Foreign Income Research Articles

The nexus between economic, demographic, policy and human development in South Africa: An econometric analysis

The Human Development Index, which accounts for both net foreign income and the total value of goods and services generated domestically, illustrates how income becomes less significant as Gross National Income (GNI) rises by using the logarithm of income. South Africa ranks 109th out of 189 countries in the Human Development Index (HDI) within the Brazil, Russia, India, China and South Africa (BRICS) economic bloc, raising long-term sustainability concerns. The study explores the relationship between economic, demography, policy indicators and human development in South Africa. South Africa’s unique status as a developing country within the BRICS economic group, alongside its lengthy history of racial discrimination, calls for a sophisticated approach to understanding Human Development. Existing research considered economic, demography, policy indicators independently; the gap of understanding their interconnection and long-term effects in the South African contexts exists. The study addresses the gap by using Autoregressive-Distributed Lag (ARDL) approach to investigate the short-term and the long-term relationship between economic, demography, policy indicators and human development in South Africa. By discovering these links, the study hopes to provide useful insights for policymakers seeking to promote sustainable human development in South Africa. The findings indicate that growth in GDP is a key factor in the HDI since it shows that there are more financial resources available for human development. By discovering these links, the study hopes to provide useful insights for policymakers seeking to promote sustainable human development in South Africa.

Effects of the Real Effective Exchange Rate Volatility on the Trade Balance, The Case of Vietnam for Sutainable Development Goals

Objective: The objective of this study is to analyze the impact of exchange rate volatility on the trade balance of Vietnam. Analyzing and evaluating the degree of exchange rate fluctuations of the VND from the first quarter of 2000 to the second quarter of 2019. Then, proposing the orientations and some solutions to regulate the exchange rate to ensure the trade balance surplus in the near future. Method: Exchange rate fluctuation is the conditional variance or unconditional variance or standard deviation of the base rate. Auto Regressive Conditional Heteroskedasticity (ARCH) model was used to calculate real effective exchange rate fluctuations in VND. The study also uses Ordinary Least Square regression (OLS) method to evaluate the impact of exchange rate volatility on Vietnam's trade balance. Results and Discussion: The results show that a stable long-term equilibrium relationship exists between exports. Quantitative results show that exchange rate volatility have a positive impact on exports but have not yet shown a clear impact on Vietnam's imports. The paper also points out that in addition to the exchange rate fluctuations, many other factors such as foreign income, domestic income, trade conditions ... could also affect the trade balance. Research Implications: To achieve the trade balance surplus, the proposed solutions need coordination among ministries and agencies. Finally, the flexible control of State Bank on exchange rate volatility will enhance Trade Balance of Vietnam.

Fiscal Year-Ends and Financial Benefits: The Role of Prospective Measurement Dates in Tax Reform

ABSTRACT The Tax Cuts and Jobs Act (TCJA) of 2017 dramatically reshaped the tax landscape for companies and reduced incentives for multinationals to leave foreign earnings abroad. We study a provision of the law that allowed some multinationals to take simple measures to reduce their tax burden more than other firms. The TCJA levied a tax on accumulated income held in foreign subsidiaries of U.S. firms. The implementation of this tax left firms an avenue to protect shareholder wealth, as foreign income retained as “cash” was taxed at a higher rate (15.5 percent) than foreign income retained in other asset classes (8 percent). Measurement rules allowed some firms significantly more time to shift foreign cash holdings to “noncash” assets and lower their tax burden. Using staggered, firm-specific measurement dates, we find that fiscal year-end firms with more time to respond to the law reduced their cash levels more than other firms. JEL Classifications: E62; H21; H25.

Staying in the shadow or not? Remittances and the Shadow Economy

AbstractObjectiveThis study investigates the impact of remittances on the shadow economy and how domestic institutions, particularly property rights, moderate this relationship.MethodsWe employed a quantitative research method using panel data from developing countries from 1990 to 2018. We adopted both fixed‐effects and instrumental variable approaches to address possible endogeneity concerns between remittances and the shadow economy.ResultsThe results demonstrate that remittances are positively associated with the shadow economy's size. However, this positive effect is weaker in countries with strong property rights institutions. These findings remain robust across alternative measures of key variables and estimation techniques.ConclusionThe results suggest that foreign income in the form of remittances is an important determinant of the shadow economy in recipient countries. We believe that exploring the relationship between foreign sources of income and the decisions of economic actors to enter specific sectors warrants further investigation.

