Existing Tax System Research Articles

Corporate Tax Avoidance and Firm Profitability

The idea of trying to reduce an organization’s tax expense is considered as old as the inception of taxation itself as organizations are always trying to exploit loopholes in the complexities of the existing tax system. The traditional motive for such practices is to reduce expenses, thereby increasing the firm’s net profit. In view of this, tax avoidance has always been considered as being in the interest of the shareholders, as it is intended to increase value. However, this view has greatly been questioned in recent researches. Taking data from the annual reports and financial statements of firms listed on the Ghana Stock Exchange (GSE), we empirically tested whether tax avoidance of a firm really translates to increase in value or profitability. Employing a standard Ordinary Least Square regression model, we test our hypotheses using SPSS statistical tools. Our findings confirmed a negative relationship between the tax avoidance measure (ETR) and the measure of profitability (ROA). We conclude that tax avoidance could translate into profitability or value due to the balance of expertise and professionalism exhibited. We recommend that a firm need to have a good corporate governance structure in place, particularly the board structure, since they are in a better position to influence management’s decisions and actions, in order to achieve the intended benefits of such practices.

Tax Payers’ Perception Towards the Existing Tax System in Ethiopia: The Case of North Shewa Zone, Ethiopia

The objective of this study was to examine taxpayers’ perception towards the excising tax system in Ethiopia in general and North Shewa Zone, Amhara Regional State in particular. The study used descriptive research design. Category “B” tax payers were the target population of this study. A sample of 317 individual Category “B” tax payers were randomly taken from selected cities and woredas of North Shewa Zone, Amhara Regional State. Both primary and secondary data sources were used for the study. Primary data were collected through questionnaire and secondary data were collected from reports and manuals of the Ethiopian Revenue and Customs Authority (ERCA) branch offices. Descriptive statistics such as tables and percentages have been used for data analysis. The result of this study revealed that North Shewa Zone Category “B” individual taxpayers' perceive the tax they are paying is unfair. Moreover, most of the respondents' point out the complexity of the tax system. Generally, the result of the study showed the importance of taking measures to improve the existing tax system through developing simple and transparent tax collection systems, building trust and confidence with taxpayers' to increase the positive perception of taxpayers' towards the existing tax system. Keywords: Tax fairness, Tax complexity, North Shewa Zone, and Ethiopia DOI : 10.7176/RJFA/10-3-03

Wykorzystanie technologii blockchain do eliminacji wybranych problemów systemu podatkowego

Technologia blockchain, dzięki cechom wyróżniającym ją na tle tradycyjnych rozwiązań bazodanowych, ma potencjał, aby zrewolucjonizować sposób rozliczeń podatkowych: sposób poboru i zwrotu podatku, sposób rozliczeń i weryfikacji transakcji, compliance czy też mechanizmy fakturowania. Dzięki temu może pomóc skutecznie rozwiązać podstawowy problem systemu podatkowego - lukę podatkową. Osiągnięcie korzyści będzie zależało jednak od konkretnych mechanizmów i sposobu implementacji oraz obszaru wdrożeń. Omawiamy i analizujemy 6 koncepcji rozwiązań w 5 obszarach: digitalizacji faktur; utworzenia krajowej kryptowaluty do rozliczeń podatkowych; rozliczenia dywidend zagranicznych udziałowców; compliance w zakresie cen transferowych oraz weryfikacji czynnych podatników VAT. W naszej ocenie najwięcej korzyści przy najmniejszej liczbie wad ma potencjał dostarczyć koncepcja wprowadzająca cyfrowy obieg faktur (DICE) w oparciu o technologię blockchain. Koncepcje wspierające płatności zobowiązań podatkowych posiadają obecnie istotne wady ograniczające efektywność. Pozostałe rozwiązania nie są wystarczająco dobrze dopracowane, aby stanowić realną alternatywę dla istniejącego systemu podatkowego lub możliwych rozwiązań nie opartych na technologii blockchain. Słowa kluczowe: blockchain, sektor usług publicznych, opodatkowanie, system podatkowy, podwójne wydatkowanie, umowy o unikaniu podwójnego opodatkowania, nauki o projektowaniu, podatek od towarów i usług, ceny transferowe.

