Tax Administration Costs Research Articles

The single tax in Ukraine: reform or repeal

The institution of a simplified taxation system provided for in the tax system of Ukraine is characterized by permanent variability, which is always aimed at achieving an optimal balance between national interests (reduction of the shadow economy sector; attracting funds to budgets; reducing the level of tax administration costs; preventing the use of simplified taxation system in minimization schemes; etc.) and individual interests of taxpayers (reducing the tax burden; promoting the competitiveness of taxpayers; improving the convenience of paying taxes; minimizing the amount of tax reporting; etc.). Since the introduction of the simplified taxation system, it has been significantly transformed and, compared to 1998, is qualitatively better. Despite this, discussions in political and scientific circles about the need to take steps to further modify this special tax regime, up to its complete abolition, do not stop. The article considers the National Revenue Strategy until 2030 approved by the supreme executive body of Ukraine, which defines a medium-term roadmap for reforming tax policy and tax administration in Ukraine. The article outlines the main principles that should be followed in modernizing the national simplified taxation system and considers the goals that the state seeks to achieve through the practical implementation of the approved strategy. The author describes in detail the key measures envisaged by this national strategy for reforming the simplified taxation system, including in the context of Europeanization of the tax system of Ukraine, and points out the uncertainty of certain elements of these measures, which leads to complications in the tax planning process for entities. The author concludes that the approved national strategy, which is aimed at approximating the national tax policy and tax legislation of Ukraine to the provisions of the European Union legislation, provides for depriving legal entities (including agricultural producers) of the right to tax their income with a single tax, and defines measures to tighten the requirements for single tax payers (individual entrepreneurs) and increase their tax burden.

Tantangan dan Strategi Penerapan Kebijakan Tarif PPN 12%

Increasing the VAT rate is one way for the government to increase tax revenue and address the fiscal deficit. The Indonesian government in 2022 has increased the VAT rate to 11% and 12% in 2025. The increase in the VAT rate to 12% has the potential to be a factor that affects the Economy, Business, and Tax Obligations of Taxpayers. The purpose of this study is to analyze the factors that could be a challenge in implementing a 12% VAT rate and the strategies that the Indonesian government can use to overcome these challenges. The research was conducted qualitatively and data was collected through a literature review. The results show that the challenges faced by the government in implementing the 12 percent VAT rate policy may be caused by the factors of increased tax administration costs, the effect on business and economy, as well as the political system and governance of government institutions. These challenges can be overcome by gradual socialization with the public and building partners, synergizing and correlating fiscal and monetary policies, and political commitment from politicians to support the policy of increasing the VAT rate to 12% so that its implementation can run well.

Inter-municipal cooperation cloud and tax administrative costs

The influence of inter-municipal cooperation (IMC) on municipal finances remains underexplored. This study focuses on implementing the inter-municipal cooperation cloud (IMC cloud), a pioneering digital framework that facilitates cooperation among municipalities in Japan. The findings indicate that introducing the IMC cloud results in a decrease of approximately 5% in tax administrative costs. A further examination reveals that the IMC cloud offers returns to scale via cost sharing and promotes operational improvements, thereby driving savings in tax administration costs. These findings suggest the possibility that cost savings through operational improvements are an overlooked aspect in the existing studies on municipal collaboration context.

Effect of Tax Evasion on Revenue Collected at Customs, Border and Control Department of Kenya Revenue Authority

