Tax Competition Research Articles

Degree of Impact of Applying Environmental Cost Accounting on Tax Revenues from Oil Companies Operating in Iraq

Protecting the environment and its natural resources is an issue of great importance at the local and global levels. The phenomenon of environmental pollution resulting from the work of oil companies is one of the dangerous phenomena facing the environment in Iraq in general, and the environment of Kirkuk Governorate in particular, as the latter is considered one of the governorates rich in mineral resources, especially oil, as it contains six oil fields, and it contains the largest oil field in Iraq. Estimates indicate that it produces (40%) of the total Iraqi oil, so it suffers from a significant increase in the proportions of toxic and environmentally polluting gases resulting from the work of these companies in it. The work of oil companies from exploration, extraction and refining oil will naturally result in the emission of many gases that are highly toxic, dangerous and harmful to human health. The most important of these gases are carbon monoxide, sulfur dioxide, nitrogen dioxide, hydrocarbon compounds, hydrogen sulfide and other gases that pollute the environment, which has resulted in the spread and increase in the number of patients with respiratory diseases in a clear and increasing manner in the governorate. This increase in environmental costs falls on society as a whole, so it was necessary to identify and measure environmental costs from the society’s point of view and work to re-charge them to oil companies by applying the environmental tax.

The impact of green tax system on idiosyncratic risk: evidence from China’s environmental protection tax law

ABSTRACT China’s enactment of the Environmental Protection Tax (EPT) Law is a pivotal milestone in the transition towards a green tax system; however, its impact on enterprises capital market performance remains unclear. We adopt a difference-in-differences approach to investigate the influence of green taxation on the idiosyncratic risk of listed companies. The findings reveal a significant reduction in idiosyncratic risk for heavily polluting enterprises following the introduction of the EPT Law, thus suggesting that green taxation contributes to firms’ enhanced capital market performance. This effect acts through environmental, social, and governance performance and is more pronounced for firms with a stronger resource base.

Inter-Nation Equity And The Regulation of Tax Competition via the Global Minimum Tax Rule: A Case for Improvement

The Organization for Economic Co-operation and Development (OECD) is an institution that influences policymaking in international tax law, and it is changing the international tax architecture to deal with tax competition by encouraging countries to adopt a global minimum tax rule. This emerging rule – called Pillar Two in international tax circles – is inadequate for dealing with poverty and inequality in an asymmetrical global context. The rule is premised on the notion and argument that tax competition is a problem for international tax law. Notwithstanding, there is existing research and evidence to show that tax competition can also be a solution to the enormous challenge of poverty and inequality as it can have a redistributive effect. This is a valuable factor amid the inefficiently asymmetrical global society with extreme poverty in many countries and enormous wealth in a few others.This article submits that the Pillar Two minimum tax rule – the Global Anti-Base Erosion (GloBE) Rules encompassing the income inclusion rule (IIR), undertaxed payment/profit rule (UTPR), and qualified domestic minimum top-up tax (QDMTT) – should incorporate inter-nation equity to prevent exacerbating global inequality and poverty. Pillar Two intensifies these for at least two reasons: (1) it restricts the positive redistributive effects of tax competition on an inefficiently asymmetrical global society, and (2) it encourages tax competition more suited for high-income countries (HICs) and less suited for those that are low-income countries (LICs). There is latitude to incorporate a differentiated principle deriving from inter-nation equity into this new Pillar Two rule designed to regulate tax competition globally. This proposal requires that the emerging rule be disenabled in certain circumstances to enable LICs to choose whether to apply the rule without being worse off. The article’s proposal seeks to allow LICs room for effective tax competition needed to attain sustainable development goals.

Environmental Taxes as a Path to a Green Transition

The integration of sustainability elements into all spheres of human activities is one of the primary initiatives of policymakers in individual European countries, but also in a broader international perspective. The transition towards more sustainable production-consumption models is now becoming a challenge for European countries. This shift is an essential part of the commitments and goals that the European Union has set itself in the medium and the long-term horizon. The future economic orientations of European countries will depend not only on the willingness and effort to use classical tools in the process of creating a green future, but especially on the level of knowledge of their appropriate implementation in practice. The paper is focused on the issue of the evaluation of selected economic instruments of environmental policy (environmental taxes) in the European area in the context of the transition to a green economy. The aim of the paper is to evaluate the use of taxes with an environmental aspect across European countries and to analyse the similarities in the process of their application towards green transformation. The need for a deeper knowledge and understanding of this area is essential in the context of the implementation of the Sustainable Development Goals in the countries involved in the 2030 Agenda. Keywords: environmental taxes, sustainability, energy, transport, green transition

