Tax Abuse Research Articles

Deliberation on continuous spread of corruption in South Africa

Corruption is widely spread in South Africa and is against the norms of honestly, morals, values, ethics, and good governance. The reasons of corruption may be individual (personal greed for luxury, power, authority), organisational (inadequate monitoring and evaluation, reporting processes), legislative (no compliance), strategic (lack of ethical culture), to state a few. The study is aimed to find answers to the following guiding research question, such as: what is the extent of corruption in South Africa? The qualitative study utilised secondary sources through the literature review of articles and document review of annual/official reports to gather relevant information. The information was further assessed using document analysis. The findings show that corruption is spreading at every level of government, and even public and private sectors are getting exposed to cases of misconduct. The country has established various legislative frameworks to combat corruption. The objectives of anti-corruption frameworks are operationalised through the establishment of anti-corruption organistaions. Some of them are Corruption Watch; National Anti-Corruption Advisory Council; Financial Intelligence Centre; Organisation Undoing Tax Abuse; and National Anti-Corruption Hotline. The findings show that although there are anti-corruption measures in place, the inadequate compliance may create implementation gaps, hence corruption keeps on spreading at political level, bureaucratic offices, and even in municipalities. The study suggests policy measures to minimise the scope and spread of corruption.

Interrelationship of tax liability with the principles of tax law

The article examines the relationship between tax liability and the principles of tax law in the current legislation and regulatory requirements of the European Union. The object of research is social relations that regulate the emergence, change, fulfillment, termination of tax liability in the context of the principles of tax law. The subject of the research is the norms of the Constitution of Ukraine, current tax legislation and other normative acts. During the research, various methods were used, in particular: historical-legal, systematic, comparative-legal, formal-legal, teleological, general scientific methods: analysis, synthesis, induction, deduction. It is indicated that the tax liability is the taxpayer's duty to pay the state a certain amount, which the taxpayer independently calculates and reflects in the tax return. It is noted that the principles of tax law and the principles of tax liability and taxation are mutually related and are reflected in regulatory acts of tax legislation or other regulatory documents. The Tax Code of Ukraine specifies the following principles: universality of taxation; equality of payers before the law, inevitability of liability; presumption of legality of the taxpayer's decisions: fiscal sufficiency; social justice; neutrality of taxation; stability; uniformity and convenience of payment; a unified approach to setting taxes and fees. Separate principles are defined in the Constitution of Ukraine - the principles of rule of law, legality, etc. The legal principle of the economy of taxation is manifested in the requirement for the economic basis of income taxation. In the tax law of the countries of the European Union, the presumption of legality of the taxpayer's decisions is expressed through the rules on the inadmissibility of various forms of tax abuse, which have a codified status. The development of these principles in the tax law of the member states of the European Union has recently taken place in the form of determining the criteria for the application of scientific doctrines in model taxation situations, based on specific court decisions in cases on determining the amount of tax liability.

PREREQUISITES AND CONSEQUENCES OF THE USE OF OFFSHORE JURISDICTIONS BY UKRAINIAN BUSINESSES

Offshore zones, as legal, financial and tax entities, attract the attention of both governments and the business environment. These zones are used for a variety of purposes, including reducing the tax burden, ensuring confidentiality, privacy and asset protection, as well as facilitating business. However, the use of offshore zones is also associated with risks, which include tax abuse, tax evasion, corruption and money laundering. One of the catalysts of the “offshorization” processes on a global scale was scientific and technical progress, the wide and rapid development of modern means of communication and communication. The emergence and development of the global Internet, satellite communications, etc. have reduced the time required for communication between fairly remote parts of the world to a minimum. The listed points together created qualitatively new opportunities for the comprehensive and rapid development of the offshore sector of the world economy, which allowed it to reach a qualitatively new level. Recent years have been characterized by growing attention to transparency and the fight against tax evasion at the international level. Ukraine is implementing measures to control transactions with offshore jurisdictions and ensure transparency in taxation. The study of this topic allows to reveal the peculiarities of the legal, financial and tax environment of offshore jurisdictions, to identify the advantages and risks of their use, as well as to understand the influence of offshores on the economy and international relations.

