Non-tax Incentives Research Articles

Global Minimum Taxation: A Strategic Approach for Developing Countries

The world has seemingly embraced the altruistic idea of ensuring a minimum level of corporate income taxation worldwide, consolidating a “benefits for all” narrative by which both developed and developing countries apparently gain. However, this altruistic narrative proves to be quite unrealistic for many developing countries. As argued in this article, the perceived benefits of a global minimum corporate income tax in developing countries rest exclusively upon three unconvincing premises. These include the assumption that all corporate income tax incentives provided by developing countries are equally inefficient, the idea that all developing countries can seamlessly transition from corporate income tax competition to alternative forms of tax and non-tax competition, and most notably, the notion that supporting or opposing a global minimum corporate income tax could either boost or diminish tax revenue for developing countries. This article urges a departure from these premises and elaborates upon three strategic recommendations for developing countries, which include: first, viewing a global minimum corporate income tax as a concept divorced from the assumption of revenue gain or loss; second, using the global minimum corporate income tax as an opportunity to reassess their tax and non-tax incentives, encompassing alternative competitive strategies; and third, striving for simplicity and ease of administration in designing and implementing a minimum tax approach. In doing so, developing countries could perhaps find an opportunity to refine their general action plan to attract foreign direct investment (FDI) more effectively while they still try to ride the wave of minimum global corporate income taxation that the world seems to be in.

The nature and sources of international variation in formal institutions related to initial coin offerings: preliminary findings and a research agenda

As prior researchers have suggested, a firm’s success in an international market depends on how well its strategy fits the nonmarket environment, such as formal institutions. This paper examines the determinants of formal institutions around new areas of economic activities. Specifically, we propose a framework for understanding how the quality of formal institutions in promoting entrepreneurship drives the focus of such institutions concerning initial coin offering (ICO), which is emerging as a popular fundraising method. The paper uses inductive analysis to examine how nonmarket factors—such as a jurisdiction’s tax haven nature, regulators’ perceptions of ICOs as threats to national or political interests, and trade and industry associations—might moderate the relationship between the quality of institutions and the focus of such institutions regarding ICOs. One of this study’s key findings is that an economy’s quality of entrepreneurship-related institutions, perceived threats to national/political interests, and tax haven nature lead to different policy orientations. Consequently, regulators assign different importance when promoting crypto-entrepreneurship and dealing with associated risks. Regulators focusing mainly on promoting crypto-ventures have taken measures to enrich the blockchain ecosystem and provided tax and non-tax incentives to attract such ventures. Regulators focusing mainly on dealing with crypto-venture risks rely on a regulatory sandbox and close regulatory monitoring of such ventures.

An assessment of barriers and solutions for the deployment of electric vehicles in the Brazilian market

The growing concerns about the energy and environmental crisis drive the development of a sustainable society. The electric vehicle (EV) is a potentially clean technology that can contribute to the decarbonization of the transportation sector. However, EVs face obstacles to being diffused and are not prevalent in the global vehicle fleet. Thus, this research identifies the attractiveness, barriers, and solutions for the diffusion of EVs. Semi-structured interviews were conducted with key agents of the Brazilian supply chain of this technology. Results showed that EVs have essential attractions, but there are barriers to their diffusion in the Brazilian market related to EV cost, charging infrastructure, and public policies. The main solutions to overcome these barriers and expand EV adoption involve: (i) increase of emission consumer awareness through promotional campaigns by government and industry, (ii) tax and non-tax incentives, e.g., reduction of taxation on EV purchase or parts of it, reduction of annual fees or special transit permits for EV, and (iii) technological advances, notably in terms of battery performance and availability and efficiency of charging stations. This research comprises aspects of EV diffusion in Brazil but can serve as guidance for other countries with emerging economies or regions where EV adoption is still incipient.