Public acceptance of beef carbon tax earmarks

The escalating effects of climate change make it important to find ways to offset the carbon burden. One way to do so is to reduce beef consumption, since cattle production creates large amounts of greenhouse gases, which contribute to global warming and climate change. In this study, we explore US consumers’ perceptions of alternative beef products. Specifically, we test the effects of three types of earmark information on consumers’ valuation of a beef carbon tax related to hamburger meat through two labeled discrete choice experiments. Our results show that earmark information can be effective in reducing the negative impact of an environmental tax on consumers’ willingness to pay for beef products. This study contributes to a better understanding of how consumers would bear environmental taxes for beef and alternative products.

Polycrisis, Megatrends – Tax Policy Trends and Responses

The EU relies heavily on labor taxation including social security contributions (accounting for more than half of all EU-27 tax revenues), though it can discourage labor market participation. Besides, ageing, digitalization, global markets, new forms of work and increasing labor mobility question the residence-based principle of personal income tax. The sustainability of the social security system can be promoted by additional behavioral tax (linked, for example, to the consumption of unhealthy products or the use of risky services). In the former socialist countries analyzed in this study (Croatia, Bulgaria, Latvia, Estonia, Hungary, Poland and Romania), the share of consumption taxes in total tax revenue is above 38%, well above the EU average. In countries with high consumption tax rates and significant consumption tax revenues, both labor and capital income tax revenues are typically below the EU average. The share of environmental taxes in tax systems is low, both on average in the EU and in the examined countries (although most of them are at or above average). Nonetheless, in the former socialist countries, the share of property taxes is lower than the EU average (for historical reasons, property taxation is less accepted by their societies). According to a Commission study published in 2024 (see: “Growth-Friendly Taxation in a High-Inflation Environment,” European Commission, European Economy Economic Brief 079), strengthening property taxation would help to make the tax system fairer, although not in a time of high inflation and crisis. Harnessing the potential of digitalization contributes to efficient and effective tax administration and can also reduce administrative costs, thus facilitating compliance. Latvia, Hungary and Poland recorded an exceptionally large improvement in VAT compliance, with VAT gaps falling between 2013 and 2021 by over 15 pp, which turned them into the best performers in the EU (Romania still faces challenges in the field of tax avoidance, VAT compliance gap and inefficient tax auditing). Tax administrations in most of the analyzed countries are therefore well adapted to the challenges of digitalization. The future tax system must implement a desirable green tax reform shifting a part of the tax burden away from labor to tax bases linked to environment taxes and other behavioral taxes – regarding the sustainability of the tax system as the European and national budgets face significant financial pressure due to the polycrisis, megatrends and EU loans. In the studied former socialist countries (Croatia, Bulgaria, Latvia, Estonia, Hungary and Romania) the share of consumption taxes in total tax revenue is above 38%, well above the EU average. In countries with high consumption tax rates and significant consumption tax revenues, both labour and capital income tax revenues are typically below the EU average. The share of environmental taxes in tax systems is low, both on average in the EU and in the countries studied (although most of them are at or above average). Though, in the former socialist countries the share of property taxes is lower than the EU average (for historical reasons, property taxation is less accepted by their society). According to a Commission study in 2024, strengthening property taxation would help to make the tax system fairer, although not in a time of high inflation and crisis. Harnessing the potential of digitalisation contributes to efficient and effective tax administration and can also reduce administrative costs, thus facilitating compliance. Latvia, Hungary and Poland recorded an exceptionally large improvement in VAT compliance, with VAT gaps falling between 2013 and 2021 by over 15 pp and currently they belong to the best performers in the EU. Tax administrations in most of the studied countries are therefore well adapted to the challenges of digitalisation. The future tax system must implement a desirable green tax reform shifting a part of the tax burden away from labour on to tax bases linked to environment taxes and other behavioural taxes – regarding the sustainability of tax system as the European and national budgets faces significant financial pressure due to the the policrisis, megatrends and EU loans.

