Effective Tax Rates Research Articles

Tax burden of food industry companies of Ukraine

The tax burden determines the payment of taxes by the market subject to various budgets and serves as the basis for verification by the State Tax Service. The corporate income tax rate, which is equal to 18% in Ukraine, is called normative. The effective tax rate can be determined from the standpoint of macroeconomic analysis of the tax burden for the industry and from the standpoint of microeconomic analysis of the tax burden for individual enterprises. It is relevant to study the effective tax burden of food industry enterprises, which form significant shares of GDP and tax payments in the consolidated budget of the country. The purpose of the study is a microeconomic analysis of the influence of factors on the effective tax rate of food industry companies of Ukraine and the verification of the hypothesis about the degree of deviation of the effective rate from the normative tax rate of food enterprises. Methodology. The methods of generalization, descriptive statistics and systematization, factor and correlation-regression analyses are used in the investigation. Economic and statistical analysis was carried out using Microsoft Office software packages. The results. An algorithm for calculating the effective corporate tax rate is proposed. The list of financial operations at food enterprises of Ukraine, which produce a change in the financial result before taxation, is determined. It was revealed that in recent years the effective tax burden approaches to the normative tax rate, 18%. A methodology of microeconomic calculations was developed for assessing the tax burden of a company based on indicator-factors, including: company assets, income from product sales, number of employees, share of liabilities in assets, share of tangible assets in assets, share of current assets in assets, profitability of assets and equity capital, labor intensity, growth rate of real GDP. Correlations between the effective tax rate and the factors are determined. The largest number of influencing factors and the number of correlations are obtained for four enterprises of the sample: private joint stock companies "Mondelis Ukraine", "Lagoda Confectionery Factory", "Rivne confectionery factory", "Kharkiv biscuit factory". Key words: tax burden, tax return, normative tax rate, effective tax rate, food industry enterprises, factoranalysis, correlation analysis.

The Influence Of Political Connections And Capital Intensity Ratio On Effective Tax Rate: Moderated by Profitability

The objective of the research was to determine dan analyze the influence of political connection dan capital intensity ratio on effectivetax rate as a moderating variable on profitability. The research method used is a quantitative method with sampling using purposivesampling. The research sample is 72 mining sector company data listed on the Indonesia Stock Exchange for the 2018-2021 period. The research analysis uses path analysis with the help of the SEM-PLS 3.3 application The results of the study show that political connections affect the effective tax rate. The capital intensity ratio does not affect the effective tax rate. While profitability can moderate political connections and profitability are not able to moderate the capital intensity ratio on the effective tax rate. This research is expected to contribute to providing input dan an overview regarding tax avoidance so that it can help stakeholders such as the government to make decisions dan policies on tax regulations that will be applied.

The Determining Factors of Foreign Direct Investment (FDI) Inflows: Empirical Studies from the Southeast Asian Countries

The purpose of the study estimates the possible causal relation between direct foreign investment with intertwined political and economic factors ranging from the investment climate reform initiative, tax policy conducted by the government, size of the government, and political institution. The sample of this study consists of ten countries in the Southeast Asia region. Our study utilizes time series data of 11 years from 2010 to 2020, to empirically tested three proposed hypotheses by using panel data regression analysis. Our statistical results show that determinants of direct foreign investment can be uncovered through economic rather than political factors. This study provides a negative relationship between the political institution factor (proxied by the veto player) and FDI inflow. On the contrary, the EODB score does not affect FDI inflow by controlling covariates. Moreover, our study could not provide robust evidence that an effective average tax rate could affect the FDI inflow which is contrary to literature expectation. However, our causal inference may suggest that previous FDI inflow is the best predictor for the FDI inflow.