Article: Pillar Two and African Countries: What Should Their Response Be? The Case for a Regional One

As the OECD’s efforts to implement Pillar Two become more concrete, it becomes more important to understand the implications of this instrument for African developing countries. This article considers the possible responses available to a grouping of African countries in a bid to ensure that their corporate income tax policies are not undermined. In doing so, this article analyses the feasibility of these countries imposing a domestic minimum tax, adapting their tax incentives to non-tax incentives and whether African countries should support the proposal for a United Nations international tax forum. This article argues that it may be feasible for African countries to introduce a targeted domestic minimum tax that would apply to in-scope multinational enterprises (MNEs). Moreover, it may be possible for African countries to adapt their tax incentives to non-tax subsidies although this would involve some costs. It is heartening to see the proposal for a United Nations international tax forum, and it may be in the best interest of African countries to support such an initiative. Pillar Two has far-reaching implications for developing countries and it is important that African countries consider adopting regional responses to it. This article endeavours to create the space for such discussions. Pillar Two, developing countries, Africa, domestic minimum taxes, non-tax subsidies, United Nations, corporate income tax

Effect of Tax Incentives and Non-Tax Incentives on Earnings Management with Tax Avoidance as a Variable Moderation

Tax incentives and non-tax incentives are both potential motivators for earnings management activity. As a result, the study was conducted to determine the reality of various aspects that could effect profits management. It also conducted tests to demonstrate the impact of tax avoidance on the relationship between the research variables. This research employed secondary data from the Indonesia Stock Exchange for the year 2020, as well as a purposive sampling strategy to select the appropriate firm to serve as the sample. To aid in the testing of the variables, this study used the multiple linear regression model as an analysis tool utilizing IBM SPSS version 25. The findings suggest that tax incentives can be used to detect profits management, as measured by a proxy of tax planning and deferred tax expense. Non-tax incentives, on the other hand, cannot be used to predict earnings management if the proxy is based on the profitability ratio and the amount of managerial ownership. Meanwhile, tax evasion can only amplify the impact of present taxes on earnings management, which includes variables such as tax incentives.

Local Brand Smoking Among Adult Smokers: Findings from the Wave 5 International Tobacco Control China Survey - China, 2015.

What is already known about this topic?Branding of cigarettes may play a role in shaping the smoking behaviors of Chinese smokers, and local brand (LB) cigarettes may reflect this influence because of greater tax and non-tax incentives compared to non-LB. Some of these brands are regional flagships that market to smokers using local landmarks or icons.What is added by this report?LB brands were significantly more likely to be the usual brand of smokers residing in provincial-level administrative divisions (PLADs) that produced their own LB cigarettes [adjusted odds ratio (AOR): 30.95; 95% confidence interval (CI): 26.36–36.49] compared to those residing in PLADs that had non-local ventures with non-LB cigarettes. Further, smokers residing in urban areas were found to be less likely to smoke LB cigarettes (AOR: 0.79; 95% CI: 0.67–0.93) compared to those in rural areas.What are the implications for public health practice?These findings suggest that LB smoking may be a result of industry-driven incentives to boost LB sales, fueled by such as supply-side strategies to boost LB sales or targeted cultural/social marketing that appeals to certain demographic groups. Although addressing these incentives to support LBs would be challenging given the nature of China’s tobacco industry, doing so would have potential to reduce cigarette smoking and ultimately the health burden of smoking in China.

Influence of Incentives and Non-Incentives Tax on Profit Management

Disclosure of financial statement information for companies in Indonesia is very important, especially for stakeholders who do not have access to company information, especially in profit management, so that stakeholders are able to make the right decisions. Profit management is a managerial activity for management in influencing and interfering with financial statements. Public companies have benefited greatly because the effective tax rate of the company will become smaller so that the company is able to manage profits. Effective tax planning methods through tax incentives and non-tax incentives can help and provide convenience for companies in their profit management. Researchers want to find out how incentive taxes and non-incentive taxes affect profit management. The first results of the study showed that two variables of projected tax incentives with tax planning and deferred tax expense, as well as one variable non-incentive tax projected through leverage, had no effect on profit management. The second results of these studies showed that two other tax incentive variables were projected with the current tax expense and the number of shares paid, and the projection of one non-incentive variable of tax through variable capital intensity ratio had an effect on profit management. Researchers found difficulties when analyzing profit management since not all companies have positive test results against profit management values; there was a company with negative profit management values. The differences between this study to other researchers were the object and variable of research.