Path to Green Economy: Analyzing Innovation, Investment and Taxation in Kazakhstan

The concept of a green economy has gained significant attention, aiming to achieve sustainable development without environmental harm. This study examines Kazakhstan's transition to a green economy, focusing on indicators such as green innovation, investment in environmental protection, and green taxes. Despite Kazakhstan's commitment to a carbon-neutral economy by 2060, significant challenges were identified. The methodology involved three steps: descriptive analysis of green economy indicators for 2016–2022, correlation analysis to identify significant relationships, and trend forecasting for 2023–2025 using a linear regression model. This approach provided a thorough examination of the green economy's current state and future projections. Over the study period, the number of organizations engaged in environmental innovation and their activity levels have decreased. Investments in environmental protection showed initial growth, but declined in recent years. Conversely, there has been an increase in environmental taxes, reflecting the government’s focus on tax instruments to promote sustainable development. Correlation analysis revealed complex interdependencies, indicating that higher investments and taxes are often associated with lower levels of green innovation activity. Projections for 2023-2025 suggest a further decline in green innovation indicators unless significant policy measures are taken. The study underscores the need for a balanced approach that encourages green innovation while maintaining robust investment and tax bases.

On the Borrowed Points and Danger Prevention of Cross-Border Tax Planning

International tax planning can reflect the level of an enterprise's multinational business management, but also relates to the financial cost of growth and decline, is a must for enterprise managers. International tax planning refers to the multinational taxpayers to make in advance, used to reduce the international tax obligations of multinational investment and business plans. With the global inflation, the use of reasonable means to reduce the tax burden in the international tax environment has become a practical need to promote the further development and growth of China's multinational companies, but at present, China's multinational enterprises are still in the initial stage of multinational operations, many managers for the discussion of the international tax planning only stays on the surface. Therefore, this paper analyzes the possibility of international tax planning, tax jurisdiction, policy loopholes, tax avoidance risks and hazard prevention from the perspective of Apple, for example, and analyzes Apple's Irish-Dutch Sandwich tax avoidance structure, which provides certain reference significance to our country's multinational tax planning.

Does environmental protection tax impact corporate ESG greenwashing? A quasi-natural experiment in China

The recently implemented environmental protection tax (EPT) policy in China provides the opportunity to conduct a quasi-natural experiment to empirically evaluate environmental regulations’ impact on corporate practices. We adopt the difference-in-differences method to analyze the effect and mechanisms of the EPT on corporate environmental, social, and governance (ESG) greenwashing based on Chinese A-share listed companies from 2015 to 2021. The empirical results show that the EPT drives companies to engage in ESG greenwashing, significantly increasing ESG greenwashing by approximately 13.16 %. The mechanism tests demonstrate that the EPT exerts governance pressure but does not create more resources, making companies more likely to achieve compliance through greenwashing. Furthermore, the effect of the EPT on ESG greenwashing is more pronounced for large companies and those located in regions with high economic development and strong regulatory enforcement. Our study provides solid evidence with valuable implications for improving the EPT policy to achieve green and sustainable development.

Nonlinear impacts of environmental transport taxes and biofuel consumption on greenhouse emissions in the four largest European Union countries

AbstractIncompatible with the pioneering role of the transportation sector in greenhouse gas (GHG) emissions, this research mainly deals with GHG emissions from the transport sector. In this context, the study looks at the four leading European Union (EU) countries (i.e., Germany, France, Italy, and Spain), investigates emissions from their sub‐types of the transport sector (i.e., aviation, rail, and road), uses environmental transport taxes (ETAX) as the main explanatory variable in the bivariate modeling, and considers biofuel consumption (BIO) as a control factor in the multivariate modeling. The study uses monthly data between 2004 and 2022, bivariate and multivariate quantile‐on‐quantile regression as well, and Granger causality‐in‐quantiles as the main approaches. The results demonstrate that (i) ETAX is completely inefficient on aviation and road transport GHG emissions; (ii) ETAX curbs rail transport GHG emissions in France at only middle quantiles; (iii) with the moderating impact of BIO, ETAX becomes effective in declining aviation, rail, and road transport GHG emissions (iv) BIO has a certainly reversing impact on the nexus between ETAX and transport sector GHG emissions. Overall, the study highlights that ETAX has a stand‐alone ineffective impact in curbing transport sector GHG emissions, but BIO has a certain moderating contribution in this manner. Thus, the study strongly recommends taking further actions, such as more use of BIO as in the case of this study, to support ETAX practices in combating GHG emissions for the EU countries.