Firm-specific Determinants of Aggressive Tax Management among East African Firms

Since tax represents an inflow of revenue to the government and an outflow of revenue to firms, factors that influence the tax planning activities of firms have gained considerable attention among management, shareholders, policymakers and researchers. Following the impact of taxation on an economy and a firm, the study investigated the factors that influence aggressive tax management practices of firms listed in East African economies. Data were collected from 99 firms for an 11-year period, from 2008 to 2018. Both cash effective tax rate and accounting effective rate were used as measures of tax planning. Multiple regression models were used for the estimation. The study results showed that smaller firms are more tax aggressive compared with larger firms, which is consistent with the political cost theory. This finding may alert policymakers and regulatory authorities (for example, revenue authorities) that small firms are most likely to avoid paying taxes compared with larger firms. This might be associated with fewer regulations and enforcements imposed on this category of business. The evidence further demonstrated that profitable firms are less tax aggressive. Consistent with the political power theory, this study has confirmed the view that profitable firms have enough earnings to pay their taxes and thus are less tax aggressive. The study further found that older firms are less involved in tax avoidance. This study has policy implications as it will assist both policymakers and firm management in their decision-making. Shareholders and firm management would benefit by understanding why some firms successfully reduce their tax burden compared to other firms.

The effect of US tax reform on the taxation of US firms' domestic and foreign earnings

AbstractWe quantify the immediate net effect of the Tax Cuts and Jobs Act (TCJA) on the tax burden of corporate profits for public US corporations. We find similar reductions in effective tax rates for domestic and multinational firms, yet the entirety of multinational tax savings stemmed from tax savings on their domestic, not foreign, earnings. We find no significant change in the federal tax burden on foreign earnings neither on average norspecifically for firms most likely to be subject to new anti‐abuse provisions. We find some evidence that firms not targeted by anti‐abuse provisions saw reductions in their federal tax burden on foreign income. Overall, while the tax burden on domestic income decreased significantly, our findings suggest the tax burden on the foreign earnings of US multinationals is largely unaffected despite the overhaul of the international tax system. Importantly for US multinationals' investment decisions, while foreign income was heavily tax‐favored prior to tax reform, we find that foreign and domestic incomes are similarly taxed after TCJA enactment.

Factors causing tax avoidance practices in multinational companies: Evidence from Indonesia

Tax avoidance by the multinational company has been at the top of the international tax policy agenda since the global financial crisis in 2008. This level of tax evasion raises concerns that large multinational corporations pay meager effective tax rates. Therefore, this study aims to obtain empirical evidence of the influence of transfer pricing, thin capitalization, and tax heaven utilization on corporate tax avoidance. This paper aims to examine the effects of factors that cause tax avoidance practices in multinational companies. This study used 37 multinational companies listed on the Indonesia Stock Exchange (IDX) for 2018-2020. This study used a purposive sampling method that produced 111 suitable samples. The analytical method used is multiple linear regression analysis through Stata 12 software. Main findings of the study demonstrate that (i) Transfer pricing has a positive effect on the practice of Tax Avoidance (ii) Thin capitalization does not affect the practice of Tax Avoidance, and finally (iii) Tax heaven utilization has a positive effect on the practice of Tax Avoidance.

Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy

We contribute to the literature on the effect of taxes on the locational choices of wealthy individuals by examining the geographical sensitivity of the Forbes 400 richest Americans to state estate taxes. Though we find billionaires’ effective tax rates are only about half the statutory rate, their residential choices are highly sensitive to these taxes, as 35 percent of local billionaires leave states with an estate tax. This tax-induced mobility causes a large reduction in the aggregate tax base. Nonetheless, we find that the revenue benefit of an estate tax exceeds the cost for the vast majority of states. (JEL H24, H31, H71, R23)

Accounting and Non-accounting Concepts of Effective Tax Rates and their Effects on Tax Planning in State-owned Companies

The study examines the link between different modalities of effective tax rates in state-owned entities in Serbia and how those rates can be used to distinguish between SOEs using tax planning and those not inclined to tax planning techniques. Results show that state-owned companies in Serbia owned by local municipalities and cities are using tax planning to obtain lower effective tax rates than the statutory rate, therefore, using their preferential tax status from size and ownership. The study shows that cash flow-based effective tax rates and combined tax rates are better predictors of tax planning than accounting-based effective tax rates for state-owned firms.

