Tax Burden Research Articles

Is tax avoidance one of the purposes of financial data manipulation? The case of Romania

PurposeCompanies avoid taxes in a variety of ways and use different methods to do that, one of the most common being earnings management. The purpose of this paper is to investigate whether companies manipulate their financial data in order to reduce taxes paid.Design/methodology/approachWe considered a sample of 63 listed Romanian companies for the period 2016–2021. The Beneish model was used for estimating earnings management, and the effective tax rate was used to measure tax avoidance. The analysis was carried out using regression analysis in Stata13 software.FindingsThe findings of the research indicate a negative and statistically significant association between effective tax rate and earnings management, implying that one of the main reasons why companies manipulate their earnings to reduce tax burden and avoid taxes. Moreover, our results show that return on assets (ROA) has a statistically significant negative influence on the effective tax rate. Furthermore, our analysis reveals that firm size, growth, and Big4 audit have no effect on effective tax rate.Research limitations/implicationsBecause it analyzes concrete cases using financial data and provides some recommendations for addressing the issue of tax avoidance, this work is useful in advancing both quantitative and qualitative research on this topic. This research is relevant for businesses, governments, regulators, audit professionals and investors.Originality/valueThe study, by analyzing concrete cases using reported financial data, contributes in filling the gap within the literature that results from a lack of scientific research on the relationship between tax avoidance and earnings management, and then it clarifies the nature of the causal connection between them. Moreover, it considers a combination of firm related variables including performance, size and also audit quality.

УБЫТОЧНАЯ ДЕЯТЕЛЬНОСТЬ МАЛОГО БИЗНЕСА: ОСОБЕННОСТИ ОЦЕНКИ НАЛОГОВОЙ НАГРУЗКИ

A universal tool has been developed for assessing the tax burden of a loss-making small hotel busi-ness using the "Income minus Expenses" tax system, which quantitatively proves the increase in losses received in operating activities, including due to "input" VAT, due to the accrual of a minimum tax

Psychological Social Behavior: Taxable Entrepreneurs Respond to Vat Policy Changes

Environmental considerations or individual intentions influence taxpayer behavior. VAT changes may be a reaction to behavior either overtly or covertly. This research applies an approach approach with the method of interviews conducted with business actors. However, VAT can reduce profits by influencing consumers to spend resources and look for lower prices. Regarding the VAT rate, it is still considered unfair. Furthermore, double recording or splitting the business into several forms is implemented, which is passed on to other family members. Another option is to do tax planning to meet the tax burden. Decisions in the information action model can be based on rationality, routine behavior, nature/tradition and subjective norms / perceptual behavior. Findings from an environmental perspective are formed from the level of experience and age, as well as the encouragement of social communities and provide psychological stimuli for taxpayer behavior in assessing changes in tax regulations, especially about VAT rates.

Assessment of Factors Affecting Optimal Tax Burden and Tax Revenues in RA

The purpose of the article is to identify the factors affecting the optimal tax burden and tax revenues of RA and evaluate their impact. The tasks of the work are to identify the range of factors affecting the optimal tax burden and tax revenues, to evaluate their impact and transmission mechanisms using econometric models. The analyzes in the work were carried out using statistical and econometric methods, the version of the Laffer curve, modified by Balatsky. As a result of the study, it was revealed that the evaluation results show that RA economic growth, other things being equal, will reach its maximum value when the tax burden is 20.9-21.9 %, which we considered as the optimal tax burden range. The government's final consumption expenditure does not ensure a sufficient level of economic growth or a continuation of high growth. The assessment of the impact of indicators determining GDP growth on tax revenues shows that the indicators determining GDP growth, in general, also have a significant impact on tax revenues.