How to get green with agricultural footprint: A global analysis of carbon emissions, environmental taxes, and agrochemical use

The agriculture sector, being highly vulnerable to climate change, plays a pivotal role in achieving green and sustainable economies. As the 2030 Agenda emphasizes the integrated development of environmental, social, and economic dimensions, it is crucial to understand how agricultural practices affect sustainability. This study investigates the environmental impact of the agricultural sector on the green economy by examining key environmental factors, such as agricultural energy emissions, environmental taxes, irrigated water use efficiency, fertilizer use, and pesticide application. The analysis is conducted using the Panel Quantile Autoregressive Distributed Lag (QARDL) model, with robustness checks performed through the comparison with the Panel ARDL model, using data from 2000 to 2020. To assess the green economy, an index is constructed based on 20 indicators related to environmental, social, and economic sustainability. The results show that agricultural energy emissions, despite their environmental cost, are positively associated with green economy development, highlighting the trade-off between high productivity and environmental degradation in a resource-efficient economy. Improved water use efficiency is found to enhance agricultural sustainability and production. Additionally, environmental taxes and regulations exert a significant positive effect on both environmental preservation and social welfare. Contrary to the belief that reducing agricultural production will lower carbon emissions, the study suggests that adopting environmentally friendly practices and imposing targeted taxes are more effective strategies. The findings also reveal a negative relationship between excessive fertilizer use and the green economy, indicating the need for minimal fertilizer application to promote sustainability. The study concludes with specific policy recommendations. Governments, particularly in countries that have not yet adopted sustainable agricultural practices, should implement environmental taxes and regulations to promote carbon neutrality and support the Sustainable Development Goals. These measures are essential to balancing economic growth, environmental sustainability, and social equity in the agricultural sector.

SPECIFICITY OF THE CREATION OF THE ECONOMIC AND LEGAL MECHANISM FOR THE FORMATION OF A GREEN ECONOMY

The article is devoted to the study of the issue of the formation of the green economy as an important direction of the development of society. The article identifies the main problems on the way to the development of the green economy. So, in particular, they include the lack of a clear, comprehensive economic and legal mechanism that would take into account the peculiarities of the national economy, legal system and environmental policy. The purpose of the article is to determine the key aspects of creating an economic and legal mechanism for the formation of a green economy. It was determined that an effective economic and legal mechanism for the formation of a green economy should be based on the harmonization of economic and legal aspects, as well as a comprehensive approach to its construction. The authors reveal the main economic aspects of the formation of the green economy (financing and investments, pricing and environmental taxes, innovation stimulation). It has been established that legislative initiatives, regulatory bodies and control, international agreements and standards, as well as national strategies and programs should be included in the legal aspects of the formation of a green economy. It was noted that the main lever for achieving success in the process of establishment and development of the green economy is the establishment of cooperation between state bodies, the private sector and the public. It was determined that attracting financial resources, developing effective legislation, control and monitoring, as well as international cooperation are key elements for achieving sustainable development and ensuring environmental safety. The authors concluded that the prospects for the formation of a green economy in Ukraine are quite favorable, provided that an integrated approach to the solution of environmental problems and the creation of an economic and legal mechanism for the formation of a green economy are provided. The implementation of the green economy will not only improve the quality of life and preserve the environment, but will also become an important factor in economic growth and increasing the country's competitiveness at the international level.

Retraction Note: Green financing and environmental risk mitigation: is environmental protection tax law that important?

Retraction Note: Green financing and environmental risk mitigation: is environmental protection tax law that important?

FISCAL ASPECTS OF ESG BUSINESS DEVELOPMENT CONCEPTS

The subject of the study is the fiscal aspects of the ESG concept of business development. Methodology. The study uses general scientific methods, in particular, theoretical generalisation, methods of analysis and synthesis and statistical analysis, as well as the graphical method to visualise the results of the study. The purpose of the study is to analyse the strategic guidelines of tax policy through the prism of the ESG concept. Conclusion. The fiscal aspects of the ESG concept are an important element in understanding its impact on business. They include various tax incentives and mechanisms that promote the implementation of ESG standards and take into account the consequences of non-compliance for businesses. In particular, fiscal policy includes tax incentives for businesses that invest in green development, support social initiatives or improve corporate governance. In a broad sense, instruments such as environmental taxes are aimed at achieving sustainable growth and economic development. Strategic tax policy guidelines under the ESG approach include encouraging investment in sustainable technologies through tax incentives for companies investing in renewable energy and environmentally friendly projects. Social initiatives are supported through tax rebates for companies that develop programmes to develop local communities and improve working conditions. Corporate governance regulations require companies to report on the environmental, social and governance aspects of their activities. Promoting the circular economy includes tax incentives for companies that implement recycling and waste reduction practices. Support for small and medium-sized businesses includes tax incentives for SMEs that implement ESG standards and easier access to green finance. International cooperation involves bringing tax policy in line with international ESG standards and participating in global tax transparency initiatives. Adaptation to climate change includes the introduction of taxes on greenhouse gas emissions and the transition to low-carbon business models. Green project financing involves the use of tax revenues to support green initiatives. Innovations in tax administration are being introduced through new technologies, and education and training include funding for ESG training programmes. These guidelines will help businesses adapt to new conditions, create sustainable value and meet modern environmental, social and governance requirements.

