International Tax Research Articles

IMPACT OF EXPORTS AND TRADE TAXES ON INDONESIA'S ECONOMIC GROWTH

This research endeavors to comprehensively investigate the intricate dynamics between the export of goods and services, as well as international trade tax receipts, encompassing import and export duties, and their collective impact on the economic growth trajectory of Indonesia over the period spanning from 1985 to 2019. The study meticulously employs secondary data gleaned from reputable sources such as the World Bank and the Ministry of Finance. Utilizing the robust analytical framework of the Error Correction Model within a linear regression analysis, this research delves into the nuanced relationships and temporal aspects that underscore the interplay between these critical economic variables. The findings of this study unveil compelling insights into the long-term effects of exports, import volumes, and the revenues generated from import and export duties on the overall economic growth of Indonesia. Notably, the research establishes that, over the extended time horizon, these variables exhibit a statistically significant influence on economic growth. However, the short-term dynamics present a nuanced picture, as the study reveals that, in the immediate context, neither exports nor import and export duties manifest a discernible impact on economic growth. In conclusion, this research contributes to the existing body of knowledge by shedding light on the multifaceted relationships between key components of international trade and economic growth in Indonesia. The implications of these findings extend beyond the confines of this specific study, providing valuable insights for policymakers, economists, and stakeholders seeking a deeper understanding of the intricate economic landscape.

Tax policy competition under destination‐based taxation

AbstractWe extend Bond and Gresik (On the incentive compatibility of universal adoption of destination‐based cash flow taxation, International Tax and Public Finance, October 2022) by analyzing the equilibrium capital expense deduction policies that arise when countries compete for multinational investment under destination‐based taxation. Bond and Gresik proved that destination‐base cash flow taxation cannot arise as a tax competition equilibrium. We show that policies that allow for no deduction (income taxation) and those that allow a partial deduction can arise in equilibrium. In the former case, public good provision will be efficient. In the latter case, weak over‐provision of the public good will arise.

Transfer Pricing Regime under the Indian Income Tax Act 1961 and Income Tax Rules 1962 – Inadequacies, Deficiencies, Problems and Proposed Solutions

The author makes a case for the inclusion of the OECD Guidelines into the Indian transfer pricing regime. The article takes a bird’s eye view of the Indian transfer pricing regime and therefore undertakes a high-level analysis. In doing so, it brings to the fore the shortcomings in the Indian regime for consideration by the tax policymakers – ministry and revenue officials who frame India’s international tax and transfer pricing policies. For this purpose, the author adopts the perspective of the revenue/tax authorities.

The Need for a Responsive African Business Community in International Tax Cooperation

The paper examines how the African business community can complement the efforts of the African states in international tax reforms. It argues that international tax cooperation is not exclusive to state actors; non-state actors, particularly businesses, have significant roles to play, considering their expertise in the global business environment. The noticeable absence of African businesses in public engagement with the Organization for Economic Cooperation and Development’s (OECD’s) work on the tax consequences of a digitalised economy justifies the need to undertake this study to demonstrate how African businesses can support their home governments in demanding international tax reforms. It seeks to demonstrate to African business actors the significant role played by shadow treaty negotiators played and other business actors in negotiating tax treaties that may significantly impact the African market. The paper presents three reasons why African business actors should be proactive in international tax cooperation. It also provides a practical framework for how they can engage with international tax initiatives. As a case study, the paper adopts a descriptive and analytical-qualitative approach to examine the OECD BEPS Inclusive Framework’s Two-Pillar proposal to address the tax consequences of the digitalised economy.

Crypto Assets: Italian and Cross-Border Tax Regulatory Framework. Proceedings Innsbruck's University Conference: "International Taxation – With Special Consideration of Cryptocurrencies" - May 2023

Crypto Assets: Italian and Cross-Border Tax Regulatory Framework. Proceedings Innsbruck's University Conference: "International Taxation – With Special Consideration of Cryptocurrencies" - May 2023

Fair Taxation in the Digital Age: Can the OECD Two-Pillar Solution Replace Digital Services Taxes?