Tax incentives and industrial productivity: evidence from Nigeria

This study investigates the relationship between tax incentives and industrial productivity in a protected industry. Based on available empirical literature, the nexus between tax incentives and direct investment, on one hand, and tax incentives and production volumes, has been largely established. However, the nexus between tax and within-sector productivity in a pioneer industry may vary across countries. Using data from Nigeria, the study examines the relative importance of tax amongst other industrial incentives in driving productivity within the cement industry. The findings show that while tax incentives may have improved production growth, it is not a significant driver of short-run productivity growth. Conversely, other non-tax incentives such as financing subsidies appear to have more impact on productivity. These findings provide new insight into the nexus between industrial policy incentives and productivity, and suggest that tax incentives may not be sufficient to drive the country's industrial agenda.

Comparative Analysis of Adopted Rural Development Measures in Saskatchewan: Five Case Studies

Over the last half century, most small regions and communities in Saskatchewan, Canada, have been facing a decline in their population. Major reasons for such a decline is outmigration of residents to larger centers that provide better quality of life as well as lack of new businesses moving into these communities, perhaps due to somewhat unattractive business climate. To secure economic development, some rural communities (including Rural Municipalities – RM) have attempted to lure business and residents through various types of incentives, including the use of tax and nontax incentives. Examples of such incentives have included, but not limited to, property tax incentives -- municipal tax abatement, property tax incentives, and commercial and industrial tax incentives. This study was based on a case study of five Saskatchewan rural municipalities (RM) in Saskatchewan to inquire about the effectiveness of such tax and nontax incentives. These communities were surveyed using a well-structured questionnaire. In most cases, interviewee was the economic development officer of the R.M., or failing that its mayor. Results of the success of the measures were mixed, as only one community indicated some success in attracting new consumer (tourists oriented) services / businesses. Even here, since this RM is located on a major national highway, marginal contribution of these incentives cannot be ascertained fully. Another R.M. indicated that the community was too small to have an economic development programs and joined neighbouring R.M. for joint collaboration. For other three RMs, the success of these incentives was noted to be nil to limited, although in one case, it was argued that the lead period between the implementation of the incentives and current reporting period was too short. This study confirms much of the evidence found in the literature that such impacts typically do not result in attracting new businesses or new residents. Other factors, particularly those related to attractiveness of the community (region) might play a more important role in rural economic development.

Incentivized for Leveling the Playing Field: Do State Economic Incentives Compensate for High Taxes?

State tax and nontax incentives have been widespread in the United States, though their efficacy in job creation and economic development has been repeatedly questioned in the literature by scholars and policy makers. Why, then, do states persistently pursue these incentive policies? Using the newly developed Panel Database on Incentives and Taxes, we adopt a dynamic spatial Durbin panel model to account for both temporal and spatial dependence and to shed light on this question. Empirical evidence suggests a statistically significant and positive relationship between tax credits and tax burdens (i.e., elevated tax breaks are used to offset higher tax differentials). States therefore may seek to create a level playing field in business attraction and retention by overcoming tax disadvantages. Besides, high-serial dependence is present in the use of various tax credits, suggesting a high self-perpetuating tendency that tax breaks, once introduced, are likely to be persistent over time. States are also found to be engaged both in spatial competition or imitation among geographically proximate states, and in strategic benchmarking among states that are geographically distant but economically alike.

The effect of foreign ownership structure and foreign commissioners board on tax avoidance

This study aims to provide empirical evidence that there is an influence of foreign ownership structure and the foreign board of commissioner against tax avoidance. In addition, the study Also tested based on tax avoidance tax incentives and non-tax incentives. The dependent variable in this study is tax avoidance is measured using five proxies items, namely the effective tax rate (ETR), cash effective tax rate (CETR), the book-tax difference (BTD), tax expenses to operating cash flow (TEOCF), and Tax Paid to Operating Cash Flow (TPOCF). The independent variables are foreign ownership structure, the foreign board of commissioner, tax incentives (profitability) and non-tax incentives (leverage and firm size). The theory tested in this research is the legitimacy theory. The sample of this research is the non-financial sector 53 companies listed in Indonesia Stock Exchange from 2012 to 2016. Data collection method using a purposive sampling technique.The method of analysis in this study using multiple linear regression analysis. The results of this study indicate that the structure of foreign ownership effect on tax avoidance through proxy ETR and CETR. The Board of Commissioners has an effect on tax avoidance through the proxy of TEOCF and TPOCF. Profitability has an effect on tax avoidance through proxy CETR, TEOCF, and TPOCF. Leverage Affects tax avoidance through proxy ETR, TEOCF, BTD, and TPOCF. Company size has no effect on tax avoidance. The results of this study will be useful for Academics to PROVE that foreign ownership structures and the foreign board of Commissioners are Able to limit tax avoidance measures, investors in decision-making, regulators in regards to the presence of the foreign board of Commissioners, as well as Researchers for future reference

