Tax Harmonization Research Articles

Tax Harmonisation through the Prohibition of State Aid?

Tax Harmonisation through the Prohibition of State Aid?

Analisis Perbandingan Tax Amnesty Jilid I dan Jilid II (Program Pengungkapan Sukarela) Serta Peluang Keberhasilannya

The government has implemented the tax amnesty volume I in July 2016 and ended in March 2017. In early 2022, the government will plan to implement the tax amnesty volume II, which was introduced as the Voluntary Disclosure Program (PPS). This program refers to the Tax Harmonization Law Number 7 of 2021. Although the results obtained during the tax amnesty volume, I did not meet the target, in 2022 the government still plans to implement the tax amnesty volume II. For this reason, it is necessary to analyze the difference between the tax amnesty volume I and the tax amnesty volume II (PPS), as well as predict its effectiveness if this tax amnesty will be implemented later. This study method focuses on a comparative qualitative descriptive method in which data collection is carried out by taking from the library, website, law and articles discussing this tax amnesty. The results obtained are that there are fundamental differences between tax amnesty I and tax amnesty II. The differences are found in the data, rates, and tax subjects. For taxpayers who have participated in the 2016 tax amnesty volume I, the tariff charged is cheaper than those who do not participate in the first volume I tax amnesty and there are restrictions on subjects who may participate in the second tax amnesty. The effectiveness of this second volume of tax amnesty is predicted to be successful with a record that socialization must be maximal, there is no perception that the tax amnesty endangers honest taxpayers, and the view of taxpayers that this tax amnesty is the last tax amnesty so that there is a fear of not paying taxes and being subject to fines.

The Importance of fiscality for Economic Development. Case study – Republic of Moldova

Abstract The topicality of the topic lies in the importance of taxation and reforms in this field for the economic development of any state. For the EU, as a conglomeration of states and as an exponent of economic globalization, taxation has a strong influence on the multiple economic processes that take place within this structure, as well as within each member state. Undoubtedly, from the perspective of the possible association with the European Union, for the Republic of Moldova, the fiscal changes with subsequent impact on the socio-economic development have a special importance. However, Community tax policy is difficult to impose in the European area, especially because of the obstacles it faces, especially those caused by the Member States themselves, which are reluctant to apply common rules, in particular to the elimination of various forms of tax discrimination, double taxation or tax evasion. The main tools that the European Union intends to use to bring Member States’ taxation closer together are tax harmonization and tax cooperation between Member States.

The Baltic States in the Economic and Monetary Union: Standing in the Shadow of Germany or Helping to Counterbalance the ‘South’?

The Baltic States have been guided in EMU by two motives of, first, being part of the EU’s core to hedge against external security risks and, second, maintaining economic policy tools to catch up with the rest of the EU. Their approach to co-operation with Germany has been influenced by the latter’s role in reinforcing military presence of NATO in the Baltics and the importance of economic links with Germany. However, their preferences diverge from those of Germany on some issues of EMU governance such as banking union or tax harmonisation. With respect to the debates on eurozone reform, the Baltic States have remained cautious and largely adopted the role of ‘fence-sitters’. They express their support for the implementation of the fiscal rules already in place and thus stand in the shadow of Germany in the latter’s debate with the ‘South’. They coordinate their positions with the Nordic EU members, which excludes Germany, allowing it to play the role of a mediator between the ‘South’ and the ‘North’. Given the emergent ‘institutional fabric’ of the relationship to Germany, the Baltic States use both bilateral contacts to Germany and multilateral venues to pursue their preferences.