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Research of existing tax systems in advanced economic countries

One of the key factors on which the effective functioning of the entire national economy depends is the organization of the state taxation system. Prospects for the reform of personal income tax are currently widely discussed with the aim of maximizing its fiscal functions and achieving equity taxation. Let us consider in more detail how foreign countries solve the problem of the fairness of taxation of personal income in the development of tax policy. The subject of the study is the foreign experience of taxation of personal income in countries with developed economies. The purpose of the study is to study the approaches to taxation of foreign countries in the current socio-economic conditions. Objective: to study the trends in the formation of the tax rate on personal income in countries with developed economies. General scientific methods are used: system analysis - to determine the specifics of tax development in economically developed countries; comparative analysis - to compare the principles in the formation of taxes in foreign countries and Ukraine. The following results were obtained: The prospects for the application of foreign experience in the taxation of personal income in Ukraine were considered. The analysis of income tax in Germany, France, Italy, Canada, the United States of America - the countries with the highest standards of living, according to the United Nations. The main features of income tax in these countries are identified, the possibility of borrowing them in the course of reforming the personal income tax in relation to Ukraine is assessed. Based on an analysis of the main approaches to taxation of personal income in countries with developed economies and Ukraine, a SWOT analysis was obtained. Conclusions: the tax systems of many states have their own historical prerequisites, are “adjusted” to the territorial and transgeographic features of countries, as well as their internal policies and the mentality of the population. Improving the efficiency of the tax system is really subject to the adjustment of the principles of taxation under the economic conditions of a particular state.

Value Added Tax in Nepalese Context

A value added tax (VAT) is a tax not on the total value of the commodity being sold, but on the value added by the last trader. Developing countries are engaging in the study of VAT more seriously as it is the source of tax revenue which has high tax potential yield among the existing tax systems. In this situation, this paper intended to assess practices of VAT and VAT administration as well as its contribution on GDP in Nepalese context. More so, the study collected secondary data which are analyzed based on descriptive/comparative methods. The study found that, sales tax has been replaced by VAT since 1997 in Nepal. Before that sales tax played a vital role to collect revenue and resources mobilization. Department of VAT and its field offices were/are responsible for administering VAT functions that was/is not yet attractive and efficient. However, data shows that collecting VAT is in increasing order. In Fiscal Year 2014/15 it came to NRs. 11516 crore which was 5.42 percent of GDP, 29.60 percent of total revenue and 48.14 percent of indirect tax revenue. And the contribution of VAT as percent of GDP remained at average of 4.04 percent during the study period (2002/2003 to 2014/2015).

Evaluation of tax regulation effectiveness of shadow economy in Ukraine

Current trends in the socio-economic development of the economy indicate the need to find new mechanisms for increasing revenues to the state budget, also by minimizing illegal financial flows. The paper investigates the essence and features of the tax regulation of illegal withdrawal of funds. The main directions of the influence of the state tax policy on the behavior of economic entities are identified. Based on the analysis of trends in the volume of tax burden, shadowing the economy and GDP, the conclusion about the inverse relationship between the economy shadowing level and the amount of taxes and fees is made. By comparing the current tax system of Ukraine with other countries of the world, its main advantages and disadvantages in the context of de-shadowing the economy are identified. The main trends of changes in the level of corruption in the country are considered as one of the determining factors in building the effective system of state regulation and control over the completeness and timeliness of meeting tax obligations to the budget. It is concluded that it would be expedient to revise the existing tax system in the country both in terms of simplifying the procedure for calculating and paying taxes, and reducing the tax burden on taxpayers.