Tax Reforms and Tax Burden of Listed Consumer Goods Firms in Nigeria

The lack of clarity in tax laws, coupled with frequent amendments and revisions, has given rise to uncertainty, hindering strategic planning and impeding long-term investment decisions. As a consequence, the publicly traded consumer goods firms in Nigeria face the formidable task of not only understanding and complying with the intricate tax structures but also striving to maintain competitiveness in an environment where the tax burden is increasingly becoming a pivotal determinant of business success. Given the foregoing this study examined tax reforms and tax burden: a study of listed consumer goods companies in Nigeria. In order to achieve the goals of the study, a longitudinal panel research design was implemented. The study concentrated on twelve consumer goods corporations that are publicly traded on the stock market. The selection of these companies was based on their continuous publication of annual audited financial statements from 2013 to 2022. The data obtained from these reports were analysed using the panel data regression approach, with the assistance of statistical tools like E-view 10. The study's findings indicated that direct tax exerts insignificant effect on tax burden of consumer goods firms in Nigeria. While indirect tax on the other hand, has a negative significant effect on tax burden of consumer goods firms in Nigeria. The study thus recommends that consumer goods firms should consider engaging with policymakers and tax authorities to advocate for favorable indirect tax policies. Collaborative efforts with government agencies can contribute to creating a tax environment that aligns with business needs and minimizes the negative impact on the tax burden.

Research on Tax Planning of B Liquor Company

Tax planning is an important part of enterprise strategic management and enterprise financial management.in recent years, the liquor industry as a traditional industry in China, the tax burden is relatively heavy. In this paper, B company as an example, within the scope of the tax law allows through tax planning, reasonable tax avoidance, reduce the tax burden of enterprises, to help enterprises achieve sustained and steady development, while its tax planning strategy has a certain degree of representation and reference.

Political influence on international climate agreements with border carbon adjustment

We study the influence of industrial lobbying on national climate policies and the formation of an international environmental agreement if the coalition countries use border carbon adjustments to protect domestic producers. We find that the effects of this political influence crucially depend on the distribution of carbon tax revenues. If these are transferred to the households, lobbying distorts carbon taxes downwards to reduce the tax burden and does not affect coalition sizes. This leads to higher emissions and lower welfare. By contrast, if tax revenues are given back to the firms, lobbies in the outsider countries favor carbon taxes, whereas lobbies in the coalition countries favor carbon subsidies to raise the international commodity price. This reduces the tax difference and the welfare difference between the countries, which reduces the free-rider incentives. Then, lobbying stabilizes the grand coalition and reduces global emissions compared to a “perfect” world without lobbying if the political influence is sufficiently strong.

Unlocking Sri Lanka's Tax Landscape: A Comprehensive Analysis of Tax Burden and Policy Dynamics in a Sri Lanka

Unlocking Sri Lanka's Tax Landscape: A Comprehensive Analysis of Tax Burden and Policy Dynamics in a Sri Lanka

Fiscal and Tax Policy of Bogd Khanate of Mongolia (1911–1919)

Abstract As a result of the prolonged struggle for national independence, the Mongolian people, who endured over two centuries of oppression under Manchurian rule, regained sovereignty in 1911 and established the Republic of Mongolia. During this period, significant economic, social, and political reforms were initiated, laying the groundwork for the national financial system. This article examines the social, political, and economic landscape during the Bogd Khanate of Mongolia. Research into the tax and financial policies implemented during this period was conducted using historical documents and sources. Within the framework of Mongolian governmental financial policies, five ministries were established, accompanied by the enactment and implementation of various regulations about finance, taxation, and customs. Efforts were made to enhance state revenue; however, the accumulation of debt owed to foreign moneylenders and merchants, coupled with the taxation burden on Mongolian citizens, including payments to domestic nobles and religious institutions, exacerbated poverty and economic hardship among the populace. In June 1915, the autonomy of Mongolia, as stipulated in the treaty between Russia, Mongolia, and China, was abolished in 1919, resulting in the reassertion of foreign control over Mongolian governance.

