Minimum Tax Research Articles

Norderfriedrichskoog! Tax Havens, Tax Competition and the Introduction of a Minimum Tax Rate

Norderfriedrichskoog! Tax Havens, Tax Competition and the Introduction of a Minimum Tax Rate

Empirical Evidence on the Global Minimum Tax: What Is a Critical Mass and How Large Is the Substance-Based Income Exclusion?

Empirical Evidence on the Global Minimum Tax: What Is a Critical Mass and How Large Is the Substance-Based Income Exclusion?

Формування податкової політики у країнах Європейського Союзу

The aim of the article is to generalize and systematize the provisions on the formation of tax policy in the EU countries. The dynamics of the indicator of the ratio of tax revenues to GDP in 27 EU countries during the period 2013–2022 is studied. It is found that the average value of this indicator for the EU-27 is 37.0%. A rather significant differentiation of the tax burden in the context of European countries is recorded, the lowest value observed in Ireland – 24.0%, and the maximum – in France – 47.4%. In general, a moderate level of tax burden is observed in the sample of Central European and Baltic countries. Using the method of correlation and regression analysis, it is found that for the EU countries in 2013–2022, with an increase in the tax burden by 1 percentage point, the real growth rate of the economy slows down by 0.215 percentage points, and the stochastic dependence is significant, but not too strong. In further research, it is important to pay attention to other factors influencing the growth rate of the real economy. Tax service is a key institution in the field of public revenue mobilization, in the EU-27 countries 62% of the total State revenues are collected by the tax authorities. The article pays attention to the study of the compositional tax structure both in the context of taxation of factors of production and individual taxes. Labor taxes account for the highest share in the tax structure in the EU Member States, followed by consumption taxes, and capital taxes are the least fiscally important. The determinant of the formation of the tax policy of European countries is competition in the international market to attract the main factors of production – labor and capital, which necessitates the creation of favorable conditions for their taxation. In the EU countries, there are unified taxation rules that apply to both minimum tax rates (VAT, excise duty) and control procedures, the principles of production and circulation of excisable goods, etc. In the EU member states, a standard and reduced VAT rate is used, the latter is a fiscal tool for maintaining social stability in society. The priorities of the tax authorities in the EU countries are the improvement of administration procedures, the expansion and modification of digital taxpayer services, the implementation of the institutional model of the State tax risk management and scenario modeling.

Minimum Tax Rates and Tax Competition: Evidence from Property Tax Limits in Finland

Minimum Tax Rates and Tax Competition: Evidence from Property Tax Limits in Finland

Impacts of the global minimum tax on foreign direct investment in Vietnam and some policy recommendations

This research focuses on analyzing and evaluating the detailed impacts of the Global Minimum Tax (GMT) on Foreign Direct Investment (FDI) flows in Vietnam. In this research, we identified a series of both positive and negative impacts of GMT on FDI. On the positive side, GMT has the potential to generate higher tax revenues, reduce tax optimization, create a more equitable and transparent business environment, encourage sustainable investment activities, and enhance the effectiveness of anti-tax evasion measures. However, the downside of GMT cannot be ignored. There's a risk that GMT might reduce Vietnam's competitive capacity in the global economic arena. Concurrently, this tax might also exert pressure that shifts capital out of Vietnam and intensifies illicit investment activities. To address and optimize these impacts, this article presents a series of policy solutions that the government and regulatory bodies in Vietnam can consider implementing. The primary objective is to maximize the benefits from GMT while minimizing any negative impacts it may impose. The findings from this study not only provide an in-depth understanding of GMT's impact on FDI in Vietnam but also lay the groundwork for further research, aiming for a more comprehensive assessment of GMT's influence.

Corporate Income Tax: We Tried the Stick, How About the Carrot?

