Tax Cooperation Research Articles

Cooperative Compliance in Poland: The Question of Equality

An increasing number of tax jurisdictions are implementing the concept of cooperative compliance into their tax systems. It aims to improve tax compliance by building an enhanced relationship between tax authorities and taxpayers. In principle, the programme is aimed at large taxpayers capable of engaging in aggressive tax optimization that is detrimental to state revenue. Dedicating the programme exclusively to large taxpayers may raise doubts about whether it violates the principle of equality before the law. In Poland, the legislation governing the cooperative compliance programme was introduced on July 1, 2020. As in other countries, it was targeted at large taxpayers. The article therefore discusses the question whether the Polish legal regulations on cooperative tax compliance are in line with the constitutional principle of equality.

When digital taxes come due: national digital taxes and the negotiation of the OECD inclusive framework

ABSTRACT What explains major shifts in international tax cooperation? Existing literature emphasises either the centrality of the United States for successful reform or the power of multinational corporations to exert downward pressure on global tax rates. Nonetheless, in 2021 members of the OECD Inclusive Framework (IF) agreed to tax some of the largest multinational companies based on their market activities rather than physical presence – a fundamental change to the international taxation regime that the U.S. government and U.S. multinational corporations (MNCs) had long opposed. We argue that the spread of digital value chains has exposed the activities of MNCs to greater regulatory activity, allowing governments to use unilateral regulatory action as leverage in international negotiations. By shifting the reversion point – the status quo absent an international agreement – governments were collectively able to transform an agreement. We demonstrate our argument by examining how the implementation of national digital services taxes (DSTs) affected the OECD IF negotiations. Drawing on interviews with key stakeholders and primary sources, we show that the adoption of DSTs, including in France and India, and the threat of additional proliferation of DSTs, pushed the United States to drop its longstanding opposition to parts of the IF process.

Tax Dispute Analysis of Incorrect Vat Payment on Offshore Royalty Viewed From the Ease of Administration Principle (Case Study of PT X)

The purposes of this research are: (i) to analyse basic considerations from the Indonesian Tax Authority (ITA) in making regulations regarding the incorrect transfer of VAT on taxable services from outside customs territory which cannot be overbooked; and (ii) to analyse whether the administrative sanctions penalized to the taxpayer are appropriate from the ease of tax administration principle’s perspective. This study is using (i) VAT imposition on intangible taxable goods and services from outside the Indonesian customs territory; (ii) Ease of Administrative principles: certainty, efficiency, convenience of payment, and simplicity as theoretical references. The research is categorized as applied study with a qualitative method using qualitative data collection techniques through literatures and field studies (interview with various key informants from ITA, representatives of the taxpayers, and taxation experts and academia. The qualitative analysis on data/information was done via triangulating process with related theories, VAT laws and regulation, as well as expert opinions. Results of the study conclude that the basis of considerations of the ITA makes regulations for the utilization of Intangible Taxable Goods and Taxable Services from Outside the Customs Territory, which cannot be done with overbook because both offshore VAT objects are difficult to detect and can be used for tax avoidance modus by the taxpayers. The ownership of documentary evidence is actually a foreign party while the person who is supposed to make a transfer request is the owner of the document evidence, and the tax that has been deposited has become a tax credit and will not move to another place other than the state treasury because the tax credit is the taxpayer's right. Considerations taken by ITA have not met the theory of good tax administration because there has been no legal formulation related to this matter and ITA's accountability is still considered to be lacking in terms of supervision and control. Administrative sanctions penalized to PT X due to tax deposit errors are not in accordance with the ease of tax administration principle. Even though it is certainly stipulated in the prevailing law and regulation, but the procedure is so lengthy and detrimental to the taxpayer, increase and disrupt cash flow for business activities carried out by PT X. In terms of efficiency principle, the rejection of overbooking process creates additional compliance costs to the taxpayer, namely: fiscal financial cost, time cost and psychological cost and denial the facts that actually the fund/money have been transferred to the State Treasury. Implications of research: To provide examples of practice in the field of how complicated tax administration procedures can cause unnecessary losses for taxpayers if the tax regulations are not made by taking into account the principle of ease of tax administration. It is also recommended that the tax authorities should reduce administrative burden for the implementation of rights and fulfillment of tax obligations that are too rigid to be more friendly in order to make it easier for taxpayers to carry out their tax obligations and make themselves a facilitator for taxpayers to increase cooperative tax compliance. Originality/value: Ease of carrying out tax obligations for taxpayers must be something that is facilitated by the Tax Authority rather than being subject to penalties and this can be done, one way, through the application of the principle of ease tax administration in the formulation of tax regulations.

