Tax Rates Research Articles

Tax Avoidance and Regulation of Transfer Pricing: From the Perspective of International Law

With the social economy developing continuously and the deepening of economic globalization, the scale of multinational corporations is expanding increasingly. However, due to the gap in tax rates between different countries, multinational corporations have room for tax planning. As a common means of tax avoidance in multinational enterprises, transfer pricing is officially realized by relying on the difference of tax rates in different countries. But transfer pricing in bring huge profits to multinational companies at the same time, the multinational home and host country revenue caused great damage, so the transfer pricing has become the focus of the tax authority regulation, this paper mainly through the case analysis of Coca-Cola company, this paper expounds the multinational companies through the transfer pricing tax avoidance and transfer pricing multidimensional adjustment of thinking. Therefore, for multinational corporations, under the constraints of relevant laws and norms, reasonable planning and control of the risk of transfer pricing is the key to enterprise tax avoidance compliance.

The Parabolic Relationship of Tax Avoidance and Cost of Public Debt

We find that, contrary to prior findings, tax avoidance has a non-linear relationship with cost of debt. Debtholders reward increasing tax avoidance with decreasing bond yields for “undersheltering” firms until reaching a minimum yield. Beyond that minimum yield, as tax avoidance increases, debtholders penalize firms with increasing costs of debt. We use secondary bond market as our empirical setting as the yields are not affected by market timing at issuance. We test several models to conclude that a quadratic function best captures the relation between tax avoidance and cost of debt. Our findings are robust to various specifications of the effective tax rate measure, to the exclusion of large firms, and in both investment grade and speculative grade subsamples.

Sugar taxation policy and sugar consumption in Malaysia

Malaysia has been taking initiatives to combat obesity as well as non-communicable diseases. A sugar-sweetened beverage (SSBs) tax was proposed in 2014 and implemented in 2019 with an excise duty of RM0.40 per litre for ready-to-drink sugar content. This article aimed to spark a discussion about Malaysia's current sugar tax policies to reduce excessive sugar consumption among Malaysians. However, the alarming rise in the number of obesity and diet-related noncommunicable diseases indicates that the sugar tax control measures are less effective in combating health issues. This study compares Malaysia's neighbours' sugar tax policies and other sugar consumption-related measures. To combat the emerging sugar-related health issues in Malaysia, the government should collaborate with food manufacturers to reduce the amount of sugar in their food production, abate sugar-containing products’ promotion, educate the consequences of excess sugar consumption at all levels of education, apply sugar taxes with lower tax base rate and specific tax rate depends on sugar addition, and form a regional policy between neighbours.

Improving the productivity and profitability of maize (Zea mays L.) using optimum blended inorganic fertilization.

There is limited information on the best NPSB rate for maize production. Thus, the study aimed to determine the optimal NPSB fertilizer dose for maximizing maize yield and profitability. The nine treatments that included 0, 25, 50, 75, 100, 125, 150, 175, and 200 NPSB kg ha-1 were tested using a randomized complete block design with three replications. The results showed that increasing NPSB application significantly influenced maize plant height, ear height, hundred-seed weight, aboveground biomass yield, and grain yield. Specifically, the application of 150 kg ha⁻¹ NPSB consistently produced the tallest plants, highest ear heights, heaviest hundred-seed weights, and maximum aboveground biomass and grain yields across both sites. Economic analysis revealed that the 150 kg ha⁻¹ NPSB earned the highest net benefits and marginal rates of return, indicating its economic viability for smallholder farmers. Beyond 150 kg ha⁻¹, further increases in NPSB did not enhance yield or economic returns significantly. These findings underscore the importance of balanced fertilization for maximizing maize productivity and profitability while ensuring efficient resource use and environmental sustainability. Implementing optimized fertilizer practices with 150 kg ha⁻¹ NPSB can empower farmers in the study area and similar agroecological zones to achieve sustainable maize production and economic success.

