Debt Tax Research Articles

Debt Tax Benefits in a High Tax Emerging Market: Evidence from Brazil

Debt Tax Benefits in a High Tax Emerging Market: Evidence from Brazil

Pengaruh Non-Debt Tax Shield Dan Cost Of Financial Distress Terhadap Struktur Modal Pada Perusahaan Sub Sektor Logam Dan Sejenisnya Yang Terdaftar Di Bursa Efek Indonesia (BEI) Tahun 2013-2017

This research aims to provide the influence of non-debt variable tax shield and cost of financial distress affect the capital structure of the company's sub-sector metals and the like listed on the Indonesia Stock Exchange in 2013-2017. The method on this research is a quantitative approach with the type of correlation study. The data collection techniques in this study use secondary data with saturated sampling techniques. The population of this research is a metal sub-sector company and the like listed on the Indonesia Stock Exchange (IDX). The samples in this study were as many as 16 metal sub-sector companies and the like listed on the Indonesia Stock Exchange (IDX). The results showed that both the partial and simultaneous variables of the non-debt tax shield and cost of financial distress had no effect on the capital structure of the metal sub-sector companies and the like listed on the Indonesia Stock Exchange ( IDX). It shows that the T-Test in a non-debt tax shield variable is obtained by the T-calculate result of 1.401 and the value of Sig. T. Acquired by 0, 165 > 0.05, then Ho accepted and H1 rejected which means there is no positive influence on the capital structure and in variable cost of financial distress obtained with the result of T-Calculate of 1.756 and the value of Sig. T. Acquired by 0, 083 > 0.05, then Ho is accepted and H1 is rejected which means there is no positive influence on the capital structure. Then simultaneously F test result in can with a fcalculate value of 2.295 with a level of Sig. 0, 108, because of the value of Sig. F > 0.05, then Ho accepted and H1 rejected. This means that there is no variable influence of non debt tax shield (X1) and cost of financial distress (X2) to the capital structure (Y).

How Does Uncertainty Influence Target Capital Structure?

This study investigates how uncertainty affects firms' target capital structure using a panel data set of U.S. public manufacturers between 2003 and 2018 and finds that high-uncertainty firms have 10.1 (8.1) percentage points lower mean book (market) targets than low-uncertainty firms. This study also shows that the uncertainty effect on leverage targets is greater than the impact of firm size, market-to-book ratio, assets tangibility, R&D intensity, and industry median leverage, making uncertainty the most critical determinant among all time-varying determinants of leverage targets. Further, this study finds that heightened uncertainty decreases debt tax shields, increases potential financial distress costs, and exacerbates debtholder-shareholder conflicts, thereby leading to a lower optimal or target leverage ratio.

Are Tax Amnesties Good for Us All? Understanding Influence of Tax Amnesties on Benefiters and Non-Benefiters

AbstractThis article aims to investigate the effect of tax amnesties on tax compliance decisions of taxpayers. In particular, we focused on Turkish taxpayers’ fairness perceptions and their voluntary tax compliance after the recent legislation of 6736, which is claimed to be the biggest tax amnesty (for example, tax debt restructuring legislation) in the last decade. This article also investigates the difference between tax amnesty benefiters and non-benefiters when it comes to their tax compliance and fairness perceptions. This article starts with a summary of the literature with a particular focus on Turkey. The research looks into the influence of the perception of tax amnesties on fairness and tax compliance of taxpayers while controlling for widely discussed factors that influence tax compliance such as risk awareness and government trust. The survey was conducted with 1028 participants and a structural model was constructed to test for the above-mentioned effects. We found fairness perception of the taxpayers is negatively affected by tax amnesties. Additionally, the findings showed that acceptance/approval of taxpayers on tax amnesty practice is effective on taxpayer compliance. Finally, only tax amnesty benefiters’ fairness perception is negatively influenced by tax amnesties while the effect is not significant on benefiters.