DO THE INDUSTRY AFFILIATION OF A COMPANY IMPACT ITS EFFECTIVE TAX RATE? - AN ANALYSIS OF INDIAN FIRMS

There are various determinants of the Effective Tax Rate of a company. This study attempts to nd out whether industry association impact Effective Tax Rates. Tax Rates and Tax Laws are specic to jurisdictions, and the results may vary from jurisdiction to jurisdiction. The study focuses on Indian conditions to examine the relationship between industry classication and the Effective Tax Rate (ETR) of companies. The study covers the standalone nancials of the top 500 listed companies. Results show a signicant impact of the industry association on the Average Effective Tax Rate

Corporate profitability and effective tax rate: the moderating role of board gender diversity

PurposeThis paper aims to investigate the relationship between corporate profitability (CP) and effective tax rate (ETR) and to examine whether this relationship is moderated by board gender diversity (BGD).Design/methodology/approachThe multivariate regression analysis was conducted to test the relationship between related variables. This study used sample of 70 Jordanian firms listed on the Amman Stock Exchanges for the period 2013 – 2020.FindingsThe results show a negative relationship between CP and ETR. Furthermore, the moderating variable BGD changes the strength and the sign, from a negative to a positive influence, of the relationship between CP and ETR.Originality/valueTo the best of the authors' knowledge, this study is among the first that provides empirical evidence regarding the relationship between CP and ETR in the light of BGD. Further, this study provides new and important insights that are not evident from the previous literature.

Pengaruh Effective Tax Rate, Bonus Scheme, Tunneling Incentive, dan Leverage terhadap Transfer Pricing dengan Size sebagai Variabel Moderasi

Transfer pricing is a transaction price that is included in every product or service from one company to another or from one industry to another with the same or different companies and has a special relationship. This study aims to determine the effect of effective tax rates, bonus schemes, tunneling incentives, and leverage on transfer pricing with size as a moderating variable in manufacturing companies listed on the IDX for the 2018-2021 period. The analytical method used is logistic regression analysis and Moderated Regression Analysis (MRA). The results of the study show that the bonus scheme, tunneling incentive, leverage, and size have a partial effect on transfer pricing. Meanwhile, the effective tax rate has no partial effect on transfer pricing. Size is able to moderate the effect of bonus schemes, tunneling incentives, and leverage on transfer pricing. However, size is unable to moderate the effect of the effective tax rate on transfer pricing.

DO BUSINESS CHARACTERISTICS AND ECONOMIC FACTORS AFFECT EFFECTIVE TAX RATE? AN EVIDENCE FROM SOUTHEAST ASIA

The corporate tax burden is known to have a substantial impact on company management and the formation of national policy. One of the ways to measure the tax burden is by using effective tax rate (ETR). Prior research suggests that each region‘s characteristics may influence ETR within the region to varying degrees. Thus, the purpose of this study is to assess the impact of business characteristics and economic factors on ETR in Southeast Asia. There are 852 Southeast Asia companies used as samples in this study. The data is taken from S&P Capital over five periods from 2015-2019 and examined using a random effect regression model by STATA. The findings indicate that business characteristics and economic factors have a limited impact on ETR. By highlighting the factors that affect ETR in Southeast Asia, companies and policymakers can make better tax plans and policies.