Overseas production or domestic production? Impacts of tax disparity and market difference

Overseas and domestic production are two commonly employed strategies for multinational firms (MNFs) to manage their global production operations. Recent tax-cutting initiatives have made domestic production an attractive option for MNFs. We aim to investigate whether such initiatives can effectively induce MNFs to produce domestically, especially when they cater to both domestic and foreign markets. In this study, we develop a game-theoretical model that considers an MNF with two subsidiaries - a production subsidiary and a retail subsidiary - located in different markets, and a third-party seller that resells the MNF's product in the domestic market. We take into account two important differences between the two markets, namely the tax disparity and the market potential difference. Our analysis reveals that a higher foreign market potential can strengthen the MNF's tax-saving incentive under the domestic production strategy. We find that a relatively lower domestic tax rate may not induce the MNF's domestic production even if the foreign market potential is low. On the other hand, when the domestic channel competition is intense, a higher domestic tax rate may still incentivize the MNF to produce domestically. These results depend on the tradeoffs among the tax-saving benefit, the third-party seller's free-riding, and the channel competition. We caution that promoting domestic production through a low tax rate may harm domestic consumer surplus, highlighting the need for policymakers to carefully consider the impact of tax policies on consumers.

Effectiveness of tax incentives in optimizing corporate income tax revenue: Case study public listed company tax office

Tax revenue is a key component of the Indonesian State Budget (APBN) and plays a strategic role in national development. This study aims to analyze the impact of the implementation of the income tax rate reduction policy and tax incentives based on Law Number 7 of 2021 on Harmonization of Tax Regulations (UU HPP) on corporate income tax revenue at Public Listed Company Tax Office. The research methodology used is qualitative descriptive, with primary data obtained through interviews with tax officials and tax consultants, and secondary data from tax revenue documentation and related literature. The findings show that the reduction in corporate income tax rates and the provision of tax incentives for publicly listed companies significantly impact the optimization of tax revenue at the Public Listed Company Tax Office. The largest contribution to corporate income tax revenue comes from companies listed on the Indonesia Stock Exchange (IDX), with a dominant contribution from companies conducting Initial Public Offerings (IPOs). The study also identifies several factors affecting the optimization of corporate income tax revenue, including tax awareness and corporate tax morale. These findings provide important insights into how tax policies can be optimized to improve taxpayer compliance and tax revenue, as well as their contribution to national economic growth.

Determinants of Private Investment in Ethiopia

The pillar for ensuring economic development is private investment. So that, the primary aim for this paper was to investigate key determinants of private investment in Ethiopia. The author used a quantitative research approach with an explanatory research design to realize the objective. The paper practically investigates whether Real GDP, inflation rate, real interest rate, foreign direct investment, tax rate, exchange rate, population growth rate, unemployment rate, international trade openness, education affect the growth of private investment in Ethiopia or not. The study mainly concentrated on thirty years of secondary data (i.e. from 1991 to 2020) on key variables. The data was obtained from a variety of sources including the NBE, IMF, WDA, CSA, and WB. Multiple regressions using the ARDL model with appropriate software E-views 9 was applied. The ECM is 110.6 percent that depicts the speed of adjustment from short run towards long run. The study also tests unit root (non-stationary), model stability, bounce, Johansson co integration, and diagnostic test. The main finding of the study showed that in real GDP, population growth rate, interest rate, trade openness, and unemployment rate were statistically significant at 5% level of significance in the long run and short-run and also exchange rate was a positive and statistically significant effect on private investment in short-run. And tax rate was insignificant in the short run. While FDI, Education, and inflation were statically insignificant both in short run and long run in this study. Finally, unemployment has a negative effect on private investment, the policy choice on the matter needs a cautious decision. To achieve the great short run and long run goals, it is advisable to employ integrated principle of action tools.

