Differences In Tax Rates Research Articles

Chief Executive Officer and Tax Avoidance: A Systematic Literature Review

This study aims to examine the development of chief executive officer (CEO) and tax avoidance. The researchers employed a structured literature review method, utilizing reputable electronic databases to gather data from 2018 to 2024, resulting in the selection of 16 studies based on inclusion and exclusion criteria. The findings of this study comprehensively present the developments, types of variables and measurements. There are several types of CEO variables, including CEO overconfidence, CEO narcissism, CEO power, CEO greed, contractual and behavioral CEO attributes, founder or descendant CEOs, masculine-faced CEOs, CEO publicity, CEO stock options, CEO duality, and CEO hometown ties. These variables serve as independent variables for the dependent variable of tax avoidance, measured by the Effective Tax Rate and Book-Tax Difference. This research contributes to the academic discourse and practical applications in the fields of CEO and tax avoidance, offering valuable insights for future studies in this area.

A new stage of personal income taxation in Russia

Subject. The article deals the latest changes in the Russian legislation regarding the taxation of personal income that is planned to be legally effective as of January 1, 2025. Objectives. The article aims to examine historical, theoretical, and practical foundations of personal income taxation to determine the feasibility of introducing a progressive scale. Methods. The study draws on methods of comparison, observation, and scientific abstraction. Results. We established that the indicators of budget revenues from the payment of personal income tax tended to increase both at progressive and flat tax rate. The performance of the payment under study is influenced by such factors as employment, income received by an individual, manufacturing sector expansion, and creation of new jobs. The findings can be applied in the work of executive authorities, budgetary, and other organizations, including the educational process of academic institutions. Conclusions. The transition to progressive scale of taxation can lead to undesirable consequences, since there is a high risk of hiding citizens' incomes. The order of differentiation of tax rates requires economic thinking. A system should be created to eliminate social inequality by taking into account the income level of individuals.

Transfer Pricing and Growth Navigation Sales in a Dynamic Tax Environment in Indonesia

This study focuses on the relationship between transfer pricing and sales growth in a dynamic tax environment in Indonesia. Transfer pricing is an important issue for multinational companies in determining transaction prices between affiliated companies in various countries, including Indonesia, which has complex tax regulations. Transfer pricing practices are often used to optimize a company's tax burden by taking advantage of differences in tax rates between countries. However, the implementation of this strategy is not free from strict supervision by the Indonesian tax authorities, who continue to update policies and regulations to prevent tax avoidance. Along with the growth of the company's economy and sales, the challenges in navigating transfer pricing are increasing. Companies are faced with the need to maintain compliance with tax regulations while still focusing on sustainable sales growth. The dynamic tax environment in Indonesia requires companies to continue to adapt to changes in policies, which can affect their transfer pricing structure. Therefore, understanding the impact of ever-changing tax policies on transfer pricing strategies is an important key for companies that want to grow sustainably and avoid the risk of tax disputes with the authorities.

Do markets react to dividend announcements and sharia compliance? Evidence from organisation of Islamic cooperation countries

Purpose This study aims to investigate the market reaction to dividend announcements and sharia compliance based on the Islamic stock indexes of Indonesia, Malaysia and Pakistan by scrutinising investors’ interpretations, behaviour (traditional, rational, religious or ethical) and preferences. Design/methodology/approach Event study methodology (ESM) was used to analyse 31 days around the event date. The research period spanned 2011–2018, during which 282 observed dividend announcements were tested using a t-test, and there were 4,960 cases of sharia compliance in the data panel. Findings Indonesian investors react to earnings surprises as bad news while bypassing dividend announcements, thus classifying their behaviour as rational. Meanwhile, investors in Malaysia and Pakistan respond to dividend announcements as bad news while bypassing earnings surprises, thus classifying their behaviour as traditional. Surprisingly, sharia compliance does not affect abnormal returns. These results imply that investors prefer a profit motive rather than sharia compliance. Practical implications To perpetrate positive reactions, companies need to increase earnings (Indonesia), nominal dividends (Malaysia) and delay dividend announcements (Pakistan). Also, tax regulators need to evaluate dividend tax and capital gains tax. Social implications Investors cannot solely rely on Islamic stock lists, while regulators and firms must be transparent and accountable regarding sharia compliance ratio. Originality/value There is a dearth of research on market reaction in Islamic stock indexes. This study adheres to critical assumptions of ESM: controlling the confounding effects and ensuring market efficiency. These assumptions lead to the proposal of mandatory and advisory sharia compliance, evaluation of ratios using a staple scale and examination of differences in dividend tax rates. An extended tax preference theory is also proposed to contribute to the body of knowledge.