Beyond the smoke: Historical analysis of the revenue implications of state cigarette tax policies, 1989 to 2019

IntroductionWhile cigarette taxes are a vital tobacco control tool, their impact on cigarette tax revenue has been largely understudied in the extant literature. This study examines how the level of cigarette taxes affects the revenue generated from cigarettes in the United States over a thirty-year period. MethodsWe obtained the Tax Burden Data from the Centers for Disease Control and Prevention (1989–2019). Our dependent variables were gross cigarette tax revenue and per capita gross cigarette tax revenue, and our independent variable was state tax per pack. We used two-way fixed effects to estimate the relationship between state cigarette tax revenue and cigarette taxes, adjusting for state-level sociodemographic characteristics, state-fixed effects, and time trends. ResultsThe study reveals that raising cigarette state tax by 10 % led to a 7.2 % to 7.5 % increase in cigarette tax revenue. We also found state and regional variation in taxes and revenue, with the Northeast region having the highest taxes per pack and tax revenues. In 2019, most states had low or moderate taxes per pack and tax revenues per capita, while a few states had high taxes per pack and tax revenues per capita. ConclusionsOur research demonstrates the positive impact of increased cigarette taxes on state tax revenue over three decades. Not only do higher taxes aid in tobacco control, but they also enhance state revenues that can be reinvested in state initiatives. Some states could potentially optimize their tax rates.

Perception of Housing Taxation in the Czech Republic

Housing taxation is considered the most obvious tax system inequity. Therefore, this type of taxation should be in line with the benefit principle. This article examines the attitudes of citizens towards residential building taxation in the Czech Republic. The aim of this paper is to evaluate the perception of residential building tax burden by taxpayers who own a house or apartment for housing based on primary research. The research was conducted in the Czech Republic using a questionnaire in 2021 and 2022. Differences in the tax burden perception in relation to improvements in quality of life in a municipality and use of compensation by providing financial benefit in favor of resident citizens are investigated in the context of municipality size. It was found that the majority of respondents in all municipality size categories perceived the tax burden as reasonable. Citizens' positive attitudes towards the taxation of their residential buildings were influenced not only by the quality-of-life improvement in the municipality, but also by the transparency of the municipality's financial management. By compensating for the tax on residential buildings through providing a financial benefit, some municipalities reduced the tax burden for their resident citizens and shifted the tax burden, within the limits of the law, to buildings for business and recreation. The most common forms of financial benefits included reducing or eliminating municipal waste fees.

A Study of the Factors Affecting Rental Income Tax Administration Effectiveness in Zambia

Even the largest tax plan in the world is useless if it is not implemented well. Efficient tax administration ensures a high level of tax compliance. However, measuring the effectiveness of tax administration based solely on the amount of taxes collected is overly simplistic. Instead, a much stronger criterion for assessing the effectiveness of tax administration is taking into account the size of the compliance gap. The goal of this study is to determine the effectiveness of rental income tax administration by examining the characteristics of the tax system that influence it, such as diversity, equality, convenience, simplicity, and security. Both primary and secondary data were used in this study. Primary data was collected from taxpayers in Kabulonga Main, Lusaka, while secondary data was collected from various sources including the Zambia Revenue Authority, State Valuation Department, Lusaka City Council, and selected real estate agencies. Descriptive statistics were used to analyze the data. The study aimed to determine whether taxpayers' perceptions of the characteristics of the tax system, as identified in the theoretical and empirical literature, could influence the effectiveness of the administration of the rental income tax. The Zambia Revenue Authority was found to have perpetuated phenomena that encourage non-compliance behavior among aggrieved taxpayers, which was indirectly used as a measure of tax administration effectiveness in this study. The results showed that the characteristics of the tax system, particularly equality, diversity, convenience, simplicity, and security, have a positive impact on the effectiveness of tax administration. Based on these findings, the study recommends that the Zambia Revenue Authority work more closely with all stakeholders, incorporate user-friendly features into its tax filing website to promote inclusivity and compliance, improve the authority's ethical profile, increase taxpayer trust in the system, and reduce the tax rate on rental income to alleviate the tax burden. Additionally, active taxpayer education and enforcement of tax laws and policies should be implemented to reduce tax evasion and improve tax compliance.

The effects of bribery on the digitization of small and medium enterprises in Latin America

AbstractIn this study, we examine the effects of bribery on the digitization of small and medium enterprises (SMEs) within Latin America. We apply neo‐institutional theory as the overarching theoretical framework to establish that bribery negatively influences digitization. We propose that firm characteristics (i.e., managerial experience and firm size) affect the firm‐level relationship between bribery and digitization. We also examine how the perceived tax burden mediates the effect of bribery on digitization. Our study is both theoretically and practically relevant. Theoretically, we are among the first to explicate the direct relationship between bribery and digitization. This novel perspective extends the information systems literature to explain digitization challenges in Latin America. For managers and policymakers, we present a path towards essential digitization for Latin American SMEs. Our empirical analysis uses secondary data from a World Bank survey of 1549 Latin American SMEs conducted over three years in six countries. Our findings show that bribery negatively influences digitization while SME characteristics positively moderate this relationship. In addition, we show that the perceived tax burden mediates the effects of bribery on digitization.