Free Competition and Fiscal Policy in European Union

Fiscal policy and the harmonization of tax laws are extremely important in order to prevent distortions of free competition in UE. The process of European Union construction is based on integration and liberalization of markets in order a loyal and free competition. This issue is really important in order to crisis superaction. In this context the fiscal policy has a very significant impact on countries economics in EU and on company’s management, especially for those most exposed to globalization. The impact of taxes on free competition, economic growth and employment is quite evident since the EU foundation. So, it would be expected a more significant progress towards fiscal harmonization among EU countries. However, until now the question of tax harmonization had no results. It remains a sensitive question in EU. Almost two decades after the entry of the Euro, after a deep economic crisis that endangered the European project, face to BREXIT, we raised some questions as base to this work: what are the political and institutional limitations to tax harmonization in EU? Why there are no further progress was made in the field of tax harmonization, at least, in company’s income? How does this affect social cohesion? What are the effects on economic and social cohesion? This study intends to reflect on the political and institutional constraints of the tax harmonization, quite necessary to the effective process of economic and social integration within the EU. As methodology, we will use a comparative study about income taxes in several EU countries and the relation to GDP, as well the deductive method to analyze the results we find and some reference studies on the subject. In conclusion, we will present the analyze the results and try to answer to these questions. With this study we pretend give a contribution in order to find an answer to the investigation questions.

On commodity tax harmonization and public goods provision

AbstractThis paper argues that Pareto improvements based on harmonizing tax reforms expressed in terms of the divergence between actual and optimal tax structures and over/under provision of public goods require the use of ‘pseudo‐optimal’ taxes instead of optimal ones. ‘Pseudo‐optimal’ taxes are defined as those obtained using the optimal tax formulas but evaluated at any arbitrary initial tax structure. Within this context the paper reconfirms existing results showing that tax harmonization emerges as a strong policy instrument in achieving a potential Pareto‐improvement.

Trade, emissions, and regulatory (non‐)compliance: Implications of firm heterogeneity

AbstractThis paper provides the implications of firm heterogeneity for the environment. In autarky, raising emission tax generates an average productivity gain and favors efficient firms in the sense that their output expands. Although some of these efficient firms discharge more emissions, some may discharge less. While trade liberalization raises outputs, global emissions do not necessarily increase. A unilateral increase in emission tax not only decreases the outputs in this country but also decreases its average productivity under sufficiently high trade openness. Trade liberalization reduces global emissions under tax harmonization but it may generate more global emissions under tax competition.

Cloaking Member State Objectives Through Legislative Instruments

This contribution discusses special sectoral taxes and analyses the CJEU judgments that have been made on their compatibility with the EU law. These taxes have aroused particular attention because they are levied on sales with progressive rates. As they mainly affect large businesses owned by non-domestic persons, the European Commission took action against suspected illegal state aid. The Commission has still failed to defend its position before the EU judicial authorities. The literature has extensively criticized the CJEU-judgments. To date, however, no author has argued that Member States’measures leading to covert state aid and indirect discrimination are a consequence of the populist state’s abuse of power and that abuses are closely linked to the decline of political democracy and the rule of law in these jurisdictions. As things stand today, the EU legal instruments have not sufficiently unveiled the type of abuse. The present paper seeks to explain how the Member States could commit abuses of taxation power when applying special sectoral taxes. progressive sales taxes, tax harmonization, distributive justice, selectivity, reference framework, covert state aid, indirect discrimination, abuse of power, cloaking Member State objectives, seemingly objective legal criteria

Should commodity tax rates be uniform across regions in a heterogeneous country? Evidence from India

With countries increasingly adopting the Goods and Services Tax (GST) as their system of commodity taxes replacing the myriad of sales, excise and other form of indirect taxes, there is a move towards the two features that characterize the GST: uniform tax rates across items and identical tax rates across regions. When India introduced the GST in 2017, it followed several other countries in departing from the first feature but in keeping with universal practice embraced the second feature. The chief motivation of this paper is to subject this latter feature to critical scrutiny. The study examines the four GST rates in India by comparing them with counterfactual evidence based on preference based optimal commodity tax rates estimated by taking into account regional diversity in prices and spending. The benchmarking suggests that the current top GST rates (12%, 16% and 28%) are much higher than can be justified by the optimal rates. The Indian evidence is also in favor of departing from the universal practice in GST of adopting a uniform tax across items. The paper makes a methodological contribution by proposing a procedure for calculating spatial prices that can be applied to a wide basket of items. The study provides evidence on the redistributive potential of indirect taxation by showing the progressive nature of the optimal commodity taxes. The latter result is of particular significance in developing countries where indirect taxes raise the greater share of revenue and provide an important policy tool for tackling increasing inequality. The study concludes with a list of policy lessons as the country seeks to make further changes to its GST. While there is a significant literature on harmonization of indirect taxes across countries that belong to a single economic grouping such as the EU, there is no such literature between regions within a large heterogeneous country. The present study on tax harmonization between the states in India attempts to fill this gap.