Can revenue collection for public funding in health care be progressive? An assessment of 29 Countries

Most research on health care equity focuses on accessing services, with less attention given to how revenue is collected to pay for a country's health care bill. This article examines the progressivity of revenue collection among publicly funded sources: income taxes, social insurance (often in the form of payroll) taxes, and consumption taxes (e.g., value-added taxes). We develop methodology to derive a qualitative index that rates each of 29 high-income countries as to its progressivity or regressivity for each of the three sources of revenue. A variety of data sources are employed, some from secondary data sources and other from country representatives of the Health Systems and Policy Monitor of the European Observatory on Health Systems and Policies. We found that countries with more progressive income tax systems used more income-based tax brackets and had larger differences in marginal tax rates between the brackets. The more progressive social insurance revenue collection systems did not have an upper income cap and exempted poorer persons or reduced their contributions. The only pattern regarding consumption taxes was that countries that exhibited the fewest overall income inequalities tended to have least regressive consumption tax policies. The article also provides several examples from the sample of countries on ways to make public revenue financing of health care more progressive.

Designing China's environmental tax schemes from the perspective of differential tax rates

The Environmental Protection Tax Law of the People's Republic of China was promulgated in 2018. However, it is uncertain whether the tax rates defined under the law are reasonable. Environmental tax reform would help the government improve the law's emission reduction effect. This paper aims to design tax schemes from the perspective of differential tax rates and propose environmental tax reform strategies. To support this goal, we adopted a directional distance function, meta-frontier analysis, and an exponential attenuation model to construct a differential tax rate model. Next, starting with the current differential provincial tax rates (scheme B), we proposed three-level differential tax rates, in which the adjusted provincial tax rates (scheme P), differential sector tax rates (scheme S), and differential province–sector tax rates (scheme P–S). Then, we analyzed three new tax schemes and proposed two step-by-step reform strategies. We selected SO2, NOx, and CO2 for empirical analysis. We found that in the short term, the government should prioritize scheme P and set more effective tax rates for SO2 and NOx. In the long term, the government should implement scheme P–S to consider both regional heterogeneity and industrial heterogeneity within a province. Specific measures should set a high tax rate for the light industry category and a low tax rate for energy production and heavy industry category. In addition, we propose that China should include a carbon tax in the scope of its environmental taxes. Our research provides valuable guidance for China's future environmental tax reform.

PENGARUH TAX AVOIDANCE TERHADAP NILAI PERUSAHAAN PADA PERUSAHAAN CONSUMER NON CYCLICALS SUB-SEKTOR FOOD AND BEVERAGE YANG TERDAFTAR DI BURSA EFEK INDONESIA (2019 – 2021)

This study aims to examine and analyze the effect of tax avoidance as measured by the Effective Tax Rate (ETR) and Book Tax Difference (BDT) on firm value as measured by Price Book Value (PBV). food and beverage sector listed on the Indonesia Stock Exchange (2019-2021). The sample used in this study was taken using purposive sampling method. The sample in this study is 21 companies that have been selected from a population of 62 companies in the consumer non-cyclicals sector of the food and beverage sub-sector listed on the Indonesia Stock Exchange (2019-2021). This study uses data analysis techniques, namely descriptive statistical test, multiple linear regression analysis, classical assumption test and hypothesis testing using SPSS. The results of this study indicate that tax avoidance as measured by the Effective Tax Rate and Effective Tax Rate has no effect on firm value. Based on the results of the coefficient of determination obtained, it shows that there are other variables outside of this study that can affect firm value. Keywords: Book Tax Difference, Effective Tax Rate, Firm Value, Price Book Value , Tax Avoidance

Research on the path of green technology innovation driven by the Environmental Protection Tax Law: Based on data of heavy polluting enterprises.

Environmental Protection Tax Law (EPTL) is a compulsory environmental regulation measure adopted by China to deal with environmental problems. However, with the advancement of implementation, the EPTL produces a dissimilation effect and damages the realization of the Porter hypothesis effect. The study examines the dissimilation effect of green technology innovation regulated by the EPTL using sample data from heavy pollution firms in China. According to the empirical test results: (1) the coordination between levies and administrations, differential tax rate setting, tax information sharing, definition of the scope of levy and administration, tax declaration counseling, and tax rate level verification produce the dissimilation effect; (2) the Porter hypothesis effect of the EPTL is the most significant in medium-sized enterprises and foreign-funded enterprises. By constructing the research model group of dissimilation effect, this study analyzes the application of environmental regulation in China's social and economic background, thus providing a reference for developing of the green economy.