Taxation in the Age of Digital Globalization

Innovations in finance and information technology have radically reduced transaction costs, thereby stimulating the globalization of goods, services and capital. Capital mobility, the growth of multinational corporations, high frequency trading, complex financial instruments, and global equity exchanges, have increased the risks of global financial instability, while making the identification and assessment of income and profits by national origin increasingly obscure and difficult. Tax avoidance and evasion behaviors drastically limit the revenues and hence social expenditures of national governments whose citizens perceive existing tax systems to be overly complex, inefficient, and inequitable with high costs of administration and compliance. In contrast to the speed of financial and technological innovation, tax systems remain mired in inertia, eluding global calls for tax reform. How then, can tax systems be adapted to the digital age? There is broad consensus on the objectives of tax reform: simplification, efficiency, equity, and reduced costs of administration and compliance. Simplification and reduction in administrative and compliance costs require abandoning the plethora of loopholes and tax expenditures that well-off stakeholders have lobbied politicians to introduce by supporting their campaigns for reelection. A reformed tax law requires a clear and simple statement of what is taxable, how much it will be taxed and how the tax will be collected. A small globally adopted Automatic Payment Transaction (APT) tax, is optimal for the digital age.

Ecological Development Impact on Tourism in Pavlodar Region

SUMMARY This article analyses the current environmental aspects and the mechanisms of environmental regulation in Kazakhstan with specific emphasis of Pavlodar Region for the development of tourism. The study showed that the environmental situation in Pavlodar Region requires the adoption of a number of activities and legal regulation for improvement and development of tourism. The improvement of tourism is very important for the regional budget and for the overall economic development of the area. It is argued that for the effective management and the development of the tourism industry, the existing taxation system that is the Tax Code of the Republic of Kazakhstan requires some amendments, sustainable development measures should put into the practice with the introduction of technological systems that based upon the use solar and wind energy, and “Green Economy” strategy should be implemented into the practical life and monitored effectively.

Efficiency in Value Added Tax in Sub-National Governments in India: An Empirical Analysis

The present study attempts to analyse whether the VAT efficiency has improved after its implementation. Further, we examine the major determinants of VAT efficiency for 17 non-special category Indian states for the period 2000-01 to 2014-15. Using random effect model (as suggested by Hausman test), the urbanization ratio, billing and collection efficiency, bank credit ratio and share of agriculture sector are found to have a favourable effect on VAT efficiency while the share of the unregistered manufacturing sector and share of services sector have an adverse impact on VAT efficiency. Besides, the study also reveals that tax efficiency has come down in the aftermath of the implementation of the VAT in India. As regards policy implication, initiatives by the government for the high level of urbanization, raising billing and collection efficiency, providing more bank credit and encouraging agricultural activities would enhance the VAT efficiency. Since the coefficient of the VAT dummy is negative in the model, the government may revise the existing tax system and adopt a suitable taxation system that solves the problem in the current tax structure.

Method of Defining the Rate of Dependency of Financial Stability on the Tax Level

Objectives: The paper substantiates the need in the improvement of the taxation of companies as a factor of economic development of the country and its regions. The aim of the research is the formation of corporate taxation mechanism that provides the maximum effect on the extension of the income base and increases in the companies’ solvency. Methods: In order to accomplish this aim the author’s used methods of theoretical and empirical studies and the system approach to the consideration of corporate taxation. The latter aided to determine the economic expediency of existing taxation system. The method of economic modeling was used for the presentation of research results.The methodology of determining the influence of the changing total tax rate and the model that includes the mutual dependence of the tax level and the taxpayer’s solvency. Findings: Apart from existing approaches to determination of the mutual dependence between the amounts of tax and discretionary income of a taxpayer, the proposed method views the dependence of the solvency on the amount of payable tax from the point of basic tax level and the changes in the total tax rate. It allows defining the actual tax burden of the taxpayers. Application: The significance of the study is the fact that the authors have revealed the role of tax in financial and distributional relationships. This fact is significant for the taxation theory because the known functions of tax mentioned in economic literature do not fully uncover the categorical nature a tax. Keywords: Discretionary Income, Income, Solvency, Taxation, Tax Rate, Tax Burden