SMALL AND MEDIUM SIZE ENTERPRISES (SMES) IN MALAYSIA: A CONCEPTUAL UNDERPINNING OF CAPITAL STRUCTURE DECISIONS AND FIRM PERFORMANCE

This research emphasises the conceptual underpinning of capital structure decisions and firm performance among Small and Medium Size Enterprises (SMEs) in Malaysia. The capital structure of a firm can be partitioned into two major groups, particularly debt and equity financing. Equity financing arises when a firm offers some of its ownership rights to raise capital for further growth, expansion and investment activities. However, the definition of capital structure is the proportion of debt and equity to the total capital carried by a firm. The study found that the relationship between growth opportunity and firm performance is positively related to firm performance. It explains most of the SMEs whom with better growth opportunities will have greater access to finance and more sources in selecting financing options compared to low growth firms in Malaysia. The finding also justifies that the oldest of the firm age, the higher creditworthiness and better historical records that provide a more considerable reputation and trust to financial institutions. In investigating the relationship between asset tangibility and firm performance among SME in Malaysia, this study proves a positive relationship between the asset tangibility and firm performance. Finally, the number of literature on SMEs capital structure in Malaysia is relatively limited. Therefore, the recommendation for future research to study on other determinants of capital structure decisions which did not utilise in this study, for example, liquidity, non- debt tax shield and financial flexibility to examine the impact of capital structure decisions of SMEs. JEL: L10, L20, P12, D24 Article visualizations:

Налоговое и гражданское право: некоторые аспекты взаимосвязи при прекращении юридического лица

Based on the analysis of civil and tax legislation and the practice of its application, an idea of the relationship between these industries in various ways of termination of a legal entity (voluntary and compulsory liquidation, invalidation of a legal entity and exclusion of an organization from the Unified state register of legal entities) is formed. It is proposed to consider the termination of a legal entity as a General institution for special methods of termination. It is concluded that it is necessary to notify the organization's stakeholders in advance through digital technologies about the upcoming exclusion of a legal entity; to take measures to collect tax debts before excluding an organization from the state register; before forming a list of organizations for exclusion, charge the tax authorities to conduct an analysis of the real state of the taxpayer. It is the tax authority that carries out compulsory liquidation and exclusion from the register, which has a huge impact on the state of subjects of civil turnover.

Превентивні заходи запобігання податковому боргу у сфері малого та середнього бізнесу

The article aims at forming a roadmap for self-reliant control of the absence of tax debt for small and medium-sized businesses in Ukraine. The necessity of conducting tax audits for small and medium-sized businesses in terms of preventing tax evasion has been studied. The article systematizes the types of tax audits provided by the Tax Code of Ukraine (hereinafter referred to as TCU) amid the COVID pandemic. The peculiarities of these audits and their key features are detailed. The necessity to conduct self-reliant control of the absence of tax debt among small and medium-sized enterprises (hereinafter referred to as SMEs) is substantiated based on the analysis of the ratio dynamics of tax debt to tax revenues to the Consolidated Budget of Ukraine. The Roadmap for independent tax control as for the absence of tax debt due from SMEs is suggested. Its structure includes three stages with step-by-step detailing of the taxpayer’s actions at each step. The practical aspect of the roadmap is based on preventive control of taxpayers’ honesty and financial literacy. The implementation of the Roadmap is carried out on the example of SMEs on the simplified system of taxation, and SMEs as single tax payers, using the taxpayer account, which is the key software in the lockdown, as the basis for calculations. The principles of work in the specified electronic resource are visualized. The article considers the tax authorities’ possible areas of work to prevent violations of tax legislation by SMEs. Such areas of work are grouped into 3 fields: taxpayers training, simplification of the taxpayer account, transparency of the uses of taxes paid by a definite SME.