Since the emergence of the digital economy at the turn of the 21st century, multinational companies have exploited the inadequacy of international tax regulations to avoid taxation. So far, states and international organisations have been unable to remedy the situation. In recent years, the former have taken the lead in introducing digital services taxes, allowing them to recoup some of the lost tax revenue, at the cost of unilateralism that is damaging to the international tax environment. Meanwhile, the OECD has put forward a multilateral solution aimed at preventing tax avoidance and ensuring a fair international tax system. This article aims at showing how profound an impact a digitalising economy has had on international taxation and to assess the respective merits and prospects of national as well as international solutions presented. Such an assessment is to be made in terms of both tax certainty as well as compatibility with constitutional and treaty provisions. It concludes that digital services taxes, despite serious shortcomings, have proven a necessary step until a multilateral agreement becomes enforceable. The latter remains nonetheless essential in ensuring multinational enterprises contribute their fair share of taxes.

Options for multilateral solutions to international taxation issues and their assessment from the perspective of the tax security of the state

The article was prepared as part of a study aimed at identifying fundamental theoretical approaches to the legal provision of the fiscal interests of the state in the context of the transformation of tax relations and tax law institutions under the influence of the digital transformation of the economy and developing recommendations for creating an effective model of legal regulation of taxation in Russia as a means of ensuring the tax security of the state, which is affected by new challenges. From the point of view of the tax security of the state, the need to ensure compliance with the fiscal interests of the state requires the transformation of essential approaches to regulating tax relations. Given that the Russian economy has faced new challenges in recent years, it seems advisable to explore not only the challenges themselves, but also ways to respond to them. It is noted that the Russian economy is successfully coping with new challenges and, in this regard, it seems relevant to return to the tasks that the state faces from the point of view of both national and international taxation. The article analyzes the projects of the OECD and the United Nations on reforming the taxation rules of international groups of companies. The projects of international organizations are considered as answers to the challenges of tax evasion, as well as to the challenges of the digital economy. The study focuses on the UN initiative to prepare a framework convention on international tax cooperation. The UN initiative is considered from the point of view of taking into account the interests of developing countries. The article also assesses the need to amend Russian tax legislation in the context of new challenges to the tax security of the state. It is noted that the current system of preferential tax regimes, which continues to be improved, meets the interests of Russian taxpayers and the national tax base.

Tax Incentives for the Space Economy and the Potential Impact of Pillar Two

The space industry is one of the world’s most promising and rapidly growing sectors, offering numerous opportunities for economic development and scientific advancement. As the industry matures, policymakers might want to connect its potential to societal benefits by promoting its development or redistributing the related wealth. Against this background, fiscal policies in the form of taxes and tax incentives are critical tools at the policymakers’ disposal. The recent developments in the international tax framework could ‘dilute’ the attractiveness and effectiveness of tax incentives. This is due to the potential application of a top-up tax under the Global Anti- Base Erosion Model Rules and implementing domestic legislations. This article aims to clarify the role that the tax system and, more specifically, tax incentives can play in the space economy, and highlight the importance of assessing the potential impact of Pillar Two on tax incentives from which space companies benefit the most. Space economy, Tax incentives, International taxation, Pillar Two, R&D, BEPS, Space commerce, Space taxation

The Interplay of Permanent Establishments and International Taxation: A Close Look from Tanzanian Perspectives and Treaty Models

The Interplay of Permanent Establishments and International Taxation: A Close Look from Tanzanian Perspectives and Treaty Models

Taxation of Autonomous Artificial Intelligence: Socially Sustainable Expansion of Automation and Impacts on International Tax

Taxation of Autonomous Artificial Intelligence: Socially Sustainable Expansion of Automation and Impacts on International Tax

Kann die Europäische Union im globalen Steuerwettbewerb um Investitionen bestehen? Bestandsaufnahme und Handlungsempfehlungen

In recent years, the European Union has dedicated itself with great vehemence to the fight against international tax avoidance. The result of this policy is the restriction of tax structuring leeway while at the same time significantly increasing tax complexity, double taxation risks and potential legal uncertainty for companies in the European single market. Tax frictions in the EU therefore continue to exist, while international tax competition is likely to focus increasingly on the real economic activity and substance of companies in the face of declining scope for tax structuring and fundamental changes to the global tax system. This article structures these considerations and makes recommendations for an EU tax policy that meets the current challenges.