Impact of tax policy on the development of agrarian enterprises and organisations

The purpose of this study was to analyse the role of tax policy in the agricultural sector to determine its impact on innovative development, investment decisions, and competitiveness of enterprises in this area. The study performed a comparative analysis of various aspects of tax regulation, review of taxation instruments, consideration of special tax regimes in such countries as the USA, Germany, France, Spain, Poland, and Kyrgyzstan. The study investigated various aspects of tax regulation that have direct and indirect impact on the functioning of the agricultural sector. The role of tax policy in stimulating investment and development in agriculture by providing tax incentives and subsidies for investment in innovative technologies, process mechanisation, and research was examined. Special tax regimes aimed at supporting agricultural enterprises were analysed, and examples of tax policies in different countries, including the USA, the European Union, China, India, and Kyrgyzstan, were provided. The state of agricultural development in Kyrgyzstan was reviewed, and the main challenges, government support measures, and the main land tax rates across the country were identified. The key point was to develop recommendations for improving the tax system to stimulate agricultural development derived from the synthesis method. This involves the introduction of tax exemptions and investment incentives, differentiation of tax rates depending on segments and regions of agriculture, stakeholder consultations, simplification of tax administration, and attraction of foreign investment through special tax regimes. Concrete examples were also given of large agricultural enterprises in different countries where improved tax policies can contribute to the development and efficiency of their operations

Ownership Structure and Tax Aggressiveness: Empirical Evidence from Indonesia

This research paper examined how tax aggressiveness is influenced by ownership structure (managerial ownership, foreign ownership, and family ownership). The study used a population of 53 companies that engage in manufacturing sector and have been listed on the Indonesian Stock Exchange (BEI) from 2020 to 2022. In this study, tax aggressiveness was measured by effective tax rate and book-tax difference models. It also examined the relationship between foreign ownership, family ownership, and managerial ownership with tax aggressiveness using a regression model analysis with the aid of STATA. It was found that a significant relationship exists between managerial ownership and effective tax rate, similar to family ownership and book-tax difference. This implies that manufacturing companies in Indonesia that were dominated by family ownership and managerial ownership could reduce tax aggressiveness. In addition, this research also found that large companies in Indonesia tend to do more tax aggressiveness than small companies. Keywords: tax aggressiveness, management ownership, foreign ownership, family ownership, Indonesia.

Dampak Pemberlakuan Insentif Dan Relaksasi Pajak Pandemi Covid-19 Terhadap Kinerja Keuangan Perusahaan Sektor Energi

The aim of this research was to determine the impact of the implementation of incentives and tax relaxation for the Covid-19 pandemic on financial performance as measured by profitability, output, implications of incentives and tax relaxation, debt capacity, capital stock and employee costs in energy companies listed on the Indonesia Stock Exchange from 2017 to 2022. The population in this research is 66 companies in the energy sector listed on the Indonesia Stock Exchange from 2017 to 2022. The sampling technique used in the research was purposive sampling. The data analysis method used is Paired Sample T-test and Wilcoxon Signed-rank Tesst. The results of the research show that profitability, output and capital stock are different before and after determining incentives and tax relaxation. Meanwhile, there is no difference in tax rates and debt capacity before and after the establishment of incentives and tax relaxation for the Covid-19 pandemic.

Analysing the Effectiveness of Hotel, Restaurant, and Advertising Taxes Revenue in Enhancing the Regional Original Revenue of DKI Jakarta Province

This study analysis the effectiveness of Hotel Tax, Restaurant Tax, and Advertising Tax in enhancing the Regional Original Revenue (PAD) of DKI Jakarta Province. The study examines local tax revenues from the fiscal years 2020 to 2022, focusing on the constant growth of Restaurant and Advertising Taxes. It looks at how the regional government of DKI Jakarta has explored the potential of these local taxes through policies and regulations, resulting in a significant increase in local tax revenue. The study underlines that the annual increase in local tax revenue from Restaurant Tax, Hotel Tax, and Advertising Tax should not be the sole measure of success in harnessing their potential. The effectiveness of these local taxes serves as a gauge of how far the achievement target will be reached, with higher percentages indicating higher effectiveness. This study found that Hotel Tax, Restaurant Tax, and Advertising Tax have been highly effective in meeting the revenue targets set by the regional government, with effectiveness rates ranging from 99.1% to 108.7%. However, the contribution of these local taxes to the regional original revenue is categorized as very low, indicating variations in contribution amounts based on differences in tax rates. Despite the low contribution, the effectiveness of tax revenue in meeting targets remains high. To increase the regional original revenue, the focus should be on expanding the scope of local tax objects rather than setting excessively high targets, as optimizing the potential of local taxes is crucial for enhancing the regional original revenue of DKI Jakarta Province.