Vergi Uyuşmazlıklarının Yargısal Çözümünde Vergi Mahkemelerinin Rolünün Değerlendirilmesi

Tax is the most important, and continuous, source of funding for the state. Taxpayers are people who live in the community and enter the field of taxation. With tax, the state obtains some of the economic resources of individuals using compulsion and utilizes it to fulfill public needs. Since taxes are monetary payments, there may be disagreements from time to time between taxpayers and the tax authority who want to receive taxes. These disputes may be caused by tax errors, or may be due to the taxpayer's refusal to pay the tax debt or to comply with the financial and formal requirements of taxation. In the event of a dispute between taxpayers and the administration regarding taxation, it is expected that the dispute will be resolved and eliminated. There are two options for both sides to remedy the tax dispute. The parties can choose administrative solutions such as reconciliation, reduction in penalties, regret, redress, and corrections that satisfy tax errors, as well as to resolve the issue of dispute by litigation through the tax judiciary. The law offers the parties the right to choose between the two options of resolution. In other words, both the tax administration and taxpayers prefer peaceful solutions in the event of a tax dispute, and if a solution cannot be found by these means, they are not required to apply to the tax jurisdiction. If tax litigation is the preferred option of resolution, it is inevitable that both sides will face a number of judicial costs, and other cost elements if the issue of the tax dispute is moved to the tax jurisdiction. If the issue of dispute is moved to the tax judiciary, expenditure from the petition being written, the costs of filing the relevant litigation, lawyer and expert costs in the matter, time spent in awaiting a judicial decision and the possibility that the result will be for or against may result in extra costs on the parties. Nevertheless, if this path is preferred by the parties, generally the first judicial body to apply to is the "tax court", which is the court of first instance in tax disputes. In this study, using qualitative research techniques, the duties and functions of tax courts and their procedure were investigated while focusing on their role in resolving tax disputes.

Taxes as a tool for ensuring economic security of the territory

The article defines the place, significance and functional role of taxes and the tax system in ensuringthe economic security of the state and its territorial units; The factors of the occurrence and the impactof tax threats on economic security are identified. The importance of the formation and successful implementationof an effective tax policy in the functional relationship of all its elements and mechanismsfor ensuring the economic security of the territory is indicated. It is noted that the effective control andverification activities of the tax authorities allows maintaining the positive dynamics of tax revenues ofthe budget system of the Russian Federation, which plays an important role in ensuring the economicsecurity of the subjects of the Republic of Armenia and the state as a whole. A detailed analysis of the taxrevenues of the Russian Federation and the Oryol region is carried out, the effectiveness of the controland verification activities of tax authorities at various state levels is assessed by absolute and relativeindicators. The authors identify factors that have a significant impact on the level of tax collection inRussia, identify the directions and conditions for the growth of tax revenues in the region. In addition,mechanisms for reducing tax debt to the consolidated budget of the region are proposed and justified,and the author’s vision of the most promising areas for increasing the effectiveness of the control andaudit activities of the tax authorities of the Oryol Region is outlined to ensure the economic security ofthe territory.

Non-Homothetic Sudden Stops

Financial crises preceded by nontradable consumption booms are characterized by sharper real exchange rate depreciation and deeper economic contractions. We show that a small open economy model of Sudden Stops under non-homothetic preferences can rationalize the danger of credit-fueled nontradable booms. Nontradable goods are more income-elastic than tradable goods. Thus, when a credit boom leads to a Sudden Stop, the demand for nontradable goods contracts violently and proportionately more than under homothetic preferences, causing a larger depreciation that further decreases the collateral value amplifying the current account reversal by 24%. The amplified pecuniary externality calls for 15% more aggressive debt taxes and increases the welfare gains from simple rules.