Pengaruh Struktur Good Corporate Governance Terhadap Tax Avoidance

P Taxes are the largest income in Indonesia, but there are still many tax-payer who are negligent in fulfilling their tax obligations. The companies think that high tax payments reduce operating profits and hinder the development of the company. Company managers often commit fraud in order to get large profits, which is why corporate governance is very necessary in controlling the company. This research was conducted to test the effect of Good Corporate Governance to Tax Avoidance. The independent variables in this study were proxied from Good Corporate Governance which include Managerial Ownership, Institutional Ownership, Board of Independent Commissioners and Audit Committee, while the dependent variable is Tax Avoidance which measured by Effective Tax Rate. This research used a quantitative approach with associative form to determine the correlation between variables. The population of this study is consumer goods industry sector company listed on Indonesia Stock Exchange for 2017-2021 period. The sampling technique used is purposive sampling, where samples of 14 companies were collected within five years,and obtain 62 samples after outlier. The data analysis methods used are descriptive statistical tests, classical assumption tests, multiple linear regression analysis and hypothesis tests. The results showed that Managerial Ownership, Institutional Ownership and Audit Committee partially did not significantly effect Tax Avoidance, while the Board of Independent Commissioners had a significant negative effect on Tax Avoidance. Managerial Ownership, Institutional Ownership, Board of Independent Commissioners and Audit Committee simultaneously do not effect Tax Avoidance.

PENGARUH EFISIENSI, PROFITABILITAS DAN FIRM SIZE TERHADAP TAX AVOIDANCE (Studi Empiris Pada Sektor Perbankan Periode Tahun 2017 - 2021)

This study aims to find evidence of the influence of efficiency, profitability and firm size on tax avoidance at national banks in Indonesia. The independent variables used in this research are efficiency, profitability and firm size. While the dependent variable in this study is Tax Avoidance as measured by the Effective Tax Rate (ETR). The type of research used in this research is quantitative data. The source of data used in this research is secondary data. The population in this study are national banking companies for the 5 year period 2017-2021. The determination of the research sample used a purposive sampling method and obtained a sample of 10 Banks. Testing the hypothesis in this study using multiple linear regression with the help of Eviews Version 10. The results of this study indicate that efficiency has no effect on tax evasion, profitability has a negative effect on tax evasion and firm size has an effect on tax avoidance . While simultaneously showing that the efficiency, profitability and Firm size have effect on tax avoidance

Inflation-related tax distortions in business valuation models: A clarification

The current corporate income tax (CIT) expense occupies just one line item on the statement of profit or loss and other comprehensive income. However, it is a unique line item following tax rules and not financial reporting rules. The difference between these rules is that it reflects the effective tax rate (ETR), which can differ from the statutory tax rate (STR). With inflation, this ETR-STR difference can be more significant due to the contribution of tax distortions. In this study, we expand on the standard formulas for the ETR by analyzing the effects of inflation-related tax distortions when computed under the following four cases: (i) Historical-cost-based accounting under a nominal tax basis, (ii) Fair-value-based accounting under a nominal tax basis, (iii) Historical-cost-based accounting under a real tax basis, and (iv) Fair-value-based accounting under a real tax basis. Further, we suggest a modified model for business valuation considering these tax distortions and provide a general formula to independently calculate the value of inflation-related tax distortions.

Analisis Faktor-Faktor yang Mempengaruhi Tax Avoidance

Tax avoidance is one of the main issues that need to be followed up more seriously by various parties, especially the government, so it becomes an important issue to be investigated. This study aims to determine the effect of institutional ownership, corporate social responsibility, profitability, and capital intensity on tax avoidance. In addition, this study investigates whether audit quality moderates the effect of institutional ownership on tax avoidance. The tax avoidance variable in this study is proxied by using the Cash Effective Tax Rate (CETR). The population of this study is consumer cyclical companies listed on the Indonesia Stock Exchange in 2018 – 2020, with a total sample of 66 company data that meet the criteria. The data collection method used is the purposive sampling method. The primary analytical tool in this research is panel data regression analysis. The results showed that institutional ownership, profitability, and capital intensity had no significant effect on tax avoidance. In contrast, CSR has a negative and significant effect on tax avoidance. Audit quality does not moderate effect of institutional ownership on tax avoidance. Audit quality which acts as a form of transparent supervision with accurate disclosure is not a tool that can influence tax avoidance actions.