Assessing Profit Shifting Using Country-by-Country Reports: A Nonlinear Response to Tax Rate Differentials

Assessing Profit Shifting Using Country-by-Country Reports: A Nonlinear Response to Tax Rate Differentials

A Transaction Cost Model of Tax-Motivated Income Shifting into Dot-Sized Tax Havens and an Empirical Examination of E-Commerce Effects

ABSTRACT Our paper develops a new transaction cost model of tax-motivated income shifting. We analytically show that income shifted by U.S. multinational parent corporations into their tax haven subsidiaries differs from predictions based only on tax rate differences because of the transaction costs of shifting income into tax haven subsidiaries. Our model predicts that e-commerce facilitates greater income shifting by lowering the transaction costs of income-shifting operations, which theoretically supports our focus on actual income shifting instead of the traditional focus on effective tax rates alone. Empirically, we find that greater numbers of multinational corporations’ dot-sized tax havens significantly increase profits shifted out of their U.S. parent corporations and also show with a separate estimation that this amount is similar to amounts shifted into their tax haven subsidiaries, consistent with income shifting being a zero-sum strategy. This novel approach documents income shifting materially increasing with e-commerce activities that lower transaction costs. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: H26; L81; F38; M48.

Do Tax Rates Encourage Profit Shifts By Multinational Companies In Indonesia?

Due to the COVID-19 pandemic, many companies have experienced a decline in financial performance which has the potential to cause financial difficulties. While the government has provided stimulus to help, there are concerns about increasing tax avoidance efforts and profit-shifting practices with businesses transitioning to digital models. However, there is a view that companies may prefer ethical behavior to safeguard their reputation in the midst of a crisis. This study analyses profit-shifting behaviour by multinational companies in Indonesia before and during the COVID-19 pandemic, focusing primarily on the effect of differences in Indonesia's income tax rates on average rates in countries where the group of companies operates. Descriptive analysis is used in this study to provide an overview and general information about the data obtained in the field which is a research variable and will be used as analysis material to answer research questions. The research sample involved 163 companies listed on the Indonesia Stock Exchange and met certain criteria, such as the calculation of corporate income tax according to the Income Tax Law and the exclusion of certain sectors. Data was analyzed for the period 2017-2022, covering the period before and during the COVID-19 pandemic, as well as changes in tax rates in Indonesia. The results show that the difference in Indonesia's corporate income tax rate with the average tax rate in the country where multinational companies operate has a negative and significant effect on profit before tax.

The IFRS adoption, corporate tax avoidance and the moderating effect of family ownership

Purpose This paper aims to examine the influence of the International Financial Reporting Standards (IFRS) adoption on corporate tax avoidance (CTA). In addition, this study aims to explore whether family ownership moderates the impact of IFRS adoption on CTA. Design/methodology/approach The authors used a sample of 1,856 firms from various countries around the world, covering the period between 2010 and 2022. To estimate the proposed econometric models, the authors applied both fixed and random effects regression methods. Findings The present findings show that IFRS adoption has a negative impact on CTA, as measured by the effective tax rate and book-tax differences. This negative impact is more pronounced in “common law” countries than in “civil law countries.” Additionally, the authors found that family ownership plays a moderating role by positively affecting the impact of IFRS adoption on CTA. Practical implications The findings have practical, regulatory and academic implications for fostering accountability and fairness in taxation. This study suggests that implementing IFRS reduces tax avoidance and emphasizes the need for firms to evaluate the implications of IFRS adoption on their tax-planning strategies. It highlights the importance of aligning financial reporting practices with international standards to enhance transparency and minimize tax avoidance opportunities. The differential impact of IFRS adoption between “common law” and “civil law” countries underscores the role of legal and regulatory frameworks. In addition, family ownership plays a significant role in shaping tax-planning strategies. From an academic perspective, this research provides a foundation for further exploration into the relationship between IFRS adoption and tax avoidance. Originality/value The existing literature has predominantly concentrated on examining the effect of IFRS adoption on CTA, and the empirical findings have been inconsistent. This study introduces a novel perspective by considering the moderating influence of family ownership in determining the impact of IFRS adoption on CTA.