Firm-specific and country-level determinants of commercial banks capital structures: evidence from Ethiopia

Since the seminal work of MM irrelevance theory, there has been a long history of controversy among academicians both in developed and developing nations regarding the determinants of capital structure. To this end, the main aim of this study was to investigate firm-specific and country-level determinants of the capital structure of Ethiopian commercial banks. The study adopted an explanatory research design with a quantitative research approach. A panel dataset was obtained from 14 commercial banks, which range from 2010 to 2022. A random effect panel regression result revealed that tangibility, non-debt tax shields, growth, and interest rate had a positive and significant effect, while the gross domestic product had a negative and significant effect on leverage which is used as a measure of capital structure. Among the independent variables tested, ROA, liquidity, effective tax rate, risk, and inflation have an insignificant effect on the capital structure of the selected commercial banks. The study will have implications for managers of commercial banks, legislators, regulators, and other interested parties that can use the study's conclusions to help them make well-informed capital decisions and implement the necessary measures to enhance the financial performance of Ethiopian banks with an optimal ratio of debt to equity.

Assessing the impact of taxation on the effective tax rate and operational risk of capital investment projects under optimal capital structures

This paper proposes two metrics to correctly measure under optimal capital structures the impact of corporate statutory tax rates (a) on the effective tax rate, and (b) on the operational risk of capital investment projects and their parent firm's project portfolio. For illustrative and explanatory purposes as well as for ensuring a realistic coverage of a wide spectrum of risky capital investment projects, both metrics are applied to a stationary in mean and variance stochastic NPVτ model under the Canadian open-class corporate taxation system. The Marshallian partial equilibrium adjustment mechanism is brought into play to ensure through efficient financial markets that firms operating within any domestic economic sector are concomitantly subjected to financial equilibrium conditions, thereby enabling firms to converge in the very short run to an optimal after-tax leveraged net cost of capital. This paper concludes that current macroeconomic neo-classical rate-based marginal effective tax rate (METR) metrics systematically and significantly underestimate business organizations' microeconomic NPVτ-based corporate effective tax rates. Furthermore, increasing both the corporate statutory tax rate and the cross-correlation coefficient between portfolio projects will markedly increase a parent firm's project portfolio operational risk while impeding its capacity to reduce it.

Balancing profit and planet: The effect of corporate tax rates on environmental quality and innovation in Asian Countries

In contemporary literature, extensive research has focused on the influence of environmental taxation on the environmental performance of industrial sectors. However, it is still uncommon in the existing literature how corporate statutory tax rate (CTR) affects environmental performance. Therefore, this study aims to empirically investigate the relationship between CTR and environmental quality (ENQ) as well as environmental innovation (EIN). To conduct this analysis, we utilized 19 years of financial data spanning from 2001 to 2019 across all 48 Asian economies. Our research employed both panel quantile regression (PQR) and system GMM models for the regression analysis. The empirical findings reveal that the corporate statutory tax rate has a positive impact on CO2 emissions, leading to deterioration of the environmental quality, while simultaneously exerting a negative influence on environmental innovation, inhibiting green innovation. These effects of the CTR on ENQ and EIN remained consistent even when controlling for factors such as economic growth, foreign capital, financial development, and environmental taxation. These findings have significant policy implications, suggesting the need for a reevaluation of current tax policies and the introduction of tax rebates for companies striving to enhance their environmental sustainability. This study contributes to the literature by shedding light on the adverse consequences of high taxation on the environmental performance of businesses.

Совершенствование законодательства о налогообложении добавленной стоимости в условиях исламской традиции (опыт Республики Иран)

The article discusses the issues of introducing VAT regulation into the tax legislation of the Islamic Republic of Iran. The following are noted as distinctive features of the Iranian VAT: (1) the influence of the traditional legal system operating on the basis of Islamic values on the improvement of the legal regulation of VAT; (2) the lowest basic tax rate of 1.5% in the history of world value added taxation, applied at the initial stage of its introduction into the national tax system; (3) a long period of progressive development of the legal regulation of VAT: from the first draft law in 1987 to the adoption of an indefinite VAT law in 2021.