Tax and Nontax Incentives in Income Shifting: Evidence from Shadow Insurers

ABSTRACTUsing the shadow insurance setting, we study the interplay between tax and nontax incentives in income shifting. Shadow insurance involves intercompany transactions designed to help firms meet regulatory capital requirements. However, prior to the Tax Cuts and Jobs Act of 2017 (TCJA), foreign-owned life insurance firms could save taxes by using shadow insurance to shift U.S. profits to tax havens. Consistent with expectations, we find that while nontax incentives appear to be the dominant factor behind firms' use of shadow insurance, tax considerations also played a role for certain firms. We also find that shadow insurance is associated with lower liquid asset holdings and increased credit risk. Overall, our results suggest that taxes were an important incentive for foreign-owned life insurance firms to use shadow insurance pre-TCJA. Moreover, in this setting, nontax considerations appeared to have motivated U.S.-owned firms' use of tax havens.

Corporate Inversions: Going beyond Tax Incentives

Abstract We study tax and nontax incentives for corporate inversions in a hand-collected data set of 691 inversions out of 11 home countries into 45 host destinations over the 1996–2013 period. Even though lower tax rates generally attract inversions, only 2 of 5 firms invert into tax havens, and two-thirds of firms invert into host destinations with lower statutory tax rates than those faced at home. Moreover, firms invert to geographically close destinations with similar governance standards. Using staggered country-pair-level policy changes as experiments, we find that host-country governance may explain why not all firms invert. Received December 6, 2018; Editorial decision August 12, 2019 by Editor Andrew Ellul.

Налоговые и неналоговые стимулы вывода самозанятых из серого и теневого секторов национальной экономики

Налоговые и неналоговые стимулы вывода самозанятых из серого и теневого секторов национальной экономики

Pengaruh Perencanaan Pajak Dan Insentif Non Pajak Terhadap Manajemen Laba Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2013-2017

The Effect of Tax Planning and Non-Tax Incentives toward Earnings Management at Manufacturing Companies listed on Indonesia Stock Exchange 2013-2017. Thesis, Tegal: Faculty of Economics, Pancasakti University Tegal. 2018. The purpose of this study is to examine the effect of tax planning and non-tax incentives simultaneously and partially toward earnings management at manufacturing companies listed on the Indonesia Stock Exchange in 2013-2017. This research is descriptive research with quantitative approach. The sample used is automotive sub-sector manufacturing companies and components listed in Indonesia Stock Exchange period 2013-2017. The number of companies sampled this research there are 45 companies by using purposive sampling method. While the data analysis method used is descriptive statistical test, classical assumption test, multiple linear regression analysis, simultaneous significance test (F test), test of individual parameter significance (T test) and coefficient of determination. Based on the results of research indicate that tax planning and non-tax incentive simultaneously have a significant effect toward earnings management with significance value 0,000. While partially tax planning, earnings pressure and firm size have significant effect to earnings management with value of significance respectively 0,037,0,000 and 0,049. As well as leverage and earnings bath partially no effect toward earnings management with a significance value of 0.436 and 0.146 respectively.

Determinants of Capacity Utilization of Food and Beverage Manufacturing Firms in Rwanda: Do Tax Incentives Matter?

This paper has the specific objective of determining main factors of capacity utilization in the food and beverage manufacturing industry which are likely to be positively affected by fiscal incentives. Data used are from the manufacturing industry comprehensive survey carried out by the Rwandese Ministry of Trade and Industry (MINICOM) during 2013-2014. The model used was derived from an augmented Cobb Douglass production function and estimated using Ordinary Least Square regression technique. Key outcomes which resulted from this study are (i) in the food processing industry, main factors which undermine the capacity utilization of firms are shortage of raw materials, lack of specialized technology, tax administration and standards; no factor favors significantly the capacity utilization in this sub sector; (ii) in the beverage manufacturing industry, drivers of capacity utilization are the firm experience (age) and its material-intensive characteristic. Four factors harm the capacity utilization of beverage manufacturing firms, namely oversize in terms of fixed assets, lack of working capital, standards and insufficient demand. Consequently, in order to boost the capacity utilization of food and beverage manufacturing firms, only non-tax incentives are advisable: in the food processing industry, capacity utilisation can be improved by easing tax administration and tax compliance instruments; guaranteeing availability of agro raw materials during all the year and reducing their cost; assisting firms, particularly young ones, in order to help them to acquire appropriate technology and to raise production standards.