Global tax avoidance and evasion: A landscape through insights from a systematic literature review and bibliometric analysis

This research aims to comprehensively investigate contemporary practices and factors influencing global tax avoidance and evasion through a systematic literature review (SLR) and bibliometric analysis. This study methodology uses SLR with bibliometric analysis to map this research trend. Relevant literature was collected and systematically analyzed to identify key themes, methodologies, and findings regarding tax avoidance and evasion. The study’s findings identify various tax avoidance practices, including profit shifting, transfer pricing strategies, and the use of tax havens by multinational corporations. The report also highlights various forms of tax evasion, such as money laundering and illicit financial flows. Key factors influencing tax behavior are ethical considerations, government policies, economic factors, and corporate governance practices. This analysis highlights the complex interactions between these factors in shaping tax practices globally. The study’s conclusions show that effective tax governance requires a multifaceted approach integrating ethical standards, a strong regulatory framework, and international cooperation. Ethical corporate behavior and transparent reporting are essential in promoting tax compliance and fairness. This study emphasizes the critical role of policymakers in designing and enforcing tax policies that discourage aggressive tax planning while encouraging economic growth and equality. Recommendations from these findings are to increase transparency in multinational operations, strengthen international tax cooperation, and improve global tax administration capabilities. In addition, increasing taxpayer education and awareness can foster a culture of compliance and ethical tax practices. Future research should prioritize longitudinal studies and case-specific analyses to deepen understanding and develop targeted interventions to address tax avoidance and evasion challenges.

Administrative Reform to Strengthen Cooperative Tax Compliance in Cambodia: A Case Study in Domestic Revenue Mobilization

The focus of current study is to discuss the tax compliance structure and the role of administrative reforms in domestic revenue mobilization. There are several reasons why unresolved tax audits keep piling up with (particularly) large taxpayers, causing complaints. After the comprehensive review of existing tax structure, discussion on the existing infrastructure and based on empirical analysis, it is suggested that too much reliance on tax audit revenue, need for a more cooperative future relationship between GDT and large taxpayers, impartial express arbitration of tax disputes to clear the backlog and update the structure of the tax audit system. Lastly, taxpayers need (even3 ) more effectual education so they can comply faster and more accurately: Our research shows that delays at the taxpayer side are just as important, or even more so, than the delays observed at the GDT side. Even large taxpayers have difficulties understanding and preparing necessary documentation (26%) or are unclear about the correct application of laws and regulations (16%). Along the same lines, the GDT should consider to make the incentive for voluntary self-correcting of past tax returns permanent, at least to some degree.

The Impact of Tax Policy on the Attractiveness of Foreign Direct Investment (FDI): An Analysis of National Strategies and Economic Effects

In the context of globalization, the economic ties between countries are getting closer and closer, and capital flows are significantly stronger. Countries take measures to attract foreign direct investment (FDI), and among them, tax policy has a significant impact on the purpose of attracting foreign investment, as tax policy plays an important role in the country's macroeconomic policy. In this article, this paper will analyze the attractiveness of the tax policies adopted by FDI in recent years, and the impact of their tax policies on the economic effects of their respective countries, supported by the theories of internationalization, tax policy stability, and tax competition theory. Then, by summarizing and comparing the analysis, we can identify more attractive policies and analyze their reasons. Finally, it is concluded that tax policy plays a very important role in the development of the global economy, and countries can effectively attract foreign investment, promote economic growth and industrial upgrading by adjusting tax policies. However, due to the challenges of balancing attracting foreign investment with maintaining fair competition, tax base erosion and fiscal sustainability, countries need to improve policy transparency and stability, optimize the preferential tax structure, strengthen international tax cooperation and other measures to help their countries achieve higher quality development and bring higher economic benefits.

Compatibility of the DAC6 Obligation to Report Cross-Border Arrangements with Fundamental Rights: A Green Light from the Advocate General?

On 29 February 2024, Advocate General Emiliou of the Court of Justice of the European Union gave his Opinion in Belgian Association of Tax Lawyers and Others v. Premier ministre/Eerste Minister (Case C-623/22) on the compatibility of DAC6 with the principles of equality and non-discrimination, legality in criminal matters, legal certainty and the right to respect for private life. This contribution summarizes and criticizes the main elements of the Opinion, which will have major ramifications for the European tax transparency and tax cooperation regime if upheld by the Court of Justice of the European Union in its forthcoming DAC6 decision.