Smart Answers to GLoBE Challenges Faced by a Small Country

In this note, the authors highlight the challenges that Hungary, a small country with a low corporate income tax rate, faced in implementing Pillar Two. The intention was to comply with the global minimum tax rules while keeping as much of the country’s attractiveness to foreign investors as possible at the lowest cost to the state budget. This was achieved by a range of targeted measures which may serve as a best practice for other countries in a similar situation.

Determinants and Extent of Tax Compliance among SMEs in Arusha City Council, Tanzania

Taxes have been a nourishing commodity in generating revenues liable for financing governments’ budgets all over the world. This being the fact, this study examined the determinants and extent of tax compliance in SMEs in Arusha City Council which was the specific objective of this study. This was a cross-sectional study which employed a double Hurdle regression model to analyze primary data collected from a sample of 100 SMEs’ owners obtained by simple random sampling to represent the entire population of SMEs owners via questionnaire and analyzed with STATA software version 17. Using the economic deterrence theory to guide the analysis of this study, the analysis found that Male entrepreneurs dominate the SME sector, SME owners understand tax regulations and undergo frequent tax audits. Further, the findings revealed that privately owned SMEs, primarily ran by persons in their mid-30s are flexible with an average workforce of nine employees. Furthermore, SMEs were found to generate feasible profits and fulfill tax compulsions by paying an average tax rate. Moreover, the double hurdle regression model shown that age and profits have negative effect on tax payments, and higher household size of SMEs owners are associated with higher tax payments. Additionally, publicly owned enterprises positively comply with tax. Therefore, given these findings, this study recommends to policymakers to streamline tax procedures and develop a platform to discuss tax rates with tax payers before implementing the planned tax obligations.

Optimal preventive maintenance: Balancing reliability and costs in the electricity market

This study addresses the challenge of achieving optimal preventive maintenance within power systems, aiming to balance reliability and costs effectively. The primary focus is on understanding the relationship between preventive maintenance expenditures and the failure rate of essential transmission components, particularly transformers in substations. We contribute to the existing literature by providing two key insights. Firstly, we establish a theoretical framework for determining the optimal level of preventive maintenance, which can be extended across various electricity facilities. By analyzing the relationship between preventive maintenance costs and failure rates, our goal is to identify the investment level that ensures a reliable power system while minimizing financial burdens. Secondly, we explore the functional form that accurately characterizes the link between preventive maintenance costs and failure rates. The diminishing marginal rate of failure, dependent on different functional forms, highlights the variability of optimal preventive maintenance expenses. Utilizing Lasso regression, we identify the functional form that optimally characterizes the relationship between outage occurrences and maintenance costs. These insights extend well beyond the confines of the Korean power industry, offering a sustainable approach to managing transmission facilities and enhancing the overall stability and efficiency of global electricity networks.

Influence of Tax Understanding, Service Quality, and Rates on Bandung MSMEs' Tax Compliance with Trust as a Moderator

The summary of the DJP's annual reports from 2017 to 2020 indicates that the achievement percentages are unstable (fluctuating). MSMEs are among the taxpayers contributing to taxation. This study examines and analyzes the influence of tax understanding, service quality, and tax rates on the compliance of MSME actors in Bandung. As a development aspect, this study adds the level of trust as a moderating factor in the relationship between changes in tax rates and the compliance of MSME actors in Bandung. This research model uses multiple regression analysis. The targeted respondents are Online (Digital) MSME Taxpayers in Bandung. The sampling method used in this study is Convenience Sampling, with a total sample of 100 respondents. The analysis tool utilized in this research is the structural least square model (SEM) – partial least square (PLS) using the SmartPLS 3.0 application. The results indicate that understanding tax regulations, the quality of tax services, and changes in tax rates influence taxpayer compliance. Additionally, understanding tax regulations, quality of tax services, and changes in tax rates impact MSME taxpayer compliance with trust in the tax authorities as a moderating variable.