Beyond generational discourse: An age-period-cohort analysis of South Koreans’ attitudes toward reunification with North Korea

ABSTRACT This study conducts age-period-cohort analyses of South Koreans’ attitudes toward reunification with North Korea, a hostile polity that shares a national identity, using the Korea Institute for National Unification survey data accumulated since 2014. It is found that the attitudes toward unification, in general, vary with age. Older respondents tend to show a greater need for unification, a weaker orientation toward peaceful coexistence, and a greater willingness to bear the unification tax burden. Unlike findings of the prior studies, cohort (generation) effects are limitedly found. While the youngest generation has the least interest in North Korea, the middle-aged generations who used to see North Korea through a lens of its own context have a relatively stronger interest in North Korea. In contrast, period effects outweigh cohort effects on South Koreans’ attitudes toward reunification and North Korea. These findings imply that the application of the “generational discourse of reunification with North Korea” in previous studies and the media may be overly exaggerated.

Tax Evoidance Practices in Emerging Capital Market: The Effect of Environment, Social and Governance, Audit Quality and Company Risk

Purpose: The act of lawfully avoiding taxes by conforming to tax laws is known as tax avoidance. By taking advantage of gaps in the tax code, this activity was done to reduce the overall tax burden. The effects of corporate risk (CR), audit quality (QA), environment, social, and governance (ESG), and tax avoidance (TA) strategies are all examined in this study. Methods: Companies in the consumer goods industry that are listed on the Indonesia Stock Exchange for the years 2017–2021 are the sample used in this study. There were sixty companies that were chosen as samples. A multiple regression analysis is performed to test hypotheses and data. Results and Conclusion: The study's findings showed that partially ESG had a positive and significant influence on TA, AQ had a positive but not significant effect on TA, and CR had a negative but not significant effect on TA. Research Implication: The results of the study give consideration to the tax authorities decision to pay attention to the ESC and AQ elements when determining the amount of tax that must be paid by taxpayers, especially companies in the consumer products sector, because these variables have a positive effect on TA. Originality/Value: Particularly in the case of ESG, not many prior studies have employed these three factors to explain company tax avoidance behaviors.

Effective Tax Rates and Firm Size under Turnover Tax: Evidence from a Natural Experiment on SMEs

Abstract Taking advantage of Romania’s compulsory and unique presumptive tax system (turnover tax) for the smallest of the small- and medium-sized enterprises (SMEs), which unequivocally allows grouping the companies into two subsamples according to their tax status (the smallest of the SMEs, i.e. micro-companies for tax purposes, subject to alternative turnover tax vs larger SMEs subject to regular profit tax), the papers compute and compare three versions of firm-specific effective tax rates and brings first-time empirical evidence on the effects of turnover taxation on corporate tax burden. The results show not only that in Romania, the turnover tax is now the prevailing tax system, massively displacing the profit tax, but also it is more burdensome in terms of taxes actually paid relative to the firm size. Moreover, turnover taxation means that taxes are due irrespective of the profitability of a company, making the share of companies who paid taxes despite having losses much higher for micro-companies than for larger SMEs, which translates into higher public finance receipts, at the cost of lower tax equity. Since the corporate tax burden triggered by turnover taxation remains under the radar of even the most qualified policy reports, the results offer relevant lessons for other jurisdictions and have valuable policy implications.