Efforts to curb tax cheating have not yet yielded 100% rewards. The taxpayers are daily devising new mechanisms of evading taxes. Tax comes in different ways and has been reported to cause indirect harm to the economy. The purpose of this study was therefore to investigate the effect of tax evasion on revenue collected at the customs, border, and control department of Kenya Revenue Authority. The study applied a descriptive research design. The study through purposeful sampling sampled 120 businesses from 7,431 businesses that are active in the export or importation of goods and clearing agents. The study applied the Taro Yamane formula to sample 162 respondents from a population of 1788 staff of KRA at the customs and border control department. Secondary data was collected using a secondary data sheet and covered a period between 2001 and 2022. Data for the study was analyzed through quantitative techniques (descriptive and inferential analysis). The results of the study were presented in tables. The study revealed that among the causes of tax evasion at the border included: High Tax Rates levied on goods and services, perception of high compliance costs, the complexity of the process of filing for duties and other fees, inadequacy of taxation services/support, ambiguity in tax laws and policies and low tax education among taxpayers. the study further revealed that among the ways through which taxes were evaded at the border included: misdeclaration, undervaluation of goods smuggling of goods, classification of imported goods as raw materials, and tariff misclassification. The study concluded that tax evasion significantly and negatively affected the tax revenues collected at the customs, border, and control departments. The study recommended the hiring and development of staff working at the customs border and control department to be able to carry out frequent tax audits and inspections of goods that are imported or exported to curb tax evasion. The study recommended that the KRA allocate resources to acquiring the latest information communication and technology gadgets including scanners to help in curbing tax evasion because it had a negative effect on the tax collected. In addition, the tax department should invest in educating the taxpayers on the importance of paying taxes, how to file for taxes, and when to file to reduce tax evasion. The study also recommended a strengthened one-stop-border post policy to help in reducing tax administration costs.

Development of a State Tax Risk Management System

The article is devoted to the development of the concept of the state to manage its tax risks, based on a systematic approach. The author's concept presupposes the presence of the following elements logically arranged according to the principle "from the general to the particular": 1) mechanisms for managing tax risks, 2) disclosing methodological recommendations, 3) specific proposals for changing legislation. To achieve this goal, the author used general scientific methods (deduction and induction, analysis and synthesis, observation, description, generalization) and private scientific methods of cognition (comparison method, graphical and tabular data presentation methods). We have presented a brief overview of the main tax risks of the Russian Federation in the current economic environment, which are classified in four areas: 1) risks in the field of value added taxation; 2) risks in the field of taxation of profits and income; 3) risks, the source of which is Russia's membership in the Eurasian Economic Union; 4) customs risks. The author presents a general scheme of tax risk management by the state, which includes the context, goals and management strategy. The priority mechanisms for managing the tax risks of the state are formulated on the basis of the presented classification of tax risks. These areas include: introduction of an end-to-end product traceability system; substantiation of taxation methods; joint elimination of tax risks (Federal Tax Service, Federal Customs Service, Ministry of Labor, Federal Service for Financial Monitoring); optimization of tax administration costs on the part of both tax authorities and taxpayers; harmonization of indirect taxation, including duty-free trade; harmonization of international tax rules at the international level; selection of the most effective tools for eliminating multiple taxation. A draft "road map" has been developed to improve the management of state tax risks.

Forecast of budget revenues from taxes in the context of economy digitalization

Issues of tax planning and forecasting have become increasingly important given the current development of digital technology. Digitalization allows the lowering of tax administration costs and increases the speed of information collection and accuracy of its processing. Though the level of digitalization of Russian fiscal bodies is quite high, there are still many problems that require the application of modern tools to be resolved. The article presents the results of the research, conclusions and recommendations which shall be helpful in developing a universal algorithm for the application of digital tools in forecasting tax revenues in the Russian Federation. The author has studied digital tools applied by fiscal bodies, defined the role of these instruments in forecasting regional tax revenues, identified problems and developed measures to improve the system of planning and forecasting tax revenues in the budget of constituent entities of the Russian Federation. The article will be of interest for theoreticians and practitioners studying the work of Russian tax bodies as a basis for further research and review.