Literasi Wajib Pajak Tentang Tarif Efektif Rata-rata pada Pemungutan PPh Pasal 21

Income Tax 21 with an average effective rate scheme is the average tax rate actually paid by taxpayers after taking into account applicable deductions and deductions. This study aims to analyze taxpayer knowledge about Income Tax Article 21 with an average effective rate scheme. This type of research is a descriptive research with a qualitative approach. Data collection was carried out through interviews and observations. The results of this study show that the public's understanding of Income Tax 21 effective tariff scheme on average is low. This is caused by uneven dissemination of information or socialization from the government and tax officials.

Can environmental protection tax alleviate the mismatch of financing and investment maturities of heavily polluting enterprises?

The gradual implementation of environmental protection tax policies has incentivized enterprises to engage in green production, effectively promoting China's accelerated achievement of the “dual‑carbon” goal. Although environmental protection tax has an important impact on the investment and financing decisions of heavily polluting enterprises (HPE), few studies have focused on the relationship between environmental protection tax and mismatch of financing and investment maturities. In this paper, we consider China's environmental protection tax reform as a “quasi-natural experiment”, and utilize the data of A-share listed companies from 2013 to 2022, and use a difference-in-differences (DID) model to assess the impact of this policy on the degree of mismatch of financing and investment maturities of HPE. The study shows that the implementation of the environmental protection tax policy (EPTP) significantly reduces the investment and financing maturities mismatch of the HPE, but this effect “fails” in the high tax rate area, and the policy is difficult to reverse the financing difficulties of the enterprises with a large degree of their own investment and financing maturities mismatch. The mediation mechanism test proves the EPTP acts on the mismatch of financing and investment maturities through two paths: alleviating the financing constraints faced by enterprises and increasing external supervision pressure; the impact of the policy has a time-differentiated effect, which is weakened year by year.

Preventing recurrence of endometriosis-related pain by means of long-acting progestogen therapy: the PRE-EMPT RCT.

Endometriosis affects 1 in 10 women, many of whom have surgery for persistent pain. Recurrence of symptoms following an operation is common. Although hormonal treatment can reduce this risk, there is uncertainty about the best option. To evaluate the clinical and cost-effectiveness of long-acting progestogen therapy compared with the combined oral contraceptive pill in preventing recurrence of endometriosis-related pain and quality of life. A multicentre, open, randomised trial with parallel economic evaluation. The final design was informed by a pilot study, qualitative exploration of women's lived experience of endometriosis and a pretrial economic model. Thirty-four United Kingdom hospitals. Women of reproductive age undergoing conservative surgery for endometriosis. Long-acting progestogen reversible contraceptive (either 150 mg depot medroxyprogesterone acetate or 52 mg levonorgestrel-releasing intrauterine system) or combined oral contraceptive pill (30 µg ethinylestradiol, 150 µg levonorgestrel). The primary outcome was the pain domain of the Endometriosis Health Profile-30 questionnaire at 36 months post randomisation. The economic evaluation estimated the cost per quality-adjusted life-years gained. Four hundred and five women were randomised to receive either long-acting reversible contraceptive (N = 205) or combined oral contraceptive pill (N = 200). Pain scores improved in both groups (24 and 23 points on average) compared with preoperative values but there was no difference between the two (adjusted mean difference: -0.8, 95% confidence interval -5.7 to 4.2; p = 0.76). The long-acting reversible contraceptive group underwent fewer surgical procedures or second-line treatments compared with the combined oral contraceptive group (73 vs. 97; hazard ratio 0.67, 95% confidence interval 0.44 to 1.00). The mean adjusted quality-adjusted life-year difference between two arms was 0.043 (95% confidence interval -0.069 to 0.152) in favour of the combined oral contraceptive pill, although this cost an additional £533 (95% confidence interval 52 to 983) per woman. Limitations include the absence of a no-treatment group and the fact that many women changed treatments over the 3 years of follow-up. Use of telephone follow-up to collect primary outcome data in those who failed to return questionnaires resulted in missing data for secondary outcomes. The COVID pandemic may have affected rates of further surgical treatment. At 36 months, women allocated to either intervention had comparable levels of pain, with both groups showing around a 40% improvement from presurgical levels. Although the combined oral contraceptive was cost-effective at a threshold of £20,000 per quality-adjusted life-year, the difference between the two was marginal and lower rates of repeat surgery might make long-acting reversible contraceptives preferable to some women. Future research needs to focus on evaluating newer hormonal preparations, a more holistic approach to symptom suppression and identification of biomarkers to diagnose endometriosis and its recurrence. This trial is registered as ISRCTN97865475. https://doi.org/10.1186/ISRCTN97865475. This award was funded by the National Institute for Health and Care Research (NIHR) Health Technology Assessment programme (NIHR award ref: 11/114/01) and is published in full in Health Technology Assessment; Vol. 28, No. 55. See the NIHR Funding and Awards website for further award information. The NIHR recognises that people have diverse gender identities, and in this report, the word 'woman' is used to describe patients or individuals whose sex assigned at birth was female, whether they identify as female, male or non-binary.