Harmonizácia daňového práva v Európskej únii

Harmonization of EU tax law The article entitled "Harmonization of tax law in the EU" deals with the issue of harmonization of tax liability in the European Union, while the thesis analyzes taxes in the European Union and develops the harmonization of individual taxes. Harmonization is implemented in the area of taxes and indirect taxes. The objectives enshrined in the EU Treaties are achieved through other legislation. In general, the Directive sets out, as a legal act, the objectives to be achieved by the EU Member States. The article contains the most current directives concerning the harmonization of value added taxes. We confirmed the theoretical control and implementation of the EU into the legislation of the Slovak Republic for accidental interventions of the European Union. Analysis of individual deadlines and implementation of confirming work objectives and analysis of harmonization processes in the field of control and determination of taxes, as well as harmonization of processes in the field of tax administration, in EU conditions and their impact on the control of orders in the Slovak Republic. URL: https://vsas.fvs.upjs.sk/

Globalization, fiscal policy and free competition: The impact in EU

Research background:Globalization has profoundly changed the rules of play in the international economy. A new world order, new challenges and new difficulties have arisen as well new strategies to avoid the consequences of global free competition. Fiscal policy is a crucial tool in new global competition model, in special for regions with a high level of economic integration, as EU. In this context tax harmonization is extremely important to prevent distortions of competition in European market.Purpose of the article:Study the political and institutional constraints of the tax harmonization and disclosure a small part of the initial results of a investigation project about “tax competition in EU”. Understand if and how lack of tax harmonization between the member states is one of the causes of inequity between them, in special the Euro zone countries.Methods:Comparative study about income tax’s in Euro zone countries and the relation to PIB, as well the deductive method to analyse the results we find and some reference studies on the subject.Findings & Value added:The goal is answer to the follow questions: what are the political and institutional limitations to tax harmonization in EU? Why there are no further progress in the field of tax harmonization? Can EU and Euro zone survive face a globalization challenge with the present fiscal disloyal competition between member states? What future for EU in a globalization era? Findings show that tax harmonization never was considered as a priority in EU, and maybe never will, what is a weakness in a globalization world.

Suzbijanje zakonitog nelegitimnog izbjegavanja poreza opštim antiabuzivnim pravilom u poreskom pravu EU

One of the greatest challenges modern states are faced with is finding a way to tackle unacceptable tax avoidance, especially aggressive tax planning schemes and the use of the so-called tax heavens. In this process, many states adopt a general anti-avoidance rule that allows for tax administration to deny tax benefits realized through the use of abusive tax arrangements, which are in accordance with the letters of the law but circumvent its purpose. At the EU level, Article 6 of the Directive 2016/1164 (Anti-Tax-Avoidance Directive, ATAD), laying down rules against tax avoidance practices that directly affect the functioning of the internal market, contains the general anti-avoidance rule (GAAR). This paper aims to analyze the ATAD's GAAR and related case law of the European Court of Justice in tax avoidance cases in the context of abuse of EU law. In the first section, the author defines tax avoidance and tax evasion in order to clearly distinguish the two terms, and explains the need for the GAAR. The second part presents the elements of the GAAR and the consequences of its application. The third section addresses the issue of legal certainty in applying the GAAR. As one of the prerequisites for tackling the unacceptable tax avoidance and aggressive tax planning is enhanced cooperation of tax administrations and greater transparency of tax information, the author analyzes the 2011 Directive on administrative cooperation in tax matters (DAC) and its numerous amendments. Finally, we present perspectives on the harmonization of direct taxes and depict a potential global solution to reform the outdated international corporate tax system, with action on the reallocation of taxing rights and minimum effective taxation.