ЕФЕКТИВНІСТЬ ПОДАТКОВИХ ПІЛЬГ В РЕСПУБЛІЦІ БІЛОРУСЬ

Formulation of the problem. The problems of applying tax benefits are one of the most controversial and controversial in the architecture of building the tax system of the state. The multifaceted perception of their need, focus, choice of priorities, implementation conditions, and other equally complex elements of the system of tax benefits has given rise to many questions that the theory and practice of taxation are not able to unambiguously answer. The purpose of the article is to study the features of the application of tax benefits in the Republic of Belarus, as well as to determine the effectiveness of their application. Object of study - features and practical procedures for the establishment of tax benefits in the Republic of Belarus. Methods used in the study. The use of the induction method allowed us to identify areas for improving the procedures for determining the effectiveness of the application of tax benefits. Research hypothesis. The negative trend in the effectiveness of tax incentives is partly due to limiting objective factors. Statement of the main material. The implementation of the economic function of taxes, the existence of which is indicated by the comprehensive nature of taxes, involves the use of leverage or tax benefits in various forms in the fabric of taxation. And despite the presence of many negative effects of tax benefits (a distorting effect on the distribution of resources, irrationality of the structure of the tax burden, an increase in tax administration costs), states actively use them as a tool for solving socio-economic problems. The huge number of benefits characteristic of the tax system of the Republic of Belarus provided for by various regulatory legal acts predetermined the need for their adjustment and assessment of their effectiveness. The article considers certain tax preferences that are provided in order to support and develop the country's priorities and areas of activity. Originality and practical value. The study of the peculiarities of special taxation regimes used by small and medium-sized businesses, agricultural organizations, allowed us to conclude that with low profitability of payers, the construction of tax relations based on them is not a condition for reducing tax obligations. Conclusions. To increase the efficiency of the simplified tax system from the standpoint of minimizing the tax burden on payers, it is proposed to reduce the existing tax rates. Comprehensive government support for the IT sector, including in the form of tax incentives, allowed HTP residents to significantly increase profitability and provide increased opportunities for their growth.

OPTIMIZATION OF THE TAX BURDEN OF THE ENTERPRISES: DOMESTIC AND FOREIGN EXPERIENCE

Introduction. Excessive tax burden on enterprises is a negative factor that prevents them from functioning properly and hinders their business activity. The high level of the tax burden is the emergence of the economy into the shadows, the shortfall of taxes to the budget and, as a consequence, the failure of the state to perform its functions. Thus, an important aspect of successful management is the application of tax optimization methods, taking into account certain aspects of each enterprise. Methods.The study uses generally accepted scientific methods: dialectical - to determine general approaches to research; monographic - for in-depth study of individual social phenomena; scientific knowledge - to determine a certain "perspective" of research as an assumption about the most important for the study of the selected problem characteristics of the object; abstract and logical - in order to return from the formulated scientific abstractions again to the study of the concrete and the formulation of the necessary conditions for its further existence and development in a logical sequence; scientific generalization - to summarize scientific facts and results based on the study, as well as methods of statistical processing of information, using methods of obtaining such values and qualitative characteristics, which are not directly in the economic information of the enterprise under study. Results. The article considers the level of tax burden on domestic and foreign enterprises in view of statistical information. The main ways to reduce tax liabilities, features and consequences of their application are indicated. It is necessary to apply a set of existing methods of taxation to effectively optimize taxes, constantly adapting them to the specifics of the enterprise. Discussion. Existing ways to reduce the tax burden need to be reviewed and improved, taking into account frequent changes in domestic tax legislation. The main areas of improvement of the current taxation system in the future should be: moderate reduction and uniform distribution of the tax burden between taxpayers depending on the type of activity; strengthening the effectiveness of tax control over the level of production costs; creating conditions for intensification of investment and innovation processes in priority sectors of the economy; ensuring control over the formation and use of financial resources mobilized as a result of the application of tax benefits; minimization of tax administration costs; as well as optimizing the rates of various taxes and their harmonization with European standards.

Abstract P229: Cost-Effectiveness of a US National Sugar-Sweetened Beverage Tax Using a Multi-Stakeholder Approach