Observing systemic values in a tax avoidance environment: Using systems theory to examine the Ireland–Apple tax relationship

AbstractTax has been the site of many battles between ethical behaviour and formal compliance with tax law, particularly in an international context. This paper accepts the functional differentiation of society and explores the amorality of systems. The environmental noise about unfair tax competition by states and tax avoidance by multinational enterprises is extensive. The autopoietic legal system cannot be relied upon to deliver a concurring view, instead producing its self‐referential and sometimes contradictory communications. The empirical setting considers Ireland and Apple and the legal system's verdict on the legality of their tax relationship. This legal verdict changes as the case progresses from European Commission to one court after another, a contingent and uncertain outcome that may be prompted by systemic irritation but which is not co‐ordinated with moral commentary on Ireland or Apple. The absence of coordination by the legal system with environmental commentary on fairness means that, as the legal verdict changes from court to superior court, moral commentary is not a reliable predictor of legal outcome.

Retraction Note: Impact of government governance and environmental taxes on sustainable energy transition in China: fresh evidence using a novel QARDL approach.

Retraction Note: Impact of government governance and environmental taxes on sustainable energy transition in China: fresh evidence using a novel QARDL approach.

Effects of Foreign Direct Investment Inflows to Economic Growth: a Case of Turkey

Objective: The purpose of this study is to investigate the effects of Tax Competition for Turkey, as well as the aspects of basic taxes like Personal Income Tax and Corporation Tax and evaluate the results. In this context, the impact of foreign direct investments on economic growth in Turkey is investigated. Theoretical Framework: Theoretically, it is accepted that foreign direct investment will positively affect economic growth. This study investigates the practical implications of this theory for Turkey. Method: International Comparative Analysis and various tables and graphics were used in this study to analyse the variance of Personal Income Tax and Corporation Tax by years. In addition study applies regression analysis on direct foreign inflow and economic growth in Turkey for 1974-2019 period. Results and Discussion: Regression analysis was performed on the time series of foreign capital investments and economic growth. However, it is concluded that foreign capital investments do not positively affect economic growth over the 1974-2019 period since foreign capital investments in Turkey reached their usual level only after 2002. Research Implications: This study concludes that foreign direct investment (FDI) does not always positively affect economic growth for all countries. Originality/Value: The study is original in that it shows that a generally accepted theory may have different results in practice for some countries.

Limiting support for environmental policies: Unfairness is a more critical barrier than cost and ineffectiveness.

Costs and policy-specific beliefs, such as effectiveness and fairness, are central factors for supporting environmental taxes. Less is known about how much each of these factors is limiting support. Across four experiments, I investigate to which extent high costs, ineffectiveness, and unfairness constrain support for environmental taxes. Results consistently demonstrate that perceived unfairness poses a greater barrier to support than extensive costs or ineffectiveness. These findings were robust across three environmental taxes (meat tax, plastic tax, and carbon tax), across three cultures (USA, UK, and India), and were replicated using a representative US sample. Furthermore, delving deeper into the consequences of perceived unfairness, results showed that distributional unfairness was a stronger barrier to support than procedural unfairness. Beyond limiting support, being presented with an unfair tax proposal led participants to perceive the tax as less effective and to express lower trust in policymakers than when receiving a fairer tax proposal.

China’s Green Finance: new in fiscal and legal regulation

Having embarked on the formation of an “ecological civilization”, the People’s Republic of China pays special attention to environmental legislation, the creation of a modern system of “green” economy and “green” finance. The effectiveness of legal regulation of environmental relations largely depends on the availability of financial guarantees of relevant environmental standards. One of these guarantees is the environmental protection tax, recently introduced in the fiscal system of the People’s Republic of China.The article analyzes the main elements of this tax — taxpayers, the object of taxation, rates, the procedure for calculating and paying, system of tax benefits. Special attention is paid to the specifics of tax administration, the organization of cooperation between tax authorities and environmental protection authorities, the interaction of tax control and environmental monitoring.

Tax harmonisation versus tax competition: an endless perpetual debate?

Tax harmonisation versus tax competition: an endless perpetual debate?