Legislative Regulation and International Cooperation in Counteracting Corporate Tax Abuse

Legislative Regulation and International Cooperation in Counteracting Corporate Tax Abuse

Modernization and Digitalization of the EU Withholding Tax Procedure: Opportunities Offered by the FASTER Initiative

The EU’s Faster and Safer Relief of Excess Withholding Taxes (FASTER) initiative aims to modernize and digitalize the withholding tax procedure. It addresses two key issues: preventing tax abuse and double taxation for cross-border investors. Cum/Ex and Cum/ Cum scandals exposed vulnerabilities in the current system, leading to substantial tax losses. To streamline the process, FASTER introduces a uniform EU Digital Tax Residence Certificate (eTRC), enabling digital reimbursement applications. It also offers two fast-track procedures, ‘relief at source’ and ‘quick refund’, alongside standard reporting obligations for certified financial intermediaries to enhance transparency. While the initiative promises annual savings of EUR 5.17 billion for investors, it places a significant burden on financial intermediaries. Implementing eTRCs and meeting reporting requirements involve substantial costs. Concerns regarding data protection and implementation timelines exist. The proposal is currently under public consultation until 21 August 2023, and the implementation is targeted for 1 January 2027, subject to further developments and consultations. In summary, FASTER seeks to modernize the withholding tax process to combat abuse and facilitate cross-border investments, but its impact on financial intermediaries and data protection considerations remain noteworthy. FASTER, Withholding tax, Digitalization, Tax fraud, Double taxation, eTRC, data protection, reporting obligation, national register, cum/ex

Financing child rights in Malawi

BackgroundNearly all countries have ratified the United Nations Convention on the Rights of the Child and, therefore, support children having access to their rights. However, only a small minority of children worldwide have access to their environmental, economic, and social rights. The most recent global effort to address these deficits came in 2015, when the United Nations General Assembly agreed to a plan for a fairer and more sustainable future by 2030 and outlined the Sustainable Development Goals (SDGs). One remediable cause is the lack of revenue in many countries, which affects all SDGs. However, illicit financial flows from low-income to high-income countries, including international tax abuse, continue unabated.MethodsUsing the most recent estimates of tax abuse perpetuated by multinational companies and tax evasion through offshore wealth, and precise econometric modelling, we illustrate the potential regarding child rights (or progress towards the SDGs) if there was an increase in revenue equivalent to tax abuse in Malawi, a low-income country particularly vulnerable to climate change. The Government Revenue and Development Estimations model provides realistic estimates of government revenue changes in developmental outcomes. Using panel data on government revenue per capita, it models the impact of increased revenue on governance and SDG progress.ResultsIf cross-border tax abuse and tax evasion were curtailed, the equivalent increase in government revenue in one country, Malawi, would be associated with 12,000 and 20,000 people having access to basic water and sanitation respectively each year. Each year, an additional 5000 children would attend school, 150 additional children would survive, and 10 mothers would survive childbirth.ConclusionsMore children would access their economic and social rights if actions were taken to close the gap in global governance regarding taxation. We discuss the responsibility of duty bearers, the need for a global body to arbitrate and monitor international tax matters, and how the Government of Malawi could take further domestic action to mitigate the gaps in global governance and protect itself against illicit financial flows, including tax abuse.

Evaluación del plan de armonización fiscal en la Unión Europea

Study of Political Economy, Public Finance and European Economic Integration on the tax harmonizationplan of the European Union. It is based on the theoretical and methodological frameworks of the EconomicAnalysis of Law, in order to analyze the European tax harmonization process. In addition to analyzing ques-tions of incentives, efficiency and institutional quality, special attention is paid to the problems of attributionof powers in the European system and the different existing levels of tax pressure and effort in the MemberStates. This study will also analyze the European Commission’s latest proposal on taxation, which aims toachieve tax uniformity, combat tax abuse and put an end to unfair competition practices within the Europeaneconomic-legislative framework. These initiatives are particularly important in the current socio-economiccontext, when new ways of financing the post-Covid recovery fund, curbing the inflation that has beenlatent in recent months and dealing with the negative externalities that the conflict between Russia andUkraine may produce are being studied. All this is completed with a proposal for the feasibility of fiscalfederalism.

Parliament

This overview highlights the European Parliament’s adoption of recommendations to fight tax abuse and call for active legislative measures following the Pandora Papers investigations.