Due to their ongoing focus on tax planning and continuous efforts to find new tax minimization strategies, multinational corporations have not been paying their fair share of taxes for a long time. As a result, the federal government is unable to generate much revenue through taxes levied on corporations. The government’s response to this problem has always been the same: introduce new tax laws and regulations, revise old tax laws to close “loopholes,” and hope that this will solve corporate tax evasion. For decades, this approach has failed. This Article examines the history of the corporate income tax in the United States and the parallel evolution of an industry dedicated to helping corporations avoid those taxes. This Article finds that the development of this industry has had significant influence on the federal government’s decisions with respect to how it taxes corporations, usually opting to adopt anti-abuse, -avoidance rules in an effort to crack down on perceived bad actors. These policy choices, though, have had little success over the years. Instead, tax revenue generated from large-scale corporate groups has been modest, and there appears to be a consensus that these entities don’t pay their fair share. We propose a different course. Instead of anti-abuse and -avoidance rules, the tax code should use tax and other economic incentives to encourage entrepreneurs and corporations to invest in the domestic economy. Economic activity creates positive externalities in the domestic economy specifically and United States generally. Congress should amend the tax code to better allocate the proceeds of these positive externalities between the Internal Revenue Service, corporations, and stakeholders. Since the Internal Revenue Code for corporations was enacted in 1909, Congress has attempted to block abusive tax planning. However, its chosen method–deterrence– has had little positive impact on the U.S. economy. In many instances, deterrence has even had a negative impact, encouraging corporations to shutter their U.S. plants and dismiss hundreds of thousands of American employees in favor of foreign operations. Such legislative measures have “trapped” billions of dollars overseas by making the distribution of these profits to U.S. shareholders too costly. Instead, Congress should adopt tax incentives that balance the positive externalities of economic activity on local communities with the need to protect small- and medium-sized businesses’ ability to compete with the entities that will be most advantaged by these favorable incentives. This approach would reduce the advantages built-in to existing complex corporate structures that enable the largest corporations to easily shift revenue and profits to lower-tax jurisdictions. This approach, however, does not jeopardize recent attempts to set a global minimum tax aimed at reducing the tax incentive driving corporations to move operations overseas in search of a lower tax rate. Instead, this Article’s recommendation focuses on rewarding the positive externalities such operations create for domestic communities.

Зеленые тренды в налоговой политике развитых стран

The subject of the study is the tax policy of the EU countries in relation to the green economy. The aim of the work is to identify ways to combat global warming and environmental pollution through tax policy instruments until 2030. The article establishes the structure of environmental taxes and fees, based on EU regulatory documents in the field of environmental policy. The strategy of the EU environmental policy called the "European Green Course" is considered as one of the directions of ensuring the sustainability of the economies of Western countries, which provides for the formation of a mechanism for taxation of carbon fuel consumers to compensate for climate damage caused by carbon dioxide emissions into the atmosphere. The analysis of the dynamics of the total volume of tax revenues in the EU for the period 2002-2020, including revenues from environmental and energy taxes to reduce greenhouse gas emissions by at least 55% by 2030 and the achievement by European countries of climate neutrality by 2050, i.e. a balance when greenhouse gas emissions, such as carbon dioxide or methane, correspond to their absorption from the atmosphere. The article establishes a connection between the minimum tax rates on fuel and its energy intensity or greenhouse gas emissions. Conclusions are drawn about the trends in the development of the EU green economy, as well as the tools for their implementation.

The Economics of the Global Minimum Tax

The Economics of the Global Minimum Tax

Why 15%? Justifying the Global Corporate Minimum Tax

Why 15%? Justifying the Global Corporate Minimum Tax

Enigma of the United States, Base Erosion, and the Global Minimum Tax

Enigma of the United States, Base Erosion, and the Global Minimum Tax

Minimum Tax Rates and Tax Competition: Evidence from Property Tax Limits in Finland

Minimum Tax Rates and Tax Competition: Evidence from Property Tax Limits in Finland