Is the Value of the New Business Tax Shield Lower? Comparative Study of International Valuation Methods

The macroeconomic environment has been characterized by strong GDP growth in recent years. The favourable conditions allow the growth of new innovative businesses (start-ups), which support multiplier economic development. New businesses are often unprofitable in the first years of existence; there is a higher probability of default. The issue of start-ups may be insufficient funding, high costs of financial distress and resulting low corporate value and unattractiveness for investors. The aim of this paper is to analyse and evaluate which of the existing methods of quantifying the debt tax shield is suitable for start-ups. Three different approaches have been chosen to calculate the interest tax shield; Modigliani-Miller (1963) model for imperfect capital markets and two models from Velez-Pareja (2013,2016). The results were obtained by correlation analysis of more than 5,000 Slovak businesses, the impact of the age of the business on the value of tax shield was examined. Also, the impact of the industry on the value of tax shield was explored. The results of the analysis suggest that the quantification by Modigliani-Miller (1963) formula does not take sufficient into account of the age of company. In contrast, the Velez-Pareja (2013, 2016) models are suitable for start-ups, because they take into account the potential tax shield, which occurs when the operating income cannot cover financial costs (especially interest paid). In innovative industries, start-ups often do not reach the traditional tax shield, but their value may be higher using an alternative formula by Velez-Pareja.

Research on the Impact of Tax Shield Effect on Corporate Capital Structure<br/>—Empirical Analysis Based on A-Share Listed Companies

This paper uses a random-effects model and takes 224 listed companies in China from 2002 to 2017 as a sample to empirically study the relationship between the corporate income tax shield effect and corporate capital structure in China. It is found that the debt tax shield and corporate capital structure are significantly positive. Relatedly, the non-debt tax shield is significantly negatively related to the corporate capital structure. At the same time, the impact of debt tax shields and non-debt tax shields on corporate capital structure varies from industry to industry.

Changes in the Capital Structure of Polish Companies During the Last Twenty Years (1997–2017)

<p><strong>Theoretical background</strong>: The capital structure is one of the most important areas in the modern theory of corporate finance. It has inspired the development of a large number of theoretical approaches, but a universally accepted theory of capital structure has not yet been developed. A common belief holds that companies try to achieve a stable capital structure in the long term; thus, companies that, at a given time, are characterised by a relatively low (or high) level of debt, also probably had the same level in previous periods.</p><p><strong>Purpose of the article</strong>: The main purpose of this paper is to provide answers to two basic questions: 1) How did the aggregate capital structure of the non-financial companies listed on the Warsaw Stock Exchange (WSE) change from 1997 to 2017?; 2) What factors are decisive for the companies’ capital structure and do the current trends in capital structure theory take account of them?</p><p><strong>Research methods</strong>: The research is carried out in two phases. In phase 1, the descriptive statistics method is applied to analyse how the capital structure of WSE-listed companies changed in the years 1997<em>–</em>2017. In phase 2, the capital structure determinants are examined using multiple regression models.</p><p><strong>Main findings</strong>: The capital structure of WSE companies varied significantly in the sample years, and overall, the debt ratios, total, short-, and long-term debt slightly increased. The causes of the changes were the economic environment factors (banking sector assets, government debt, and corporate income tax) and macroeconomic circumstances, along with the companies’ characteristics. Among the latter, the company’s profitability and the share of fixed assets in total assets usually turned out to be statistically significant.</p>

General Theoretical Analysis of the Mechanism of Legal Tax Regulation

The research is devoted to the detailed analysis of the mechanism of legal tax regulation. The study has found that the mechanism of legal tax regulation is primarily related to the legal regulation of tax debt to ensure its proper execution. Full and timely payment of taxes or fees is meant by proper execution.
 The implementation of tax debt is defined both in the Basic Law of the state, where the emphasis is placed on the imperative requirement for timely payment of taxes and fees in full, and in the Tax code of Ukraine, which establishes the definition of tax debt as the taxpayer's obligation to calculate, declare and / or pay the amount of tax and fee in the manner and terms determined by the Tax code of Ukraine, customs laws.
 The analysis of the legislation and the scientific literature has revealed that the most important issue on taxes and fees payment regulation is the establishment of the moment from which the obligation for tax payment arises. Having rights and obligations for a person is another important factor if he becomes a participant in tax relations. The mechanism of legal tax regulation is a set of elements, which are defined in the Tax Code of Ukraine and in accordance with it are divided into basic, additional and optional. The mechanism of legal tax regulation is possible only as a set of basic and additional elements. The absence of at least one of the elements will not allow to legislate a separate tax or levy. The study provides a comprehensive analysis of each element of the tax mechanism.