Evolutionary game analysis of carbon emission reduction in transportation infrastructure construction under dual regulation

Under the dual regulation of government intervention and environmental constraints, user demand, low-carbon awareness, and the willingness of construction enterprise to reduce carbon emissions are crucial to the realization of low-carbon transportation infrastructure construction. Basing on prospect theory, this paper constructs an evolutionary game model for the government, construction enterprise, and user, explores the stabilization of the three-game players' strategy choices, and discusses the influence of key parameters on the behavior evolution of relevant players through simulation analysis. The results indicate that: the regulatory cost when the government adopts incentives or no incentives is an important factor affecting the strategy choice. The enhancement of incentives by the government can promote the construction of enterprise and the selection of low-carbon transportation infrastructure by user. However, when the benefit of government credibility outweighs the incremental cost of household subsidies, carbon subsidies, and regulation, the government changes its strategy and no longer adopts encouraging strategy. Improving benefits of build low-carbon transportation infrastructure reducing incremental costs, setting a ladder carbon tax rate, increasing carbon tax rate for traditional construction, and decreasing for low-carbon construction is an effective approach to stimulate enterprise to construct low-carbon transportation infrastructure. The user's choice of low-carbon transportation infrastructure strategy is positively correlated with the subsidy received and is less affected by environmental benefits. And the construction enterprise's strategy choice hasn’t been influenced by user, which is related to the public service characteristics of transportation infrastructure.

Investigating Consumer’s Attitudes Toward New Carbon Tax Regulation in Indonesia

Abstract The Indonesian Government’s 2021 initiative to curb carbon emissions through carbon tax aims to influence the behavior of firms and consumers, particularly, those reliant on fossil fuels. Simultaneously, the carbon tax is envisaged as a means of generating state income and facilitating environmental investments. This research investigates Indonesian consumers’ attitudes toward the carbon tax through a representative survey, analyzing awareness, acceptance, and support levels as indicators and utilizing Structural Equation Modelling (SEM) with Partial Least Squares (PLS) program. The study explores opinions on the climate crisis and carbon tax, with a focus on Greater Jakarta. Preconceptions of climate change and their influence on attitudes are examined, along with socio-demographic characteristics shaping consumer behaviours. Findings reveal a heightened climate crisis awareness among the participants, however, a quarter remain unaware of the carbon tax enactment. Most consumers accept the tax, recognizing personal and industry responsibility for carbon reduction. Many are willing to contribute with tax rates of 1% to 3%. Policy recommendations include fostering political trust, progressive taxation on fossil fuels, and government incentives for carbon reduction. The study underscores the link between awareness, acceptance, and support for carbon tax implementation, suggesting further research on additional support indicators, including political trust.