The Economics of the Global Minimum Tax

The Economics of the Global Minimum Tax

International Tax Competition and Coordination with a Global Minimum Tax

International Tax Competition and Coordination with a Global Minimum Tax

중국의 소득불균형 해소를 위한 상속세제 도입 연구

Inheritance tax in China was first implemented during the Republic of China era. At that time, the Nanjing government proposed imposing an inheritance tax and enacted related ordinances, but it was not implemented.
 However, after the Anti-Japanese War broke out on July 1, 1940 and the national finances were in crisis, inheritance tax was officially imposed. 
 However, inheritance tax was proposed several times as one of the taxes imposed after the founding of New China, but all of them were postponed. 
 As the Chinese economy has grown rapidly since the reform and opening up and the gap between the rich and the poor has widened, personal income tax can no longer meet the need to adjust the income gap. As a policy tool to control this and as a way to narrow the income gap, the question of whether or not to impose inheritance tax has been revisited. It was once the people’s choice. However, considering the current situation of China’s economic level and the gap between the rich and the poor, the introduction of the inheritance tax is considered sufficient. 
 Inheritance tax also has a positive meaning in improving the national tax system, properly adjusting the distribution of wealth among members of society, increasing financial resources for the government and social welfare programs, and maintaining national income.
 Therefore, in order for China to introduce and actually implement the inheritance tax system, it is necessary to establish a theoretically desirable basic direction. In other words, it is very important to clearly establish the
 purpose pursued by the national policy and to establish the basic direction to achieve the purpose well. 
 On the other hand, when introducing the inheritance tax system, the tax conditions such as which inheritance tax method to choose, whether to separate or integrate with the gift tax, the determination of the minimum tax amount, and the tax rate should be tailored to the actual situation in China in consideration of the inheritance tax legislative principle, efficiency and fairness. You will have to decide. In addition, research on countries that are currently successfully operating the inheritance tax system and specific plans for detailed components to suit China’s situation should be established.
 This study focused on the implementation (proposal) of the Inheritance Tax Law, which was reviewed by the Chinese Ministry of Finance in 2010, and further research by experts is also required.

PROFIT (CORPORATE) TAX PARTICIPATION İN THE TAX SYSTEM OF THE REPUBLIC OF NORTH MACEDONIA

Taxes are treated as involuntary payments paid by individuals or entities to the accounts of central or local government bodies and institutions. There are a variety of taxes depending on the legal system, but almost everyone agrees that they remain one of the key sources of filling the country’s budget. Taxes on corporate income are extremely complex. When it comes to profit tax, generally it is a tax imposed on the net income of the company. Recently, the European Commission in December 2021 proposed a Directive ensuring a minimum effective tax rate for the global activities of large multinational groups. It includes a common set of rules on how to calculate this effective tax rate, so that it is properly and consistently applied across the European Union (EU). The purpose of this paper is through normative and economic analysis, both empirical and theoretical, to process the official data from Organization for Economic Co-operation and Development (OECD), World Bank (WB) and Public Revenue Office of the Republic of North Macedonia, in order to provide a clear overview of the current state of the foreseen tax rates as well trends of profit tax collection. Research in terms of object is branched in two directions: global and local. In the global aspect, the current situation during the last year (2021) is analyzed, relying on the ranking of the countries based on the highest, i.e. the lowest statutory corporate income tax rates (starting from the reflection of the situation in continents and then across concrete countries). In the local aspect, the research deals with the state of corporate taxes in the Republic of North Macedonia in the period of the previous law (2003-2013) and the period after the adoption of the law in force (2014-2021). To achieve the aforementioned goals, the author has focused on the use of some of the scientific methods, of which the most expressed are: the method of analysis and synthesis, induction and deduction, normative, comparative, historical and empirical method. The analysis of statistical data provides results that argue three existing facts: (1) at a comparative level, the Republic of North Macedonia is part of the group of countries with the lowest corporate tax rate; (2) the collection (payment) of profit tax in recent years proves a serious trend of continuous growth; (3) compared to the two most prominent forms of tax, personal income tax and value added tax, profit tax continues to show serious setbacks based on the collected values of these taxes in denars.

“Two’s Company, Three’s a Crowd” – The Triad of Controlled Foreign Company Rules and the Two-Sided Income Inclusion Rule under the OECD’s Pillar Two Global Minimum Tax Proposal

This article analyses multiple issues and offers recommendations regarding the overlap between standard controlled foreign company rules and the income inclusion and qualified domestic minimum top-up tax rules of the OECD’s Pillar Two Global Minimum Tax proposal.

Corporate Control and Exceptions to Minimum Corporate Taxation: A Step Toward Fairness or Financialisation?