Ідентифікація макрофінансових показників у сфері управління державними фінансами

Зосереджено увагу на особливостях аналізу макрофінансових показників у сфері управління державними фінансами. Наголошено, що ефективність податкового регулювання залежить від значного числа інтересів та факторів і визначається використанням відповідних макрофінансових індикаторів, які потрібні для комплексного аналізу і вибору сценаріїв досягнення стратегічних цілей. Показано важливість розмежування макрофінансової та макроекономічної сфер. Макрофінансовими індикаторами визначено доходи та видатки зведеного бюджету, державний борг, показники грошово-кредитної сфери. Оскільки управління є безперервним циклічним процесом, протягом циклу індикатори використовуються двічі: для оцінки ситуації під час планування заходів та оцінки наслідків їх впровадження. Визначено, що індикатори податкової сфери також включають у групу макрофінансової безпеки як складову структури доходів бюджету. Показники податкового навантаження на макрорівні відображають ефективність податкової політики, тобто кількісно вимірюють сукупний вплив податкових платежів на джерела їхньої сплати. При цьому потрібно розрізняти податкове навантаження сплачене та несплачене, тобто податкові борги та борги до цільових фондів. З'ясовано, що податковий коефіцієнт є найпростішим показником для використання у характеристиці податкового навантаження та його впливу на макропараметри. З погляду аналізу макрофінансової стабільності, відношення податкових надходжень до ВВП дає достатньо підстав для формування висновків щодо довготермінових тенденцій наповнення бюджету та виявлення потенційних ризиків. Однак надходження податків не є індикатором, пов'язаним з рівнем економічного розвитку. Обґрунтовано, що рівень несплати податкових зобов'язань, рівень тінізації економіки є відображенням реальної макрофінансової стабільності.

Liquidity Choice and Misallocation of Credit

This paper studies a novel type of misallocation of credit between investments of varying liquidity. One type of investment is more liquid, i.e., its return is more pledgeable, and the other is more productive. Low liquidities of both investment types imply that the allocation of credit is constrained inefficient and that there is overinvestment in the liquid type. Constrained inefficient equilibria feature non-positive, i.e., one less than or equal the economy’s growth rate, and yet too high interest rate, too much investment and too little consumption. Financial development can reduce long-term welfare and output in a constrained inefficient equilibrium if it raises the liquidity of the liquid type. I show a maximum liquid asset ratio or a simple debt tax can achieve constrained efficiency. Introducing government bonds can make Pareto improvement whenever it does not raise the interest rate.

Problematic aspects of the correlation of civil and tax legislation in the context of inheritance succession in tax legal relations

In the article the analysis of the correlation of civil and tax legislation on the example of inheritance succession in tax legal relations. The problematic perspective of the interaction and influence of civil and tax law is one of the constant problems of the national legal system, which is modified under the influence of various factors. As this problem has been the subject of scientific research in the theory of law, relevant sectoral directions, the task of this scientific publication focuses on the issues of determining the ratio of civil and tax law in the interaction of hereditary and tax relations, burdened by succession in succession. The author probed the questions practice of courts in resolving disputes regarding the collection of tax debt in the event of the death of the defendant, procedural actions and court decisions. The author studies court decisions and relevant practice on closing the proceedings or refusing to open in the event of the death of the defendant, when the disputed tax relations do not allow succession. The article explores the application of civil legislation to relations that arose before entry into force. The features of the simplified production are examined in matters about an inheritance. In the article are formulated the signs of judicial cases about an inheritance and tax, related to subject composition, matter of action, inheritance time, other descriptions. The author affected the questions of forming of judicial practice, roles of Supreme Court in correct application of legislation courts about an inheritance. A circleof legally meaningful actions, which may be inherited from the side of subjectsof the inherited legal relationships, is outlined. Composition of inheritance, the right and obligations, whose carrier during the life was the testatorhimself, is analyzed. It is proved, that the composition of inheritance besidesrights and obligations can also includes possibilities and permissions, given bythe law. Key words: inheritance, heirs, tax legal relationship, law of succession.