Tax Amnesty – The choice between fiscal discipline and economic development. The case of Albania

Nowadays, the various problems in the economy are directly affecting the economic development of the countries considering tax abuse as a serious issue in the economy, in overall. The conflict arising in nowadays society seems to be between the demand to increase welfare and consequently the refusal to face tax obligations. Hence, a country’s economy cannot upgrade itself without the efficiency of fiscal policies. The scope of this article is to analyze the relationship between fiscal discipline and economic development in Albania. The objectives of this research are to review the literature on tax amnesty program and describe the factors related to tax amnesty, such as: implementations, costs and benefits, participation and the effects of the program and lessons learned from countries around the world to show the connection that exists between tax amnesty and economic development in Albania. For all possible standards in the country, it is very important that the state budget is reimbursed in a timely manner. Undoubtedly, the question that arises on behalf of this paper is whether the tax amnesty would serve as an aid for the reimbursement of the state budget.

АНАЛІЗ ВПЛИВУ ПОДАТКОВОЇ СИСТЕМИ НА ФІСКАЛЬНУ СТАБІЛЬНІСТЬ ТА УПРАВЛІННЯ РИЗИКАМИ: ПЕРСПЕКТИВИ ТА ВИКЛИКИ

Withinthearticle, theimpactofthetaxpolicyonfiscalstabilityandrisksman-agementtoidentifyperspectivesandchallengesfacingUkraineintheconditionsofmartiallawareresearched.Themainapproachestodeterminingandunderstandingfiscalstabilityareidentified, whichincludetheapproachrelatedtothebudgetbalance; theapproachbasedonthedynam-icsofmoneyturnover; theapproachfocusedonpublicdebt; andtheapproachthattakesintoaccountsocio-economicjustice. Theadvantagesanddisadvantagesofusingtheseap-proachesareformulated. Itisprovedthattheoutlinedapproachestounderstandingfiscalsta-bilityareinterrelatedandcomplementary, sinceofthemisfocusedondifferentaspectsofthefiscalpolicyduetoitsimpactontheeconomyandsociety. Theintegrateduseoftheseap-proachesallowsustoobtainamorecompleteandobjectiveunderstandingoffiscalstabilityanditsdependenceonotheraspectsofeconomicdevelopment.Therelationshipbetweenthetaxsystemandfiscalstabilityisidentifiedandcharacter-ised. Itisprovedthatthetaxsystem, whichdeterminedthemethodofcollectingrevenuesforthestatebudgetandformsthespecificsofthestate’sfinancialpolicy, isasignificantprerequi-siteformanagingfinancesandensuringfiscalstability.Themainrisksassociatedwiththevalidtaxsystemthatcanaffectfiscalstabilityandformulatethelikelyconsequencesoftheirimplementationareidentified. The most significant risks include as follows: shortcomings in tax legislation, increased losses of financial and phys-ical assets of economic entities as a result of war, tax abuses and tax evasion, macroeconomic financial and tax crises, tax completion between countries, corruption, tax policy and social conflicts, changes in international tax standards(in the context of the chosen path of the Ukraine’s development towards European integration).Prospectsforreformingthetaxsystemtoimprovefiscalstabilityintheconditionsofwarandpost-warconditionsareformulated

Due Diligence in the Implementation of the Sustainable Development Goals and the ESG Agenda: the Balance of Soft and "Hard" Regulations

The subject of the study is the due diligence of the company, which can manifest itself to it in corporate governance. Due diligence in corporate governance, considered in the context of the implementation of the sustainable development goals and the ESG agenda, differs significantly from the understanding adopted in Russia from the position of the highest courts in the field of detection and prevention of tax abuses. Both approaches, as well as the definition under consideration, are not normatively fixed, and the first, in accordance with world tradition and practice, is implemented through soft regulation. In an environment of uncertainty and risk diversification, there is a growing trend to make SDG and ESG prudence mandatory. In Russia, such a transition is being discussed, but there is no readiness for it, and references to European experience in the current conditions are problematic. The existing ones in this area have not yet been studied, which hinders the choice of ways and mechanisms for their regulation. The novelty of the study is to identify the need to monitor the effectiveness of soft regulation and the actual activities of Russian companies in the context of the SDGs and the ESG agenda.