Abstract The European Commission is currently seeking to implement the OECD/G20 agreement on minimum corporate taxation, in view to ensuring a minimum effective tax rate on large multinational corporate groups and protecting the level playing field for business and society. In fact, the proposed ruling introduces scope exceptions for groups directly or indirectly controlled by governmental entities, non-profit organisations, and investment and pension funds. These scope exceptions may provide incentives for controlling parties to restructure the corporate group in view to avoid taxation, if the minimum effective tax threshold is constraining and material. Furthermore, it may provide a tax competitive advantage for groups controlled by those parties.

BEPS Project and International Tax Reform: The 2021 Agreements on Taxing Multinational Companies.

The globalization of commercial exchanges and capital movements reveal new ways of obtaining value in economic activities, and the differences in the tax burden of companies, depending on where they reside, have become threats for countries to exercise the right to tax business profits generated in its jurisdiction. This problem, together with tax competition between countries, causes a transfer of tax bases towards countries with lower tax rates and tax havens. The lack of agreement in the international community on how to find a solution to the problems has caused several countries to choose to establish special taxes for certain activities of multinational companies in their jurisdictions, resulting in inefficient taxes. This paper analyzes the agreement reached in October 2021 in the G20 and in the OECD in which measures are adopted within the BEPS project to prevent the erosion of tax bases in market jurisdictions promoted by multinational companies. After studying different aspects, we found fundamental reasons for not having an optimistic view on the effective solution to the problems above: unrealistic forecasts on the amount of the new estimated tax bases for Pillar 1 and the high administration and compliance costs. In conclusion, it is not foreseeable that the tax bases derived from the provision of digital services will suffer a territorial redistribution. We do not expect that a minimum tax rate of 15% in corporate tax will be carried out effectively or that the benefits that are transferred to tax havens will be significantly reduced.

Taxation and Accountability in Local Government: A Democratic Deficit in Andhra Pradesh

This study looks at the vibrancy of local democracy through linkages between local tax collection and accountability: When villagers pay taxes to the village panchayat are they more likely to hold the panchayat accountable? Fifty villages in Andhra Pradesh were surveyed through 500 structured interviews. The study found that in the low-tax environment where panchayats generally follow government-established minimum tax rates, the level of taxation is not politically salient and has no acknowledged impact on panchayat elections. Tax-paying villagers are more likely to participate in the panchayat when residents have connections to outside parties and officials. Except in questions regarding the fairness of internal distributions of works and services, panchayats appear more as the lowest end of the state system than as local democracies. Local government in Andhra Pradesh has a democratic deficit.

Special taxation regime for agricultural enterprises: Ukrainian experience

The problem of building a taxation system for agricultural producers that would take into account the specifics of their activities, would not be too burdensome, would stimulate or, at least, would not become an obstacle to the increase of business entities’ activities remains extremely relevant for agrarian Ukraine. The purpose of this study was to analyze the special taxation regime for agricultural producers, to characterize the stages of its formation and development, to determine changes in the level of tax burden on taxpayers in the dynamics, and to substantiate the criteria for the expediency of certain producers to be on the simplified, special taxation system. In order to solve certain tasks, historical, statistical and economic, abstract and logical, and graphical research methods were used in the paper. The paper shows that the most favorable taxation of farmers was in the first 5 years after the introduction of the special taxation regime in 1999. The mandatory payments, the exemption from which was most noticeable for commodity producers, are named. The tax burden on agricultural enterprises is studied, the reasons for changes in its level in the dynamics are substantiated. The advantages and disadvantages of a simplified approach to taxation of agricultural producers based on the area of agricultural land under cultivation are outlined. The author describes the reasons for the introduction of legislative provision on the collection of mandatory payments from agricultural producers at a level not lower than the minimum tax liability, starting from 2022, and determines the consequences of such innovation for an average Ukrainian enterprise, and also draws conclusions concerning the prospects for further taxation of agricultural producers. The practical significance of the research results lies in the possibility of their use, on the one hand, by the legislator to reform the current system of taxation of agricultural producers, and on the other hand, by specific producers, when deciding on the choice of a taxation system that would be more economically beneficial for them