Pengaruh Tax Planning, Thin Capitalization, Profitabilitas, Likuiditas dan Ukuran Perusahaan terhadap Nilai Perusahaan

The purpose of establishing a company is to maximize profits by using existing resources and provide prosperity to shareholders. Firm value can be a benchmark for investors' views of a company's performance, which is usually associated with the size of the share price in the capital market. One of the factors that can affect the value of the company is tax. With the acquisition of large profits, the company is responsible for paying large taxes. To minimize the tax burden paid, companies can carry out tax planning and practice thin capitalization. The company's financial performance can also be a consideration for investment decisions by investors. Therefore, this study aims to examine the effect of tax planning, thin capitalization, profitability, liquidity and company size on firm value. With the sampling technique using purposive sampling, 33 consumer non-cyclicals sector companies were obtained which were listed on the Indonesia Stock Exchange for the 2019-2021 period as research samples. Data analysis techniques and hypothesis testing used were coefficient similarity test, descriptive statistics, classic assumption test (normality, autocorrelation, heteroscedasticity, multicollinearity), multiple linear regression analysis, F test, t test and test of the coefficient of determination using SPSS 26. Conclusions from this research is not proven that tax planning, liquidity and firm size have a positive effect on firm value, but thin capitalization and profitability are proven to have a positive effect on firm value.

TAXATION OF CENTRALISED DRINKING WATER SUPPLY SERVICES WITH VALUE-ADDED TAX

The scientific article is devoted to the issue of reducing the tax burden on such a socially important service as a centralised drinking water supply. The study has determined that the service of centralised drinking water supply is an essential component on the way to achieving universal and equal access to safe and affordable drinking water for everyone in Ukraine. The research shows that the legal form of the utility company as a service provider is the most common for providing water supply services. This form best allows local self-government bodies to conduct their tasks and obligations in the drinking water supply. The study revealed the main features of the water supply service. We established that the service has great social significance and that its main task is not to make a profit but to provide consumers with quality drinking water in sufficient quantity and at an acceptable cost level. Despite its significant social value, the drinking water supply services are subject to value-added tax at the usual rate of 20%. The study found that the drinking water supply services generate significant added value, which results in service providers paying substantial amounts of value-added tax to the state budget. We concluded that such a situation does not correspond with the spirit of providing the population with drinking water and is unacceptable for a heavily subsidised service with many chronic problems, including high levels of deterioration of water supply infrastructure and low coverage of rural areas with centralised water supply. Further, we carried out an analysis of the legislation of the European Union regarding the taxation of water supply services with value-added tax. We determined that most countries of the European Union use the practice of applying a reduced value-added tax rate for the taxation of water supply services. The obtained results justify the further necessity to study the issue of making changes to the tax legislation of Ukraine to apply a reduced value-added tax rate or complete exemption from taxation of the value-added tax for centralised drinking water supply services. Keywords: value-added tax, drinking water supply, utility company, tariff, cost price, reduced rate.

Geographic dispersion, tax administration and corporate tax burden: evidence from China

PurposeFrom the perspective of local government tax administration, the impact of geographic dispersion on the corporate tax burden is investigated in this paper.Design/methodology/approachUsing unbalanced panel data with a sample of listed companies from 2003 to 2020 in China, this paper focuses on the effect of geographic dispersion on corporate tax burden and the mechanisms.FindingsIt is found that corporate tax burden is positively related to geographic dispersion. It is also found that geographic dispersion affects the corporate tax burden by increasing the effort of local government tax administration. In addition, the relation between geographic dispersion and corporate tax burden is more pronounced for local SOEs prior to the implementation of Golden Tax Project III and in cases where local governments face stronger financial pressure to obtain revenue.Originality/valueThis study has important implications for the promotion of the coordinated development of the regional economy, as well as the legalization, modernization and informatization of tax administration.

Mitigating the conflict between economic and green development: Emission reduction mechanisms for vertical transfer payments

AbstractThe impact of government behavior on emission reductions has gained widespread attention, but fewer studies have explored the relationship between vertical transfers (VT) and carbon emissions (CE). We empirically test the CE reduction mechanism of VT by constructing two‐way fixed effects models based on data of 278 Chinese cities from 2005 to 2020. Empirical analysis finds that VT reduce the taxing efforts of local governments and the tax burden of enterprises, promote the upgrading of enterprises' production technology, and ultimately reduces CE. Conclusions suggest that transfer payments should be actively used to establish preferential policies to assist enterprises in reducing CE.