Introduction: Taxes on sugar-sweetened beverage (SSB) purchases have emerged as a policy tool to lower obesity, diabetes and CVD risks. Prior cost-effectiveness analyses included SSB tax administration costs yet ignored tax payments as mere transfers from a societal perspective. Yet, tax payments could count as revenues for the government and as costs for consumers and the SSB industry. Corresponding health and economic impacts for different stakeholders, essential to guide decision-making, are not established. Aim: To estimate the health impact and cost-effectiveness of a national penny-per-ounce SSB tax from the healthcare perspective, societal perspective, and across 9 stakeholder groups: 6 consumer categories classified by insurance status (and reflecting varying SSB intake and risk factors), the government, the beverage industry, and other private sector. Methods: A validated microsimulation model (CVD PREDICT) was used to estimate CVD reductions, quality-adjusted life-years (QALYs) gained, costs, and cost-effectiveness among US adults (35+ years), evaluating both 100% and 50% price pass-through to consumers. Model inputs included dietary and demographic data from NHANES, policy effects on consumer intake and SSB-disease effects from meta-analyses, policy costs for tax administration based on the Berkeley tax, and validated healthcare costs. Findings were evaluated over a lifetime, with costs inflated to constant 2017 US dollars and outcomes discounted annually by 3%. Results: With 100% pass-through, the tax prevented 518,000 CVD events among US adults 35+ years over a lifetime and was cost-saving from a societal perspective. Lifetime discounted healthcare cost savings ($31.5bn) were 24 times as large as tax implementation costs ($1.3bn). Evaluating cost-effectiveness by stakeholder, for the 6 consumer categories, the tax was not cost saving, but incremental cost-effectiveness ratios (ICERs) each were <$50,000/QALY. For the government, tax revenues and healthcare savings were positive, netting $73.7bn in savings. For the beverage industry, net costs were $0.63bn (limited to tax compliance costs). With 50% pass-through, the tax would prevent 279,000 CVD events over a lifetime and remained cost-saving from a societal perspective. Government healthcare savings were approximately half as large, while consumer ICERs all remained <$50,000/QALY. For the beverage industry, tax costs were $33.64bn, much larger than with 100% pass-through, reflecting lower producer revenue per unit sold. Findings were robust to a range of sensitivity analyses. Conclusions: A national SSB tax would improve health and be cost-saving nationally, with varying health impacts and costs across major stakeholders. These novel findings are relevant and timely for policy decisions on continuing expansion of SSB taxes.

Tax administrative costs as a component of tax transaction costs in Poland and other OECD countries

Motivation: While implementing a tax policy, attention should be paid not only to the amount of tax revenues but also to the total cost of the fiscal process itself. Only an analysis with consideration of tax collection costs provides the possibility of unequivocal assessment of a tax system’s effectiveness.Aim: The aim of the article is to identify the elements of tax transaction costs and to analyze in detail the tax administrative costs, as well as to assess the effectiveness of the Polish tax system compared to that of other OECD countries.Results: The Polish tax administration is one of the most expensive in the European Union and it requires reforms. According to the OECD, tax collection costs in Poland in 2013 amounted to 1.6% of tax revenues. Among the 56 countries surveyed by the OECD, only Japan (1.74% of revenue) and Saudi Arabia (1.62%) had a higher tax collection costs index.

The taxation of foreign profits: A unified view

This paper synthesizes and extends the literature on the taxation of foreign source income in a framework that covers both greenfield and acquisition investment, and a general constraint linking investment at home and abroad for the multinational by introducing a cost of adjustment for the mobile factor. Unless the cost of adjustment is zero, the domestic tax on foreign-source income should always be set to ensure the optimal allocation of the mobile factor between domestic and foreign assets and should follow the classical rules in the literature; national optimality requires the deduction rule, and global optimality requires the credit rule. Only in the zero-cost case does exemption become optimal. Allowances can be set so as to ensure that domestic and foreign asset purchases are undistorted by the tax system: this requires a cash-flow tax on domestic investment in the greenfield case, and a cross-border cash flow tax on foreign investment in both cases. These basic results extend to various extensions of the model, notably: (i) when a profit-shifting motive is present; and (ii) to some extent, when a corporate income tax is in place. The introduction of tax administration costs into the model can explain the empirical trend towards the use of the exemption regime.

The Taxation of Foreign Profits: A Unified View

This paper synthesizes and extends the literature on the taxation of foreign source income in a framework that covers both greenfield and acquisition investment, and a general constraint linking investment at home and abroad for the multinational by introducing a cost of adjustment for the mobile factor. Unless the cost of adjustment is zero, the domestic tax on foreign-source income should always be set to ensure the optimal allocation of the mobile factor between domestic and foreign assets and should follow the classical rules in the literature; national optimality requires the deduction rule, and global optimality requires the credit rule. Only in the zero-cost case does exemption become optimal. Allowances can be set so as to ensure that domestic and foreign asset purchases are undistorted by the tax system: this requires a cash-flow tax on domestic investment in the greenfield case, and a cross-border cash flow tax on foreign investment in both cases. These basic results extend to various extensions of the model, notably (i) when a profit-shifting motive is present; (ii) to some extent, when a corporate income tax is in place. The introduction of tax administration costs into the model can explain the empirical trend towards use of the exemption regime.