The Revised Case of IP Regimes Under the GloBE Rules: A Canadian Perspective

After action 5 of the base erosion and profit shifting (BEPS) project identified intellectual property (IP) regimes as harmful, the Organisation for Economic Co-operation and Development (OECD) proceeded to recommend that favourable tax treatment be available only under a nexus approach. More than 25 countries now offer a form of IP regime. The introduction of the global minimum tax may limit the effectiveness of IP regimes. The impact of this tax will vary with the circumstances, however. A comprehensive examination of the optimal alignment of innovation tax incentives for multinational enterprises (MNEs) must be undertaken under the GloBE rules. In this paper, the authors begin by providing an overview of the global context of IP regime adoption, and they summarize some research findings with respect to the effectiveness of this type of preferential tax regime in achieving the objectives set by governments. Next, they present examples to illustrate, in simple terms, some of the interactions that must be considered when these regimes are being designed in a Canadian context. From the MNEs' perspective, the impact of the interaction between the GloBE rules and research and development (R & D) incentives will depend on, among other things, (1) the location of the IP income, tangible assets, and R & D activities; (2) the proportion of IP income; and (3) the possibility of leveraging the corporate structure. From a tax policy perspective, the introduction of the GloBE rules will in some cases not alter the suitability of an IP-preferential regime when the effective tax rate remains above 15 percent. When the GloBE rules apply, however, the characteristics of the tax regime—for example, IP regime tax rates, R & D incentive mechanisms, and (most of all) the additive effect of the measures (federal plus provincial measures, and R & D credits plus IP deductions)—will alter the results. From the perspective of tax competition, the opportunity to adopt an IP regime also depends on the perceived risks of losing or deterring R & D activities now that IP regimes are related to local R & D activities and are widespread. Finally, the federal-provincial context complicates the design and the deployment of a tax policy that is aimed at stimulating innovation and that will require some form of negotiation, if not cooperation, with the implementation of a global minimum tax.

Canadian QDMTT Challenges

Nobody believes that Canada is a tax haven. The fact remains that the effective tax rate of certain entities could be less than 15 percent. If nothing is done, pillar two could therefore apply, and taxes that naturally accrue to Canada could end up in foreign hands. We must therefore find a solution, and the most obvious is that of adopting a qualified domestic minimum top-up tax (QDMTT). Other solutions are possible, but they seem less attractive. A QDMTT still presents some challenges. These challenges include sharing with the provinces, determining the priority to be given to certain foreign taxes relating to Canadian income (that is, whether those foreign taxes take priority over the QDMTT or vice versa), and estimating certain foreign taxes.

The impact of economic and social dimensions from CSR and firm size towards tax avoidance

<p>This research aimed to analyze the effect of economic and social dimensions of Corporate Social Responsibility (CSR) and company size toward tax avoidance. The proxy to measure tax avoidance used in this research is Effective Tax Rate (ETR). The sample of this research uses manufacturing companies in sector consumer goods industry and basic industries and chemical listed in Indonesia Stock Exchange (IDX) for pre-covid 19 (2014 – 2018). The analysis technique used in this research is multiple linear regression analysis. The result of analysis showed that social dimension of CSR has significant negative effect on tax avoidance. This means if CSR social dimension increase then tax avoidance will decrease. Company size has significant positive effect on tax avoidance. This means if the company size is increase then tax avoidance will increase. CSR economic dimension has no significant effect towards tax avoidance.</p>

The Effect of Return on Assets, Effective Tax Rate, and Company Size on Transfer Pricing in Food and Beverage Companies listed on the Indonesia Stock Exchange

This study aims to determine and explain the impact of Return on Assets, Effective Tax Rate, and Company Size on Transfer Pricing. This type of research is quantity research. The data used is secondary data obtained from Indonesia Stock Exchange Website. The sample in this study amounted to 10 (ten) companies. Data analysis using path analysis and data processing using IBM SPSS 26.0. The results of this study state that Return on Assets has a negative and significant effect on Transfer Pricing, Effective Tax Rate has a negative and significant effect on Transfer Pricing, the results of this study Company Size has a positive and significant effect on Transfer Pricing, and Return on Assets, Effective Tax Rate, and Company Size has a positive and significant effect simultaneously on Transfer Pricing.