The effect of tax harmonization in the Southern African development community on foreign direct investment

The effect of tax harmonization in the Southern African development community on foreign direct investment

Development of Income Taxes in Slovakia and the European Union in the Light of Recent Economic Changes in Europe

Political, economic, and social developments in the world have undergone relatively turbulent changes over the last two decades. The European Union has not avoided them either. Naturally, any such change directly or indirectly affects the national economies of individual countries. Governments adapt to the new conditions through measures in the areas of employment, production, taxes, levies, and the like. This paper aims to examine the development of income taxes in Slovakia and other countries of the EU. Personal income tax and corporate income tax are the most significant direct taxes in all Member States in terms of collection volume. Their development varies from one region of Europe to another. Therefore, the idea of greater tax harmonization in the Union regularly runs into the arguments of countries in favor of maintaining tax competition. The paper seeks the similarity of individual tax systems and suggests a possible procedure in their further convergence.

Revisiting corporate income tax determinants in Southern Africa

ABSTRACT The corporate income tax (CIT) systems of developing countries can potentially be contributors or impediments to their economic development. This is especially relevant in the SADC region that has a set agenda regarding regional integration goals, and where the guiding principle is tax harmonisation that benefits all members through tax reform efforts. Despite the importance of the topic, empirical literature remains scant, and this paper attempted to revisit the CIT determinants in the SADC region. Having a larger database at their disposal, the authors could update the existing empirical literature. The sample period of the study included the commodity booms and slumps following the global financial crises, and illustrated the varying fortunes of developing countries in general, and the SADC specifically. Furthermore, given the lower economic growth, together with the variable commodity prices since 2008, there is a concern that corporate tax revenue may continue to erode. A cross-section panel was utilised to determine those factors that may best explain changes in corporate taxes in Southern Africa over the period of time from 1980 to 2017.

Issues of tax integration of the member states of the Eurasian Economic Union

The article discusses changes in the national legislation of the states of the Eurasian Economic Union (EAEU): the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic and the Russian Federation. The nature and conditions of the harmonization process are analyzed taking into account legislative changes. The most important indirect taxes (value added tax, excise taxes) in the EAEU member countries are compared.In addition, the state of their tax systems is compared, features, their further unification and restructuring are determined, and their ratio is compared with the provisions of the EAEU Treaty. Despite many years of efforts to harmonize taxes, issues remain that need an interstate settlement. Currently, taxation approaches in the EAEU countries are significantly different, which complicates the integration processes within the framework of the association. Speaking of tax harmonization in the EAEU, it is worth noting significant progress in the harmonization of approaches to indirect taxation. The competitiveness of the participating countries in the world market and the growth of the welfare of the population depend on this. When selling goods between the member states of the Eurasian Economic Union, there is no customs control, customs duties and fees are not levied. The procedure for levying indirect taxes (VAT and excise taxes) for the supply of goods (performing work, rendering services) between the EAEU member states is governed by the provisions of the Treaty on the Eurasian Economic Union, signed in Astana on May 29, 2014 and the provisions of the Protocol on the procedure for levying indirect taxes and the mechanism of control over their payment when exporting and importing goods, performing work, and rendering services, which is Appendix No. 18 to the EAEU Agreement.