Анализ эффективности налоговых расходов в России на примере имущественного налогового вычета и льготной ставки НДС

Introduction. Tax expenditures are widely used both in international and Russian practice to redistribute population incomes for the purpose of their equalization. Despite the significant share of tax expenditures in total budget expenditures, the assessment of their effectiveness has not been yet fully studied. Aims. The article presents the assessment of the tax expenditures effectiveness in Russia considering property tax deduction and preferential rate of value added tax (VAT), as well as the ways to improve the existing tax system in the context of optimizing the tax burden. Methods. The main method is the analysis of benefit distribution (distributional analysis). Results. The age and the household structure must be taken into account when analyzing the tax expenditures distribution. The distributions of property tax deductions and VAT subsidies by income group reveal a slight shift (property deduction – to the right, VAT subsidies – to the left). Conclusion. The existing system of property tax deductions and preferential VAT rate helps to level off the population incomes. A group of households which can be viewed as “middle class” (with incomes per member at 10.6–35.0 thousand rubles) appears to be the main beneficiary.

ИСПОЛЬЗОВАНИЕ DEA-МОДЕЛЕЙ ПРИ СОГЛАСОВАНИИ ИНТЕРЕСОВ НАЛОГОВЫХ ОРГАНОВ И НАЛОГОПЛАТЕЛЬЩИКОВ

Цель: показать пути согласования интересов налоговых органов и налогоплательщиков на основе решения DEA-модели. Обсуждение: одной из проблем, касающихся взаимоотношений налоговых органов с налогоплательщиками, а конкретно разнонаправленности их интересов. В связи с этим актуальным вопросом является разработка экономико-математического инструментария для выявления возможностей сглаживания данных противоречий. Результаты: рассмотрены причины различия интересов налоговых органов и налогоплательщиков, предложен вариант поиска путей сглаживания данных различий на основе DEA-метода, представлено и проанализировано решение DEA-модели для конкретных организаций Краснодарского края.

Tax Related Implications of Fair Value Accounting

This paper discusses tax implications of fair value accounting. We first provide an overview over existing tax systems in Europe and the United States and the use of fair value elements for tax purposes. We also discuss potential costs and benefits of implementing fair value taxation. Benefits of using fair value accounting for tax purposes, for example, comprise fewer distortions of investment decisions. However, there are also potential downsides of fair value based taxation. For example, tax payments of firms could become more counter-cyclical and firms might have to pay taxes on unrealized gains. Taken together, our paper provides an overview of costs and benefits of fair value taxation as well as potential avenues for future research.

An Inequality Deflator for Australia

This paper estimates an Inequality Deflator for the Australian economy, which represents the distributional trade-offs that exist within the current tax and transfer system. These trade-offs can be used to evaluate policy alternatives where equity is an important consideration, as well as provide a normative evaluation of the trend towards increased inequality in Australia. This normative evaluation can be justified in two ways. First, in can be argued that the government has revealed a preference for distributional trade-offs through the tax system, which should be followed in other policy analysis. Second, this approach is equivalent to altering the standard Kaldor-Hicks welfare criterion such that compensating payments are made through the existing tax system (rather than as lump sum payments). As such, implementing policy in this way, along with adjustments to the tax and transfer system, can be thought of as identifying realisable pareto improvements. In order to estimate an Inequality Deflator in the Australian setting, this paper develops an estimation method using The Melbourne Institute Tax and Transfer Simulator (MITTS). This methodology also allows for an Inequality Deflator to be estimated at the household level, and for different family types. Finally, the Inequality Deflator is applied to the Australian economy over the period 1994-2013 and finds that if the tax system was used to spread growth equally across the population, growth would be around 18 percent lower than recorded.