WORLD EXPERIENCE IN STIMULATING THE DEVELOPMENT OF CLUSTERS IN THE ELECTRONIC INDUSTRY

Purpose: the article deals with innovative clusters as a form of priority organization of R & d and production in high-tech sectors of the economy, presents foreign experience of creating clusters in the electronic industry, the factors of their functioning efficiency. The main goal of the article lies in the study of world experience of fostering clusters in the electronics and the synthesis of the main techniques and methods applied in this fi eld. Methods: the article is based on the analysis and synthesis of international experience of state support for the innovative development of the electronic industry. The methods of theoretical, functional and structural analysis were used in its preparation. Results: currently, the main driver of the national economy of Russia are innovations, the key factor for the successful implementation of which is the state support for new forms of interaction between science and industry in the most dynamic sectors, including electronics. Based on the study of world experience in stimulating the development of clusters, the article presents possible approaches to the organization of this work in the electronic industry of the Russian Federation. Conclusions and Relevance : the analysis of foreign experience of state stimulation of development of clusters in high-tech industries, on the one hand, confirms the correctness of the measures that are implemented by Russia in the course of solving issues of territorial and sectoral organization of innovation, and on the other, points to areas that require additional attention and concrete actions. These include: programs and special conditions for attracting foreign companies and scientists to perform research and development in Russia; a variety of tax and non-tax incentives for innovation; supporting government participation in the capital of startups and others.

Extending pension coverage: Tax versus non-tax incentives

This paper compares the design, cost and effectiveness of three voluntary approaches for increasing pension coverage. The first facilitates plan features designed to attract workers. The second provides tax and other financial incentives. The third mandates autoenrollment of workers with opt out. The non-tax incentives of plan features in the United States have had little effect on increasing coverage. Generous tax incentives in Germany and Czechia have raised coverage but are costly. Mandatory autoenrollment with opt out in the United Kingdom has achieved the highest coverage rate of the three approaches.

RESPON PERUBAHAN TARIF PAJAK PENGHASILAN, INSENTIF DAN NON-INSENTIF PAJAK TERHADAP MANAJEMEN LABA

Tax is an obligation that must be paid by the company, the greater the income the company the greater the tax due. Management expects the tax payment detail to allow management to do the engineering to minimize the income tax burden. This study aims to examine the effects of changes in income tax rates that Law. 36 of 2008 on Income Tax on discretionary accrual due to a decrease in income tax rates between 2009 and the Agency for the year 2010 is the year 2009 by 28% and in 2010 dropped to 25%. In addition, this study also aims to determine the impact of tax and non tax incentives as well as the percentage of shares traded on the Stock Exchange of earnings management behavior. Sample of this study is manufacturing companies listed on the Indonesia Stock Exchange, which has published its financial statements from 2009-2010. Methods of analysis in this study using multiple regression analysis to determine the effect of independent variables earnings pressure, debt level, earningsbath, firm size, managerial ownership and the percentage of shares) against the dependent variable (discretionary accruals) and using independent sample t-test for the different test equipment. independent sample t-test was used to examine differences in the level of discretionary accruals between 2009 and 2010 after a decline in income tax rates. The results showed that before and after the reduction in tax rates, the management was not convicted of discretionary accruals to make savings income. This suggests that management in Indonesia did not take action to make opportunistic earnings management in order to decrease the tax rate Agency 2010. From the regression resultsof tax incentives and the percentage of shares traded on the Stock Exchange a significant effect on discretionary accruals, non-tax incentives only to have a significant earnings pressure on discretionary accruals, while the level of debt, earnings bath, firm size and managerial ownership has no significant effect on discretionary accruals.

Incentives for High-Tech Manufacturing Enterprises

This note discusses tax and non-tax incentives offered to businesses resident in the new Chinese-Belarusian “Great Stone” Industrial Park.