Оцінка впливу амортизаційної політики на міжнародну податкову конкурентоспроможність країн ОЕСР та України

The article presents an assessment of the impact of capital cost recovery policies of the OECD countries and Ukraine on their international tax competitiveness, based on a comparison of the treatments of investment in machinery, buildings, and intangibles that a business can recover through the tax code via depreciation. The rating of the international tax competitiveness of the OECD countries and Ukraine is based on the standardized capital allowances. Although the assessment of international tax competitiveness is expressed by the only indicator, such as capital allowances, it serves to prove that international tax competition is responded not only by reducing tax rates but also by defining a business tax base. According to the results of the study, the dominant position in the ranking of the OECD countries is occupied by countries that are able to recover higher costs of capital investments (over 68%). These countries are characterized by particularly high (by international standards) capital allowances for equipment and intangibles (over 82%). Unfortunately, due to the lack of tax harmonization of the Ukrainian tax system, specifically its treatment of capital allowances, with the EU and OECD countries, Ukraine falls behind in the ranking of international tax competitiveness. Thus, in order to enhance the competitiveness of the domestic corporate income tax system, Ukraine's treatment of capital investments in core assets, especially buildings and intangibles, should be improved and brought in line with both modern Ukrainian socio-economic realities and the capital cost recovery provisions accepted in the OECD.

The Long Arm of State Aid Law: Crushing Corporate Tax Avoidance

The sun is setting on the days when multinationals could establish intricate tax systems to drastically reduce their tax bills. Since the 1990s, the OECD and the EU have taken resolute steps to compel their members to eradicate corporate tax elusion and harmful tax competition. These solutions are forward-looking, and aim at averting future issues. Importantly, the European Commission has picked a fight against past tax schemes by targeting tax rulings via State aid, a part of EU competition law. In the most publicized case, Apple was asked to pay $15 billion to Ireland in outstanding taxes. The decision was annulled by the General Court in July 2020, and an appeal before the Court of Justice is currently pending. This paper assesses the value of State aid law as a tool to fight unfair corporate taxation. It does so by scrutinizing the decisional practice of the Commission and the judgments of the General Court. The point of departure is that it is legitimate to resort to State aid rules to monitor tax planning practices. While the Commission faces an uphill struggle to win individual cases, the general principles and strategy delineated by the investigations serve to enhance deterrence and decrease undesirable predictability. Unintendedly, the Commission’s losses reinforce the robustness of judicial review, and serve to question the narrative that EU competition law may be strategically applied against US tech giants. Overall, the paper perceives State aid as a useful weapon to combat corporate tax malpractices, but as a complement, not a substitute, of the preferred tax harmonization strategy.

Analysis of selected indicators of tax competition and tax harmonization in the EU

The paper aims to provide an analytical view of the harmonization of income taxes in the European Union. The aim of the theoretical part is to provide an overview of the literature that deals with the issue of tax harmonization and tax competition. This section contains the views of experts on tax competition and tax harmonization. The paper explores the current state, as well as the development in the field of income tax harmonization, and competition in the Member States. The aim of the analytical part is to compare income taxes in the countries of the European Union and to bring proposals for the solution of tax harmonization. The analysis focuses solely on the most important direct taxes, personal income tax, and corporate income tax. The results of cluster analysis using four tax determinants suggest the future of the direct tax harmonization process. The graphical analyzes indicate, that the process of tax harmonization could begin with the harmonization within countries that are geographically and politically close together. Harmonization would bring together countries with a similar tax burden and could continue in other interested European Union countries.

Development of the financial policy of the Eurasian economic union countries: tax harmonization

The paper presents an analysis of viewpoints in the debate concerning tax harmonization in integration unions and the results achieved in the Eurasian integration process, focusing on the specifics of taxation in the EAEU member states. The findings have led the author to conclude that there are considerable differences in taxation approaches and the rates of major budget-forming taxes and excises in the EAEU countries and non-tariff barriers still exist in product and services markets, which is an obstacle for mutual trade and access of excisable goods to the markets of union states. Measures to refine taxation systems are identified with a view to expanding budget revenues and ensuring the competitiveness and financial stability of the EAEU member states. Such measures include the establishment of a unified identification system for foreign trade operators (UISFTO), enhancement of electronic services, automation of information exchange between tax and customs authorities and implementation of new tax administration mechanisms in digital trade.