Tax Abuse in the European Union: The Current State of Affairs

In this contribution, the author, who was a pupil of the late Prof. em. Frans Vanistendael and later became his successor at the Institute of Tax Law at KU Leuven, discusses the view of Prof. em. Vanistendael on tax abuse. Prof. em. Vanistendael took the position that there are multiple notions of tax abuse in EU law, depending upon whether abuse of primary or secondary law is at stake. The present author, however, argues that there is only a single notion of tax abuse which is incarnated in the general EU law anti-abuse principle that applies in all areas of tax law, but not necessarily with the same effect.

Proportionality and the fight against international tax abuse: comparative analysis of judicial review in EU, international investment and WTO law

ABSTRACT This contribution considers the use of the principle of proportionality to review measures combatting international tax abuse (avoidance and evasion). Our claim is that proportionality, which tends to be viewed as the key analytical tool to balance tax equity against the interests of taxpayers, is ill-suited to the review of such measures. This we will demonstrate from a theoretical angle, but also through the analysis of the CJEU, international investment tribunals and WTO adjudicatory bodies: rather than balancing tax certainty against tax equity or focusing on the efficiency of the anti-tax abuse measures in the pursuit of substantive policy goals (the types of enquires normally associated with proportionality), what we observe is an assessment and gradual demarcation of the rightful territorial extent of the State’s taxation powers.

An analysis of tax abuse, debt, and climate change risk in low-income and lower-middle-income countries

IntroductionClimate change is exacerbating a pre-existing child rights crisis. Lower- (low- and lower-middle-) income countries have borne 99% of the disease burden from the crisis, of which children under five...

Influences of european integration on the formation and implementation of the tax policy of Ukraine

Methods. The results of the work are obtained through the use of methods of analysis and synthesis, dialectical approach, method of analogy, scientific generalization, methods of economic and comparative analysis. Results. The role of tax policy in the system of conceptual directions of business development of EU countries is determined. The generalization of the main practices and tax trends in the EU countries made it possible to identify priorities for implementation in Ukraine by blocks of mandatory or resultative character. Mandatory proprieties would be: observance of the principles of transparency, information exchange and fair tax competition; ratification of EU standards in the field of taxation within the framework of further harmonization of tax legislation; implementation of European approaches to the principles of fair tax competition by identifying harmful measures of state support; implementation of joint measures in the fight against fraud related to trade in excise goods, other tax abuses; implementation of measures within the framework of BEPS; ensuring the stability of the tax system with the burden of reforms in the event of a change of government. Resultative priorities would be: determination of special taxation modes within the framework of implementation of recovery and sustainability programs; preferential taxation practices for businesses in the first years of activity; preferential taxation practices for investment businesses; exemption from income taxation of young people up to a certain age; ensuring the protection of the rights of taxpayers in the conditions of judicial reform and compliance with the principles of the rule of law. Novelty. The specifics of the practice of taxation in the EU countries have been revealed and the most relevant for Ukraine approaches to the implementation of tax policy have been characterized in the context of the development of the war economy and post-war recovery. Practical value. The results of the study are of an applied nature, since the study of the European integration of Ukraine from the point of view of influence on the tax policy will ensure the system of reforms with the stabilization of management approaches. Since the tax policy in Ukraine is characterized by frequent reforms, European practices will force a series of changes with further establishment of the tax system. For Ukrainian business and population, this is a positive aspect of adaptation and formation of the market environment on a competitive basis and with the possibility of long-term planning of activities.

Article: Access to Tax Treaty Dispute Resolution Mechanisms in Cases of Abuse

Reaching a common understanding of the interpretation and enforcement of tax treaties is a desirable policy goal. It results in higher certainty and helps to increase their effectiveness thus enhancing all the purported objectives of these international agreements. In this regard, dispute resolution mechanisms within international tax law fulfil a relevant coordinating function through the amicable assessment of frictions and mismatches in tax treaty provisions. Notwithstanding, access to these remedies is sometimes denied when the tax authorities consider that the case involves tax abuse even though anti-tax abuse measures usually pose some of the most complex interpretation challenges within tax treaties. Even after the post-BEPS wide implementation of broad-based treaty anti-abuse rules – such as the principal purpose test – countries are reluctant to grant unrestricted access to dispute resolution remedies. This contribution aims at depicting the rather asymmetrical state of affairs on the access to dispute resolution remedies in instances of tax abuse. Additionally, it purports to demonstrate that there are compelling policy reasons to support granting access to both mutual agreement and arbitration procedures in these cases and to criticize the incoherencies that originate from the existing restrictions. Tax treaties, dispute resolution, mutual agreement procedure, arbitration, MLI, Tax abuse, GAAR, PPT