Penghindaran Pajak dan Strategi Perusahaan

Through the use of prospector tactics versus defender actions, this study seeks to show the many ways that companies engage in tax avoidance. This study uses proxies such as Effective Tax Rate (ETR) and Book Tax Difference (BTD) to examine tax avoidance behavior. The typology developed by Miles and Snow (1978) is used to define the prospector and defender methods. Within the scope of this study, agency theory is used to establish the relationship between the prospector approach and corporate defense practices and tax avoidance carried out by the corporate sector. The population of this study is manufacturing companies listed on the Indonesia Stock Exchange (IDX), and the research period 2017-2022 is the time period considered. To select the sample for this investigation, purposive sampling was used. There were 105 companies and 630 observations included in the sample selection procedure. For the purpose of evaluating each hypothesis, we used two separate sampling methods. The test findings show that while there is no difference in tax avoidance activities among firms using the book tax difference (BTD) proxy, there is variation in tax avoidance actions among firms using prospector tactics and defenses in terms of the efficacy of Effective Tax Rate (ETR). Adopt a strategy that is defensive and prospective.

Taxation Preferences and the Uptake of Hybrid and Electric Vehicles in Poland’s Ten Largest Cities: A Case Study

The purpose of this article is to explore whether and based on what criteria local governments employ reduced tax rates on means of transportation to encourage hybrid and electric vehicles. The study also aims to determine if there has been a more rapid increase in the number of means of transportation powered entirely or partially by electricity in local government units that have implemented more substantial incentives. The study encompasses the ten largest cities in Poland and the years 2018–2020. To achieve the above research objectives, an analysis of the texts of the resolutions of the city councils was carried out in terms of the tax rates in effect during the selected period. On the basis of the relevant amounts provided in the resolutions, the amount of concessions resulting from the application of lower tax rates was calculated, and the criteria for the use of these concessions related to the level of emissivity were presented. To assess the potential correlation between the scale of tax preferences and the dynamics of growth in the number of hybrid and electric vehicles, a statistical tool in the form of Spearman’s rank correlation coefficient was used for a thorough data analysis. The results suggest that municipalities use their authority to introduce differentiated tax rates on means of transportation. However, those utilizing hybrid and electric vehicles are more likely to employ these powers on an equal basis, with owners of vehicles adhering to lower emission standards covered by EURO standards. In addition, there was no positive correlation between the amount of tax credits and the rate of growth in the number of reduced-emission vehicles. This work can foster a green mindset and societal nature-based new thinking.

Corporate profit tax, managerial delegation and multinational firm's transfer pricing

AbstractThis paper analyzes the transfer pricing decision of the multinational firm. There are differences in profit tax rates between home‐country and host‐country. The multinational firm determines the transfer price to its overseas affiliate and delegates the responsibility of deciding on the final sales to its affiliate manager. We find that: (1) The multinational firm will set a higher transfer price if its affiliate hires a manager. If the host‐country firm also hires a manager, the managerial delegation may lead to an asymmetry “prisoner's dilemma”. (2) When home‐country's tax rate is higher than that in the host‐country, multinational firm tends to set a lower transfer price relative to the marginal production cost. (3) When host‐country's tax rate is higher than that in the home‐country, an increase in the host‐country corporate tax rate decreases multinational firm's profit and the consumer surplus, while its impact on the host‐country firm's profit is non‐monotone; an increase in the home‐country tax rate decreases host‐country firm's profit, increases consumer surplus, but has a non‐monotone impact on multinational firm's profit.

Multinationals' profits in China: Impact of tax avoidance

Based on proprietary and hand-collected source country information on foreign-owned firms in China, this paper empirically explores the effect of the tax avoidance of multinational firms on the profit rate of foreign-owned firms. Foreign firms in China previously benefited from various preferential tax policies and had a lower effective tax rate compared to domestic firms. The results show that the increase in the difference between the statutory maximum tax rate in the parent country and the domestic tax rate will increase foreign firms' pretax profit margin. This effect is more pronounced for younger firms and wholly foreign-owned firms. Further tests indicate that the transfer pricing in export and import activity of foreign firms is an important channel for multinational firms to shift profits. In year 2008, the implementation of the new Enterprise Income Tax Law has unified the corporate tax rate for both domestic and foreign firms at 25 percent. The tax reform reduces the profit margin of foreign firms, especially those with larger tax rate differentials. This paper explains multinational firms' profit performance from the novel perspective of tax avoidance.