Tax Liabilities of The Board Member in Latvia: Legal-Economic Aspects

Abstract Research purpose. To analyse the content of legal acts regulating the personal responsibility of the Member of the Board for overdue tax payments by a legal person, to carry out an analysis of the legal and economic conditions of business development. Design/ Methodology/ Approach. The study is based on the economic and legal analysis of legal acts using descriptive, analytical, deductive and inductive methods, on the basis of which the authors draw conclusions about the responsibility of the Members of the Board, their rights and obligations towards the state and society, deliberately avoiding compulsory taxes. The research has been created as a systematic review, including searching in databases The Legal acts of the Republic of Latvia and The Commercial Register of the Republic of Latvia, specific literature, publications of expert, methodically analysing, compiling and including and excluding information. Findings. The responsibility of the Member of the Board for losses incurred by a legal person in Latvia has so far been an insufficiently researched topic and there is a lack of publications and case summaries. This creates problems for the uniform application of the law in practice. This study will analyse current issues – the conditions for the responsibility of a Member of the Board as a natural person for the tax liabilities of a legal person, analysis of statistical data. Changes in statistical data and legislation in the study cover the period from the entry into force of changes in legislation that provide for the personal financial responsibility of the Member of the Board for a legal person’s tax debts. Originality/Value/Practical implications. The study contributes to the analysis of the business environment in two aspects: 1) economic aspects related to changes in the legislation on the personal responsibility of the Member of the Board for corporate tax debts; 2) the legal conditions that affect the role and responsibility of the Member of the Board in a commercial company in case of damages.

Payment of Tax and Labor Wages Debt When the Company Experiences Bankruptcy in Indonesia

The Bankruptcy Decision is both instantaneous and constitutive that it excludes circumstances and creates a new legal state. In the judge's verdict on bankruptcy there are three essentials: the statement that the debtor is bankrupt, the appointment of a Designated Judge of the Judge of the Court and the Curator. Substantively UUK and PKPU still have some weaknesses, as well as in practice. In this study the authors focus on the problem of "Which should take precedence between tax debt with the wages of workers in the case of companies experiencing bankruptcy in Indonesia?". How is the scale of payments prioritized to the separatist, preferred and concurrent creditor in practice is still often found the existence of legal uncertainty. Keywords: debt payments, taxes, workers' wages, bankruptcy, creditors. DOI : 10.7176/JLPG/92-22 Publication date: December 31 st 2019

INVESTIGATING THE LEVERAGE COMPOSITION OF PAKISTANI FIRMS THROUGH THEIR DETERMINANTS

To have an ideal mix of debt and equity in a balance sheet of an entity is till to date a very complicated issue for managers as there is no such rule to predict an optimal capital structure. An in-depth understanding is required for the corporate culture, the degree of the development of the capital market and the economy in which the firms operate. This study seeks to investigate the leverage composition of Pakistani corporations through their determinants. Fixed effect regression is used to show the relationship of determinants of capital structure on leverage corporations listed on Karachi Stock Exchange (KSE) for the period of 2006 to 2013. The results suggest that agency cost, growth, age, and size are significantly and negatively associated with the capital structure of Pakistan firms, however, collateral value of asset is significantly but positively associated with the capital structure of the firm. On the other hand, free cash flows, non debt tax shield, profitability, business risk and bankruptcy cost are not significantly associated with leverage composition of the firms and are against the signaling theory and peaking order theory. The key importance of this study is that no prior research was done for determinants like agency cost, free cash flows, bankruptcy cost and age as determinants of capital structure for Pakistani firms among other determinants. Further, this study does not confine to a particular sector rather it covers all companies listed by Karachi Stock Exchange.