Common Reporting Standard as a model for tax information exchange: mechanism of operation and implementation status in Ukraine

The article studies the Common Reporting Standard (CRS), an information standard for the automatic exchange of tax information between states that are parties to the Multilateral Competent Authority Agreement (MCAA). It also explores the prospects of Ukraine’s participation in the exchange under this standard. The study analyzes the information subject to international exchange, types of financial institutions required to collect and submit tax-relevant information to authorities for international exchange, account types, tax residents, and methods of verifying client integrity when opening accounts. The article aims to systematize knowledge about the prerequisites for creating, the mechanism of intergovernmental tax cooperation within the CRS framework, current results achieved under this standard, Ukraine’s accession status, steps taken by Ukraine towards implementing automatic exchange of tax information, and recommendations for accountable entities and account holders on complying with CRS rules. The study employed a comprehensive research methodology, including a literature review, analysis of normative documents, and comparative analysis. The conclusions emphasize the crucial importance of Ukraine’s accession to the CRS standard for ensuring proper tax compliance and budgetary revenues, particularly amid full-scale Russian aggression. The study also describes the challenges, especially regarding compliance with tax data exchange requirements by financial institutions and account holders. It underscores the need for strong political will from Ukrainian authorities to overcome obstacles and ensure effective CRS implementation. Overall, the study highlights the significant role of CRS in improving tax collection while acknowledging the hurdles ahead. The research perspective on this topic is extensive, given that automatic tax information exchange, particularly under the investigated standard, is currently being established and is relatively underexplored by researchers.

Проблемы формирования налоговой культуры в России

This article addresses the issues surrounding the formation of the domestic tax culture in Russia. These issues are largely attributed to the state of “cultural tax shock” experienced by the Russian population in the post-perestroika period. However, even in Soviet times and earlier, a characteristic feature of Russian mentality known as “tax nihilism” was observed. The current state of tax culture can be characterized in two aspects: by examining the level of tax literacy among the population and taxpayers’ trust in tax authorities. Particular attention should be paid to youth in the formation of tax culture due to their detachment from the consequences of the societal transformation processes at the end of the last century. The article analyzes ways to increase the level of tax literacy among Russian schoolchildren. However, the problem of tax literacy among Russian students persists, coupled with the increasing prevalence of secondary employment among them. Measures to enhance public trust in tax authorities are also considered. The article emphasizes the role of developing the theoretical basis of tax culture, which requires attention not only to developments in traditional fields of law and economics but also in social research on fiscal sociology and the philosophy of taxation. In conclusion, the formation of tax culture in Russia faces multifaceted challenges stemming from historical legacies, societal perceptions, and educational gaps. By addressing these issues holistically, Russia can progress towards cultivating a more informed and cooperative tax culture among its populace.

Guest Editorial: Why Should EU Countries Support a UN Framework Convention on International Tax Cooperation

Guest Editorial: Why Should EU Countries Support a UN Framework Convention on International Tax Cooperation

Driving a Hard Bargain: A Sneak Preview of the UN Framework Convention Negotiations

Last December, the UN boldly claimed a significant role in setting international tax policy when it voted overwhelmingly to develop a Framework Convention on International Tax Cooperation. Work has now begun on realizing the UN’s vision. In this Talking Points, Bob Michel highlights the procedural and substantive issues under consideration, and reviews the stated positions of a broad cross-section of countries in the developed and developing world as the negotiations ramp up.

Shaping the UN’s Future Role in International Tax Cooperation: Resolution A/RES/77/244 and the Options Raised in Tax Report 2023 as an Opening for Legally Binding Tax-Norm Setting by the UN

Shaping the UN’s Future Role in International Tax Cooperation: Resolution A/RES/77/244 and the Options Raised in Tax Report 2023 as an Opening for Legally Binding Tax-Norm Setting by the UN

OVERCOMING DOUBLE TAXATION: CURRENT STATE AND PROSPECTS

The problem of double taxation is currently a pressing issue for many countries and the international community in particular. This phenomenon has a negative impact on the economic development of countries, investment inflows, competitiveness in the international market and many other aspects. Therefore, the issue of overcoming double taxation is an urgent issue for many countries, including Ukraine, and international organisations. This is the reason for the relevance of this research. The purpose of this study is to analyse double taxation in terms of its generally accepted classification, its characteristics and current state; to determine the peculiarities of overcoming double taxation within the framework of application of double taxation avoidance methods; to analyse the prospects for activities aimed at overcoming double taxation and to characterise the achievements in multilateral tax cooperation. In order to achieve this goal, the following methods of scientific knowledge were used: general philosophical method, descriptive method, method of system analysis, synthesis, dialectical method, methods of deduction and induction. The conclusions drawn as a result of the study are scientifically significant and important for further research and improvement of the legal regulation of double taxation issues.