Corporate Governance and Accounting Conservatism of Quoted Non-Financial Firms in Nigeria

This study investigates the impact of some corporate governance attributes on accounting conservatism in Nigeria. The study covers the period from 2005 to 2020 of 75 non-financial firms listed on the floor of the Nigerian Exchange Group (NXG). The results of the generalized method of moments (GMM) reveal that while four of the variables board size (BODS), managerial ownership (MOWN), audit committee size (ACS) and number of foreign directors (NFODIR) are positively significant with accounting conservatism; two of the variables chief executive officer with military experience (CEOME) and board independence (BODI) are negatively significant with it but board gender diversity (BGDIV) is insignificant. Again, while the Big4 as well as the number of foreign directors (NFODIR) are positively significant; foreign income (FINCOME) as well as the industry (IDUM) and yearly (YDUM) dummy variables are positively insignificant. The study makes some recommendations such as management should maintain or increase the present level of board size, managerial ownership, audit committee size and the number of foreigners in the board since these variables allowed management to stick to prudence in financial reporting for the period under review.

Retribution Collection and Tellecomunication Tower Control on Increased Original Local Government Revenue in Banyuasin District

The aim of this research is to identify how retribution and control of telecommunications towers affect the increase in regional foreign income in Banyuasin Regency. The data sources in this research are secondary data, namely Surat Tanda Retribusi Daerah (STRD) and Surat Tanda Setoran (STS) at the Banyuasin Regency Diskominfo-SP. The research method used in this study is descriptive qualitative. There are three stages in this method: data condensation, data presentation, and verification or conclusions. The percentage of telecommunications tower control retribution collected by the Banyuasin Regency Government in 2020 has exceeded the revenue target, namely 100.23%, in 2021 it increased to 101.60%, while in 2022 it decreased to 84.89%. Even though there will be a decline in 2022, the realization of revenues in 2020 and 2021 has reached or even exceeded the targeted revenues. has been above 100%, this shows that the collection of telecommunications tower control retribution has been achieved very effectively. Meanwhile, the contribution of retribution and control of telecommunications towers to increasing PAD during 2020-2022 is still below 10%, so the criteria are very low.

Contribution of Tax Induced Foreign Direct Investment for Sustainable Development in Bangladesh

Tax incentives play a crucial role in promoting and facilitating foreign direct investment (FDI), thereby contributing to a country's overall economic development. However, Bangladesh experienced a decline in FDI-based foreign income in the first two quarters of 2018, partially attributed to a lag in FDI from the USA. Given Bangladesh's historical challenges with deficit financing post-independence, increasing self-revenue income and leveraging tax-induced FDI are imperative for achieving sustainable development goals. To develop tax incentive-based hypotheses, four investment climate factors are considered: i) Corporate Tax Rate (CTR), ii) Tax Holiday (TaxH), and iii) Tax Concession (TaxC). This research adopts an analytical and descriptive approach, employing a mixed-method research methodology to analyze data sourced from both primary and secondary sources. Data collection methods include semi-structured interviews and documentary analysis, focusing on regulatory bodies like NBR, BIDA, and BOI for tax incentive analysis, and relevant organizations such as BB, World Bank, UNCTAD, BIDS, FIAS, BEZA, and BEPZA for FDI-related documents. The impact of tax incentives on FDI inflows in Bangladesh from 2001 to 2020 is analyzed using a simple regression model. The independent variables include corporate tax rate, tax holiday, and tax concession, while controlled variables such as gross domestic product (GDP) and corruption are also considered, as they may influence FDI inflows. Statistical analysis reveals a negative influence of corporate tax rate on FDI inflows, while the tax holiday variable exhibits a positive and statistically significant relationship with FDI inflows. Furthermore, alongside the contribution of FDI, this study also examines sustainable development trends from 2016 to 2020, providing numerical insights into its attainment. Overall, this research sheds light on the importance of tax incentives in attracting FDI and its implications for sustainable development in Bangladesh.