Critical Review Of The ATAD Implementation: The Implementation of the ATAD by Austria

The Anti-Tax Avoidance Directive (ATAD) and ATAD II had major implications for the Austrian corporate tax regime. Particularly, Austria was obligated to introduce an interest limitation rule, a controlled foreign company (CFC) rule, and comprehensive hybrid mismatches rules. In addition to an overview of the transposition measures, this contribution particularly aims at elucidating remarkable deviations from the ATAD’s standards and discussing selected issues arising in the specific Austrian context. Tax abuse, tax avoidance, BEPS, ATAD, EU law, adoption of EU secondary law

Article: The EU’s Uncoordinated Approach to Tax Avoidance and Tax Abuse in Relation to ‘Uncooperative’ Tax Jurisdictions

The European Union (EU)’s external tax policies in relation to ‘uncooperative’ tax jurisdictions are predominantly shaped by the case law of the Court of Justice of the European Union (CJEU), the Member States’ domestic tax laws and, most recently, the EU list of non-cooperative jurisdictions for tax purposes (EU blacklist). Research in academia scholarship has assessed the EU blacklist from various angles. The objective of this article is to contribute to this discussion by contextualizing the EU blacklist with the relevant CJEU case law on anti-avoidance and antiabuse provisions applied in third country situations. Beyond an assessment from a doctrinal perspective, particular emphasis is placed on related tax policy issues. This combined evaluation yields three primary conclusions: the EU blacklist’s soft law character allows the Member States to continue to take advantage of type-casted and irrebuttable anti-avoidance and anti-abuse provisions in light of the CJEU case law; the EU blacklist’s inability to meet its initial objectives can be explained by political dynamics at the EU level; and the EU blacklist might relieve some of the currently manifesting symptoms without addressing the fundamental flaws in the international tax system. CJEU case law, developing countries, EU blacklist, EU external tax policies, free movement of capital, harmful tax competition, mutual assistance, tax abuse, tax avoidance

Tax abuse-The potential for the Sustainable Development Goals.

Governments generally provide the services that allow people to access the critical determinants of health: water, sanitation, and education. These are also Sustainable Development Goals and fundamental economic and social human rights. Studies show that governments spend more on public services and health determinants with more revenue. However, governments in low and lower-middle-income countries have small budgets, and tax abuse (avoidance and evasion) contributes to revenue leaks. Researchers have estimated that four countries enable more than half of global tax abuse. We used estimates on tax abuse with a model of the relationship between government revenue and the determinants of health to quantify the potential for progress towards the Sustainable Development Goals 3, 4, 5, and 6. The increase in government revenue equivalent to global tax abuses is associated with 36 million people having access to basic sanitation and 18 million having access to basic drinking water. Additionally, over a ten year period, this increase would be associated with over 600,000 children and almost 80,000 mothers surviving. Thus, curtailing tax abuses would significantly contribute to progress towards the Sustainable Development Goals. Countries that enable tax abuses must review and modify policies to ensure progress towards these goals.

Աշխարհի տխրահռչակ «հարկային դրախտները»/Notorious «Tax Havens» of the World

Significant differences in tax policy, banking and financial secrecy and similar issues have led to colossal accumulation of financial resources and tax abuses in a number of countries/jurisdictions around the world. Such countries/jurisdictions are characterized as «tax havens». However, if such territories provide «paradise» conditions for the business sector, which strives in every way to reduce the tax burden, then for states deprived of a significant part of the expected tax revenues, they are a real «hell». Perhaps, this is the reason for the universal interest in tax havens and offshores. The paper compiles and analyzes «black» and «gray» lists of countries/jurisdictions that have received the status of tax havens by various international structures, and their classification according to the indices of financial secrecy and corporate tax havens.