Money laundering governance and income shifting: Evidence from Australian financial institutions

This study investigates the relationship between strength in money laundering governance (MLG) and income shifting incentives using a sample of Australian multinational financial institutions. Firms exhibiting strength in MLG are less likely to engage in income shifting arrangements given that strength in MLG can enhance financial transparency around funding sources, transfers and use. Further, we find that firms with 1) tax havens use, 2) lawsuit and 3) business risk suppress the association between MLG and income shifting. Overall, in terms of economic significance, MLG reduces income shifting incentives by some 15 per cent. Our results are robust using additional tests. This study shows that strength in MLG has important implications in terms of firm managements’ incentive to shift income. Finally, these findings suggest that money laundering controls constitute an important governance mechanism required in the achievement of fairness, equity and opacity in international capital and tax markets.

False Idols in the Early History of International Taxation

False Idols in the Early History of International Taxation

TAX TRANSPARENCY AS ESSENTIAL PRECONDITION OF THE MODERN TAX PAYMENT ADMINISTRATION SYSTEM

Introduction. Modern challenges in the field of administration of tax payments have become especially acute for Ukraine in the conditions of the outflow of human capital and the loss of economic potential. Under such conditions, the role of tax transparency is decisive, because during the implementation of the administration process, it is a necessary prerequisite for the implementation of the basic principles of taxation - fairness and certainty. The purpose of this article is to determine the place of tax transparency in the tax payment administration system. Results. The evolutionary aspect of the formation of the definition was studied and the author’s definition of the term “tax transparency” was given. The place of tax transparency in the system of administration of tax payments in the context of the implementation of the administration of tax payments is determined, taking into account potentially possible scenarios of the development of events and actions on the part of taxpayers and tax administrations. The current state of implementation of tax transparency in Ukraine in comparison with other countries is studied. The vector of future necessary transformations of relations between taxpayers and the tax service in Ukraine for the implementation of the strategy of tax transparency is outlined. Conclusions. The dynamics of the development of international taxation, especially in the modern realities of the development of public finances of Ukraine, requires a rethinking of approaches to the process of implementing tax administration. The study of directions for increasing the efficiency of the administration process is the subject of further scientific research through the implementation of tax transparency, in particular, by building a close relationship and trust between taxpayers and the tax service.

МІЖНАРОДНЕ ОПОДАТКУВАННЯ ДОХОДІВ, ЩО ВИПЛАЧУЮТЬСЯ НЕРЕЗИДЕНТАМ: ЗАСТОСУВАННЯ СТАВОК ПОДАТКУ ТА ОБЛІКОВІ АСПЕКТИ

The article examines the main aspects of international taxation of incomes paid with a source of origin in Ukraine by legal entities – residents for the benefit of legal entities – non-residents. Such income includes dividends, interest, freight, royalties, engineering income, etc. A legal entity – resident may be obliged to comply with the provisions of tax legislation to tax such income with corporate income tax, which is also called "non-resident income tax" or "repatriation tax". An analysis of the norms of the Tax Code of Ukraine, which regulate the procedure for payment of non-resident income tax, was carried out. The composition of residents who must act as tax agents when paying income to non-residents and withholding non-resident income tax was studied. Attention is paid to the rates that should be applied by legal entities – residents when taxing incomes paid from Ukraine to legal entities – non-resident. The term is specified when legal entities – residents, which have withheld tax from the income of non-residents, must transfer this tax to the budget. An analysis of tax legislation was carried out in terms of the application of international treaties for the avoidance of double taxation. Cases were considered when legal entities – residents, when paying income to legal entities – non-residents, should not withhold non-resident income tax at the source of the payment. The conditions under which legal entities – residents can reduce the amount of non-resident income tax paid to the budget or avoid paying this tax have been studied. Attention is focused on the document that confirms that the non-resident is a tax resident of the relevant country, which means that he can claim tax benefits (for example, claim a reduced tax rate on his income). The conditions under which the controlling body can refuse to grant tax benefits regarding the exemption of income from taxation or the application of a reduced rate on non-resident income tax to these incomes are considered. Attention is paid to the peculiarities of the reflection in the accounting of the legal entity – resident of the operation of payment of income from Ukraine in favor of the legal entity – non-resident and the accounting of withheld nonresident income tax.

