes and optimization of the tax burden on investors, both for companies and individuals; differentiation of investors; ensuring adequate dividend payments.

The interplay of corporate tax planning and corporate governance on firm value: Evidence from listed NGX consumer goods firms

The study investigates the interactive impact of tax planning and CG on firm value of the listed Nigerian consumer goods firms by examining whether this relationship is further strengthened or weakened in the presence of strong corporate governance. From the population of the entire 21 consumer goods firms of the Nigerian Exchange (NGX), 19 firms with complete data were selected as a sample. Data were collected from the annual reports of these firms and both descriptive and inferential analyses were employed to estimate the relationship between the variables. Tax planning was measured using the effective tax rate and book-tax difference, firm value using Tobin’s q, while corporate governance was measured using board independence. The fixed effect panel regression was used to estimate the relationship. The study revealed a positive relationship between tax planning (for both proxies) and firm value although the relationship is statistically insignificant (p = 0.0981 and 0.387). Also, there is limited evidence to support the assertion that the interactive effect of tax planning and firm value is significantly moderated by corporate governance (p = 0.818). The combined implication is that evidence on the moderating effect of corporate governance on tax planning and firm value is limited and should be interpreted with caution suggesting that more empirical research should be carried out in this area. In addition, shareholders should demand more disclosure of tax-related matters as this will help prevent information asymmetry, improve monitoring, and increase the value effectiveness of tax planning.

Can Shari’ah supervisory board and Islamic bank characteristics reduce tax avoidance? Evidence in Indonesia and Malaysia

PurposeThis study aims to shed light on Shari’ah supervisory boards (SSBs) and the possibilities of Islamic banks to reduce the tax avoidance. Performance and Shari’ah compliance have been extensively studied; however, tax avoidance remains a challenge.Design/methodology/approachSSB characteristics, based on resource dependence theory, influence tax avoidance, including SSB size, educational level, expertise, reputation, remuneration and turnover. The samples were obtained from Islamic banks in Indonesia and Malaysia (2010–2020) using the data panel method.FindingsIslamic banks avoid taxes through the effective tax rate and book tax difference. SSBs who have more expertise play a role in investigating the complexity of tax avoidance, and SSB reputation, who is a member of the Islamic bank regulator, understands immorality, resulting in reduced tax avoidance. Moreover, the recruitment system has been effective, as SSBs with more expertise have become more prevalent. Meanwhile, SSB from a Shari’ah background works only in regulated areas, simplifying Shari’ah compliance, in particular, attestation of financial reporting. A heavy workload is created by cross-membership, resulting in the neglect of the immoral value of tax avoidance. The calculation of tax avoidance also includes remuneration and bank assets.Practical implicationsGiven the uniqueness of Islamic banks contributing to social welfare, tax regulators need to review the appropriateness of fees that can be treated as taxes. Tax regulators can join hands with Islamic bank regulators on this review.Originality/valueTo the best of the authors’ knowledge, this study is one of the first to examine the characteristics of SSBs and Islamic banks on tax avoidance. Separating Islamic banks by country enriches the analysis.