The taxation of foreign profits — The old view, the new view and a pragmatic view

The increasing importance of multinational firms raises the question as to whether and how governments should tax repatriated profits, i.e. affiliate profits returned to the headquarters. The answer to this question is especially relevant for profit repatriations within the European Union where multinational firm investment is substantial and tax competition is supposed to be of rising intensity. This paper reviews the criticism of the standard view (the “old view”) of foreign profit taxation, which goes back to Peggy Musgrave. The “new view” of international taxation is based on recent empirical studies and favours a system in which foreign profits are exempt from tax. The debate between old view and new view proponents is critically discussed and, finally, the two are confronted with a “pragmatic view” on foreign profit taxation which crucially incorporates compliance and tax administration costs.

Tax Assignment: Does the Practice Match the Theory?

This paper builds on the existing literature to better explain the tax assignment choices made by countries in different economic circumstances. In particular, we explain why the degree of tax autonomy given to subnational governments is significantly greater in industrial than in developing countries, even when adjustment is made for differences in income level. We consider several arguments for this disparity. First, electoral regimes are not in place for the accountability gains to be fully captured. Second, tax decentralization may result in unacceptable fiscal disparities, and, third, tax administration costs are higher for subnational governments and there is not enough incentive to take steps to lower them. Finally, and contrary to expectations, we do not find empirical evidence that giving more discretionary powers to subnational governments in developing countries will lead to a crowding out of central revenues, but we do find this result for industrial countries.

Four Core Principles of Tax System Design: Introduced and Applied to the Taxation of Multinationals

Although optimal tax theory dominates both tax economics and tax law scholarship in the upper academic ranks, legal academics make remarkably little use of it in their day-to-day work. This is unfortunate. Although I am unwilling to accord efficiency the primacy that optimal tax theory gives it, the behaviorally distortive effects of tax rules should be of concern regardless of one’s normative perspective. Distortive effects are not merely inefficient; they affect fairness and administrability as well. We know, for example, that if the relevant supply or demand curve of a nominal taxpayer is elastic, she is unlikely to bear the ultimate burden of a tax or rule. If so, the burden of a tax or rule that is supposed to be borne by one group may in fact be shifted to another. Tax shelters and the administrative problems they create similarly cannot be understood without taking into account the behaviorally distortive effects of the rules on which they rely.The paper proposes four nonmathematical principles that, consistently applied, should result in rules that minimize such distortion:1. Tax liability should not turn on factors as to which taxpayer is relatively indifferent (“relative indifference”).2. The least distortive tax base for any taxpayer is whatever that taxpayer would seek to maximize in the absence of taxation (“taxing the maximand”).3. If what taxpayer would seek to maximize in the absence of taxation is a number already computed for non-tax purposes, tax administrative costs will be minimized if the tax base equals that reported number (“taxing the reported maximand”).4. Taxpayers should be classified for tax purposes by reference to whatever it is they would seek to maximize in the absence of taxation (“classification by maximand”).All else being equal, rules consistent with these four principles are more likely to be efficient, more likely to effect intended distributive goals, and less likely to invite tax avoidance than rules that are not.The paper then illustrates the power of these principles by applying them to a problem that has long resisted solution: design of a minimally distortive system for taxing corporations, particularly multinational groups. Such a minimally distortive system, it concludes, would tax all publicly-reporting corporate groups, domestic and foreign alike, on their adjusted book income, computed on a consolidated basis and allocated among jurisdictions using a single factor formula based on sales adjusted by industry-average profit-to-sales ratios.

Tax Administration Costs in Transition Economies and the OECD: A Comparative Study

Tax Administration Costs in Transition Economies and the OECD: A Comparative Study