Corporate Governance Characteristics and Earnings Management of Quoted Non-Financial Firms in Nigeria

This study investigates the relationship between some corporate governance attributes and earnings management of listed firms in Nigeria. This study uses the correlational research design and purposively sampled secondarily sourced data over the period from 2005 to 2020 of 75 non-financial firms listed on the floor of the Nigerian Exchange Group (NXG). The Robust Least Squares Estimators results reveal that board independence (BODI) is positively significant with earnings management; board size (BODS board gender diversity (BGDIV) and audit committee size (ACS) are negatively significant with it while managerial ownership (MOWN); chief executive officer with military experience (CEOME) and number of foreign directors (NFODIR) are insignificant. While foreign income (FINCOME), year fixed effects (YDUM) and industry fixed effects (IDUM) dummies are negatively and statistically significant, the Big4 auditors is positively insignificant. The study concludes with some recommendations that management, among others, should maintain or increase the present level of board size, audit committee size and the number of females in the board since these variables deter management in managing earnings for the period under review.

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

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

Shell Companies

The term ‘shell company’ has been heard quite often in recent years. Though most of the people have heard this term, not many people know the exact meaning behind it. In our country, there is no specific definition for this term. No legal definition is mentioned in The Companies Act or any other Act. Efforts to define it have been going on. However, it can be said that a shell company is a company that has no or few significant assets or operations. The main objective behind establishing such companies would include money laundering, tax evasion, converting black money into white money, etc., These shell companies affect the economy of a country by making the poor into poorer and rich into richer. In order to curtail these companies there is no specific provision, Act, or law related solely to shell companies. Issues related to these companies are generally dealt with under The Prevention of Money Laundering Act, 2002; Benami Transactions Prohibition (Amendment) Act, 2016; Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015; The Income Tax Act, 1961; Indian Penal Code; and The companies Rules 2017. Hence the Author is going to discuss what is a shell company, how to identify it, the reason behind the creation of shell companies, laws that are violated, the effects of shell companies, and the challenges faced while curtailing shell companies. Finally, the author will end the discussion with probable suggestions.

The impact of personal remittance and RMG export income on income inequality in Bangladesh: evidence from an ARDL approach

PurposePersonal remittance and ready-made garments (RMG) export incomes have emerged as the largest source of foreign income for Bangladesh's economy. The study investigates their impact on income inequality and gross domestic product (GDP) as a control variable, using time-series yearly data from 1983 to 2018.Design/methodology/approachIt employs the Autoregressive Distributed Lag (ARDL) estimation and the Toda-Yamamoto (T-Y) causality approach. The ARDL estimation outcomes confirm a long-run association among the above variables and validate the autoregressive characteristic of the model.FindingsPersonal remittances positively contribute to reducing the income gap among the people of the society and declining income inequality. In contrast, RMG export income and economic growth contribute to further income inequality. The T-Y causality analysis follows the ARDL estimation outcomes and authenticates their robustness. It reveals a feedback relationship between remittance inflow and the Gini coefficient, unidirectional causalities from RMG export income to income inequality and economic growth to income inequality.Research limitations/implicationsThe finding has important policy implications to limit the income gaps between low and high-income groups by channeling incremental income to the lower-income group people. The policymakers may facilitate further international migration to attract further remittances and may upgrade the minimum wage of the RMG workers.Originality/valueThe study is original. As far as the authors' knowledge goes, this is a maiden attempt to investigate the impact of personal remittances and RMG export income on income disparity in the case of Bangladesh.

Tax progressivity and taxing the rich in developing countries: lessons from Latin America.

This article discusses the challenges and potential policy choices for levying progressive taxes and taxing the rich in Latin America, a region known for its high-income inequality, limited tax-collection capacity, and low share of taxes collected from personal income and wealth. Factors such as high exemption thresholds, low top marginal tax rates, and limited administrative capacity undermine the redistributive ability and revenue collection of the tax systems in the region. Moreover, the income composition for the top percentiles largely comes from capital, and the effective tax rates they face are often low due to the preferential treatment of capital income and wealth. After discussing the evidence of how the rich in Latin America respond to progressive taxes on income and wealth and changes in enforcement policy, we provide some insights on potential policy choices to tax them effectively. These may include broadening the income tax base by lowering the number of exempt and non-taxable income items and the statutory exemption thresholds, reevaluating preferential tax rates on capital income, monitoring foreign income, addressing the abuse of tax treatment by business earners, and enhancing tax administration capacity. Additionally, wealth taxes may complement the tax system with updates to property registers and scrutiny of foreign assets.