International Taxation of Holograms and Human Physical Presence in Tax Treaties

As technology advances, human physical presence can be easily ‘replicated’. For example, a politician can give a speech abroad via hologram technology. Is he also taxed abroad? This article explores the impact of hologram technology on tax treaties and shows that amendments are due. Accordingly, the author proposes a new rule for the taxation of individual services offered via technological means that replicate or replace human physical presence. Holograms, robotics, human physical presence, POEM, PE, monetary threshold, source taxation, withholding tax, services taxation, artist taxation

Revolutionizing International Taxation: The Role of Tech Giants in Shaping Digital Currency Policies Across Borders

Revolutionizing International Taxation: The Role of Tech Giants in Shaping Digital Currency Policies Across Borders

THE NEW DESIGN OF PUBLIC LAW CONCEPTS IN DIGITAL ECONOMY: TAXATION INFLUENCE ON FUNDAMENTAL REGULATION

The paper addresses the challenges generated by the new layout of the global economy, in general, and in the Central and Eastern Europe, in particular. The recent pandemic, energetic crises and military conflicts emphasize the influence of digitalization on the public law, from the design of the institutional mechanism to the new regulatory perspective of the fiscal treatment for the income generated by individual and natural persons. The particularities of the digital dimension of the global economy have justified the need to use similar/compatible regulation worldwide for almost all the fields of the public law. This tendency is even more dominant for the fiscal law field, a distinctive area of public law and the main tool used by the states to determine the state's annual income. It is expected that all the governments aim at maximizing their revenues, using the constitutional protection for the sovereign right to determine taxes. The result is often inefficient, as the states engage in a tight competition between each other for the larger part of the taxable income. The short-term benefit from such conduct is unbalanced by the mid- and long-term distortion of the economic activities, asking for innovative solutions. The recent developments in international organization negotiation and the domestic perspective on the fiscal regime of the digital income have determined changes in the design of the public law concepts, favoring the mutual agreements on taxation and undermining the role of the national legislations on the topic. The assessment of these recent evolutions in local, regional and international taxation shows important changes in the design of the public law concepts in the digital economy: the imperative to draw multilateral agreements on taxation and the challenges of constitutional law.

Transfer Pricing Regulations and International Tax Compliance in Nigeria

Transfer Pricing Regulations and International Tax Compliance in Nigeria

ФОРМУЛЬНОЕ РАСПРЕДЕЛЕНИЕ: ВОПРОСЫ ТЕОРИИ

The current international tax system, which is based on separate accounting for corporate affiliates trading at arm’s length prices, is increasingly viewed as prone to abuse. Multinational enterprises have become adept at manipulating the rules of the current system to shift profits from high-tax to low-tax (or no-tax) jurisdictions. At the same time, each country’s law sets corporate income tax rates as well as bases, which may be eroded by tax incentives provided via legislation or ministerial discretion. These laws are further overlaid by a network of bilateral tax treaties, which alter the tax treatment of investment depending on the particular source and residence countries involved. This makes administration and enforcement of the corporate income tax costly, especially for developing country governments. Corporate compliance costs also increase with complexity. One fundamental reform proposal is to replace the current system of separate accounting by formulary apportionment.