Recent impact of gst in india

GST also known as the Goods and Services Tax is defined as the giant indirect taxstructures designed to support and enhance the economic growth of a country. In today‘sscenario to pay various taxes i.e. direct and indirect taxes, which are felt as burden on us anddue to these taxes the corruption is increasing. So, to overcome from all these taxation systemthe Central Government has decided to make one tax system i.e. Goods and Services Tax(GST). GST is one of the most critical tax reforms in India which has been long awaitingdecision. It is a comprehensive tax system that will subsume all indirect taxes of State andcentral Governments and whole economy into seamless nation in national market. It isexpected to remove the burden of existing indirect tax system and play an important role ingrowth of India. GST includes all Indirect Taxes which will help in growth of economy andproves to be more beneficial than the existing tax system. GST will also help to accelerate theoverall Gross Domestic Product (GDP) of the country. The Goods and Services Tax (GST) isa vast concept that simplifies the giant tax structure by supporting and enhancing theeconomic growth of a country. GST is a comprehensive tax levy on manufacturing, sale andconsumption of goods and services at a national level

GST in India: Expectations and challenges

India is ready to implement its “Goods and Services Tax (GST)” act from 1st April 2017. It is expected that GST will minimise all the loopholes of existing tax system in India. However, critics argue that the euphoria over GST camouflages the deadly assault to tax policy as a means of promoting equity and efficiency. This review on GST highlights the challenges over GST claims. It has been observed that to implement GST effectively, both centre and state have to go hand in hand.

GOODS AND SERVICES TAX: A STUDY ON ROAD MAP FOR 2017

The paper covers the scope of GST and the history of the taxation system in India.
 The word tax is derived from the Latin word ‘taxare’ meaning, to estimate. “A tax is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is any contribution imposed by government whether under the name of toll, tribute, impost, duty, custom, excise, subsidy, aid, supply, or other name.” Taxes in India are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such as Municipality or Local Council. The paper consists of the demerits of existing taxation system, challenges and opportunities of the GST and the latest amendments with the road map for 2017. With the help of this paper we get the overview of the current amendments and the future efforts to be made in the implementation of GST.

OPTIMALIOS ŪKININKŲ MOKESČIŲ SISTEMOS FORMAVIMAS

Išsamių tyrimų apie optimalią ūkininkų ūkių mokesčių sistemą, skatinančią ūkių gyvybingumą, konkurencingumą ir tvarumą, nėra Problema – kokia yra optimali ūkininkų ūkių mokesčių sistema ir kokie turi būti taikomi principai ir kriterijai optimaliai ūkininkų ūkių mokesčių sistemai nustatyti. Tyrimo tikslas – atlikus optimalios mokesčių sistemos teorinę analizę, patikslinus optimalios mokesčių sistemos sąvoką bei identifikavus šios sistemos vystymosi kryptis ir ūkininkų ūkių apmokestinimo problemas, parengti optimalios ūkininkų ūkių mokesčių sistemos teorinį modelį. Egzistuojanti ūkininkų ūkių mokesčių sistema nėra optimali, nes neužtikrinamas maksimalus valstybės pajamų lygis dėl moralinės žalos poveikio mokesčių sistemai, neužtikrinamos ūkininkų gerovės funkcijos, nepakankamos investicijos į žmogiškąjį kapitalą bei mažai sprendžiamos aplinkosauginės problemos.

System podatkowy Polski w okresie transformacji – próba oceny

The article presents the theoretical basis for constructing the existing tax system during the periods of 1992–1993 and indicates how well experiences and lessons drawn from highly developed capitalist countries were used in building the Polish tax system. The Polish Tax doctrine had its characterization and this was made possible by the use of selected empirical data to support it in this article. The paper presents the criteria of evaluation of the Polish Tax system. Presented in this paper is a selection of tax arrangements references of the old European Union member countries. In conclusion, according to the author, realistic proposals for changes in the tax system and tax policy have been suggested.