Challenges in Applying Saudi Arabian Tax Treaties: Digitalization, Withholding Tax, and Permanent Establishment of Non-residents

As part of Vision 2030, the Kingdom of Saudi Arabia (KSA) has begun implementing broad economic and legal reforms to improve its tax environment and create an amicable setting for international investors. However, there are challenges to this endeavour, which are not limited to Saudi rules. Digitalization is one such challenge in income taxation at the global level. This study investigates the challenges in taxation arising from digitalization that can potentially affect base erosion and profit shifting (BEPS) mechanisms both internationally and in Saudi Arabia. One major problem in the Saudi tax judiciary is the interpretation of international tax treaties to determine the existence of a permanent establishment (PE) for the purpose of Saudi income tax for a non-resident providing remote services within Saudi territory. By examining contradictory decisions related to two typical digital services, namely online travel companies (OTCs) and international telecommunication, this study highlights the complexity involved in digitalization, withholding tax, and PE. By analysing Saudi practices against the context of international rules, this research also highlights the need to clearly define the meaning of a ‘permanent digital establishment’. Finally, it underscores the necessity of establishing a permanent higher chamber in the tax judiciary, which will make decisions on stable judicial tax principles. This will improve the Saudi legal tax environment and ensure its consistency with international practices. Saudi tax law, foreign income, digitalization, withholding tax, permanent establishment

Educational achievements and export earnings: a comparison between leader and follower countries

PurposeThis study examines whether education in developing countries directly impacts their foreign income from the top export sector.Design/methodology/approachAs most developing countries follow developed nations to shape their development, this study assumes developing countries as education-follower and developed countries as education-leader countries. Considering selected countries from the South Asian Regional Cooperation (SAARC) and African countries as follower countries and Group of Seven (G7) as leader countries, this study employs Dumitrescu-Hurlin Granger non-causality tests.FindingsThis study finds that education-follower countries' achievements do not directly impact foreign earnings from their leading export sectors. However, findings also confirm that leader countries have a bidirectional causal relationship between tertiary education and earnings from high technology exports.Originality/valueTo the best of the authors' knowledge, this is the first study urging research-intensive education with comparative advantages in international trade. Using educational attainment on export earnings from the leading sector, findings support dependency theory in education is still existed.

The exchange rate, income, trade openness and the trade balance: longitudinal panel analysis for selected SSA countries

Purpose Motivated by recent rapid exchange rate depreciations, shrank economic growth, high inflation, and persistent trade deficits, this study examines the trade balance (TB) in the face of the recent dynamics of the stated macroeconomic factors, which are also important determinants of the TB. The symmetric test of the J-curve phenomenon for the selected Sub-Saharan African (SSA) countries is revisited in this regard. The study uses panel data from 1970 to 2020 for ten of these countries for the longitudinal panel analysis with the TB as the dependent variable and the real exchange rate, foreign and domestic national incomes, and trade openness as the set of independent variables.Design/methodology/approach Because the underlying data set involves a heterogeneous panel of relatively short N and long T, the pooled mean group (PMG) and mean group (MG) heterogeneous panel models are employed based on the Hausman test for parameter consistency in heterogeneous panels.Findings The findings largely support the domestic income growth– TB worsening and the foreign income growth– TB improvement hypotheses. Trade openness is found to mostly augment the TB performance of the countries. The results also validated the J-curve effect for only 3/10 and 2/10 countries in the PMG and MG models, respectively. The divergence for most of the countries is attributed to possible import compression and institutional structure of SSA countries.Practical implications Given the favorable effects of trade openness on the TB performance of SSA countries, it is recommended that SSA countries place much emphasis on import-substitution industrialization and value addition to their natural resources as well as investment-driven growth policies to improve the competitiveness of their exports and reverse the chronic deficits in their TBs.Originality/value This paper is unique for invoking heterogeneous panel models to analyze the TB in light of recent dynamics of its determinants, as well as providing an update on the symmetric test of the J-curve phenomenon for the selected SSA countries.