Beps plan as a key mechanism of intergovernmental tax cooperation – international progress and implementation status in Ukraine

Beps plan as a key mechanism of intergovernmental tax cooperation – international progress and implementation status in Ukraine

Promoting Inclusive and Effective Tax Cooperation at the United Nations

Promoting Inclusive and Effective Tax Cooperation at the United Nations

Options for multilateral solutions to international taxation issues and their assessment from the perspective of the tax security of the state

The article was prepared as part of a study aimed at identifying fundamental theoretical approaches to the legal provision of the fiscal interests of the state in the context of the transformation of tax relations and tax law institutions under the influence of the digital transformation of the economy and developing recommendations for creating an effective model of legal regulation of taxation in Russia as a means of ensuring the tax security of the state, which is affected by new challenges. From the point of view of the tax security of the state, the need to ensure compliance with the fiscal interests of the state requires the transformation of essential approaches to regulating tax relations. Given that the Russian economy has faced new challenges in recent years, it seems advisable to explore not only the challenges themselves, but also ways to respond to them. It is noted that the Russian economy is successfully coping with new challenges and, in this regard, it seems relevant to return to the tasks that the state faces from the point of view of both national and international taxation. The article analyzes the projects of the OECD and the United Nations on reforming the taxation rules of international groups of companies. The projects of international organizations are considered as answers to the challenges of tax evasion, as well as to the challenges of the digital economy. The study focuses on the UN initiative to prepare a framework convention on international tax cooperation. The UN initiative is considered from the point of view of taking into account the interests of developing countries. The article also assesses the need to amend Russian tax legislation in the context of new challenges to the tax security of the state. It is noted that the current system of preferential tax regimes, which continues to be improved, meets the interests of Russian taxpayers and the national tax base.

The Need for a Responsive African Business Community in International Tax Cooperation

The paper examines how the African business community can complement the efforts of the African states in international tax reforms. It argues that international tax cooperation is not exclusive to state actors; non-state actors, particularly businesses, have significant roles to play, considering their expertise in the global business environment. The noticeable absence of African businesses in public engagement with the Organization for Economic Cooperation and Development’s (OECD’s) work on the tax consequences of a digitalised economy justifies the need to undertake this study to demonstrate how African businesses can support their home governments in demanding international tax reforms. It seeks to demonstrate to African business actors the significant role played by shadow treaty negotiators played and other business actors in negotiating tax treaties that may significantly impact the African market. The paper presents three reasons why African business actors should be proactive in international tax cooperation. It also provides a practical framework for how they can engage with international tax initiatives. As a case study, the paper adopts a descriptive and analytical-qualitative approach to examine the OECD BEPS Inclusive Framework’s Two-Pillar proposal to address the tax consequences of the digitalised economy.

The Tax Cooperation Mechanism between China and African Countries and the Avoidance of a Double Taxation Agreement

The tax cooperation mechanism between China and African countries has a bearing on the business environment of bilateral economic and trade cooperation. At present, the tax cooperation mechanism between China and African countries has developed rapidly by way of the Forum on China-Africa Cooperation (FOCAC) and the Belt and Road Initiative (B&R), but it still faces challenges, such as an insufficiency in tax agreements, differences on the agreement content, a lack of trans-regional tax cooperation agreements and support mechanisms to promote tax cooperation and exchange. To improve the China-Africa international business environment, it is necessary to enhance the tax cooperation mechanism between China and African countries, including the speeding up and signing of tax treaties, coordinating and improving the content of the agreements, negotiating a convention of trans-regional tax cooperation, setting up a tax supporting cooperation dialogue mechanism, strengthening the construction of tax capacity and improving the tax dispute settlement mechanism.

Tax Cooperation between the EU Member States and Türkiye Regarding Automatic Exchange of Information on Income Collected by Digital Platform Operators

In this note, the author discusses the probable legal foundations of automatic exchange of information on income collected by digital platform operators between Türkiye and the EU Member States. The note analyses the international legal framework, examines the extent to which Türkiye has domestic reporting obligations for digital platform operators parallel to the EU reporting rules and provides some conclusions and suggestions on this cooperation.

Optimal capital structure and credit policy with bank-tax-guarantee

We study the optimal capital structure, credit policy and investment strategy of a small- and micro-sized enterprise that funds the expansion investment by bank-tax-guarantee, an innovative financing pattern that utilizes the superimposed effects of bank tax cooperation and bank guarantee cooperation. We show that investment is accelerated by stricter tax supervision, and is first delayed and then accelerated as the degree of tax payment increases. The optimal leverage ratio decreases with the cost of tax evasion and the degree of tax payment. The loose credit policy reduces corporate debt scale, guarantee cost and optimal leverage ratio.