The non-linear impacts of crude oil prices and trade openness on the foreign income of Bangladesh

A Market based study was conducted in the high (Tanore Upazila) and low (Natore Upazila) drought prone areas over the period of twelve months with the aims to know the impacts of drought on the market. Drought inhibits production, the inflow of agricultural produces and food supply in high drought market areas. Availability, diversity, price and sources of plant species become more restricted by the severe drought. The high drought market area shows less availability of the produces with low diversity and high prices. These attributes arrest consumer’s behavior in food consumption patterns and restricted food supply in high drought market. Low drought market area shows normal production, regular inflows of agricultural produces. Mostly drought affects market in the Kharif-2 season. More local varieties were found in the low drought market during Rabi season. Appropriate drought forecasting in advance and drought insurance can protect production loss and ensure market supply. IUBAT Review—A Multidisciplinary Academic Journal, 6 (1): 61-76

Sorghum Growth and Yield as Influenced by Farmyard Manure and Inorganic Fertilizer in Post Mined Soils

Mining plays an important role in Kenyan Economic development through provision of employment, raw materials as well as foreign income. Despite the important role played by this sector, it is associated with land degradation, impacting food security. Closure of mines calls for rehabilitation process through establishment of native trees, grass or crops. In order to promote crop production as a reclamation measure, performance of sorghum in post mined soils was evaluated in the south dune site of base titanium limited Kwale Company. The experiments were laid down in Randomized Complete Block Design (RCBD) with split plot arrangement and replicated thrice. Fertilizer, Manure, Manure + Fertilizer, Control (unfertilized) and Gadam and Silla sorghum varieties were tested. Data collected included: Initial soil properties, plant height, number of leaves, leaf length, leaf width, stem circumference, panicle length, panicle circumference and grain yield per hectare. Data collected was subjected to analysis of variance using Genstat software and means separated using the Fisher’s protected least significant difference at (P≤0.05). The soils were slightly acidic with low levels of exchangeable P, K, S, Cu and Bn. Manure + fertilizer significantly (P≤0.05) increased plant height by 14% (gadam), and 28% (silla), number of leaves per plant by 28% (gadam) and 29% (silla), panicle length by 18% (gadam), 8% (silla), dry matter by 30% (gadam) 40% (silla) and grain yield by 50% for both gadam and silla varieties compared to control plots in both varieties. Average yields in both seasons for manure + fertilizer treated plants were significantly high (5.3 tones/ha) for Silla variety and (5.7 tones/ha) for Gadam variety. Where gadam produced slightly high grain yield than silla variety by 7%. Combined application of farmyard manure and inorganic fertilizer were most effective in enhancing sorghum growth, dry matter and yield. Growth and yield data collected showed that combined farmyard manure + fertilizer can support optimal sorghum production in the post mined soils. Owing to the fact that the soils have compromised profile, soil structure and fertility, long term trials and simulation models are required to ascertain optimal sorghum production while ensuring sustainable soil health in such soils.

Economic Growth Of Manufacturing Companies: Long-Term Debt, Pre-Tax Foreign Income, And Earning Management

The objective of this research is to find evidence of Long-Term Debt, Pre-Tax Foreign Income, and Earnings Management on Economic Growth. The data used are manufacturing companies listed on the Indonesia Stock Exchange from 2015-2018. This study's sample was selected using purposive sampling criteria and 12 manufacturing companies. This study uses a panel regression model with the Eviews version 10. This study found that the variable of Long-Term Debt (LTD) has a positive effect, Pre-Tax Foreign Income (PRTX), and Earnings Management (EM) have no effect on Economic Growth (EP). Research contribution gives academics, financial statement users, and regulatory bodies additional literature that Long-Term Debt (LTD) is a component that has a positive impact on Economic Growth (EP).Keywords: Long Term Debt, Pre-Tax Foreign Income, Earnings Management, Economic Growth

A source of funding for illicit activities or a solution to crime? Evidence from remittance inflows to Jamaica

AbstractCrime and remittance inflows are high in Jamaica, and there is a general anecdote that foreign‐based masterminds use remittances to fund crime. Yet, remittances represent a significant source of foreign income to alleviate financial constraints, which may pose a dilemma to policymakers. We find that remittances significantly reduce rape and carnal abuse and property crimes such as larceny and break‐ins but have no significant effect on armed crimes such as shooting, murder and robbery. Remittances decrease crime by raising consumption and employment, but also they increase crime by weakening democratic institutions. Overall, remittances reduce incidents of crime significantly.

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.