Tax Incentive Policy Research Articles

Relationship between Taxpayers and Authorities against Tax Compliance during the Covid'19 Pandemic

Taxpayer compliance during the Covid 19 pandemic is an important issue in the relationship between taxpayers and tax authorities. This study was to identify taxpayer compliance behavior using factors, namely: procedural fairness, trust, and commitment. The commitment mediation effect was also tested in this study. Data were collected through questionnaire involving individual taxpayer respondents. A total of 102 collected questionnaires were analyzed using Partial Least Square (PLS). Procedural fairness in determining tax incentive policies during the Covid 19 pandemic is not enough to increase taxpayer compliance. The results of this study also prove that the commitment be a factor affecting tax compliance, either directly or indirectly. Result of mediation test prove that taxpayer’s commitment mediates the relationship of procedural justice on tax compliance. Similarly, commitment is a mediation in the relationship of trust on tax compliance. Therefore, it is important for the government and tax authorities to maintain the commitment of the taxpayer as part of a strategy to increase tax compliance and develop effective long-term relationships.

IMPLEMENTASI INSENTIF PAJAK UMKM DI ERA COVID-19 DI KECAMATAN GEDANGAN KABUPATEN SIDOARJO

It is known that the people's economy has experienced a significant decline due to the Covid -19 Pandemic which has spread in various regions in Indonesia. From an economic point of view, we found that there was a decrease in income felt by UMKM actors, one of which was in the Gedangan Sub-District, Sidoarjo District which was caused by the Covid-19 pandemic. So that we are interested in examining how the efforts made by the Government through the Ministry of Finance regarding Final Income Tax Incentives to deal with the decline in income faced by UMKM’s. This study aims to determine how the implementation of the Final PPh Tax Incentive policy for UMKM’s during the current Covid-19 pandemic and to find out how the impact felt by UMKM’s regarding the Final Income Tax incentives issued by the Indonesian Minister of Finance. The method we use in this research is descriptive qualitative with data collection techniques using interviews and observations. The results of this study indicate that the tax incentive policy can not be felt by UMKM actors in Gedangan District, this is due to the lack of socialization provided, resulting in their lack of knowledge about this policy and what conditions they must have to get tax incentives issued by the Ministry of Finance.

EFEK INSENTIF PERPAJAKAN BERDASARKAN DASAR PENGENAAN PAJAK DAN TARIF PAJAK TERHADAP EKONOMI SECARA MAKRO : STUDI KASUS INDONESIA

Due to National Economy Recovery program, the Indonesian Government had conducted severalTax Incentive Policies to escalate economic growth faster. However, we have not found any studyto measure the policies' effect on macroeconomic indicators. In this paper, we attempt to find theimpact of Tax Incentive Policies that had been implemented for the end of the year of 2018. Ourpurpose is solely to find general understanding and knowledge about Tax Incentive Policies' effecton Macroeconomy. Based on the examination test using The Impulse Response Function method,we discovered that Tax Incentive Policies positively impact Investment, gross domestic product, and unemployment.Specifically, Tax Incentive Policies based on Tax Rates have a better positive impact than TaxIncentive Policies based on Tax Base. However, those impact only relatively sustains in a short period.

Analysis of COVID-19 Tax incentives on tax revenues

The Covid-19 pandemic is a global problem that affects every aspect of almost all countries, especially the economic aspects. The Indonesian government states that the Covid-19 pandemic is an unnatural disaster that affects economic stability as well as state revenue, which is exacerbated by the existence of an incentive scheme.This study aims to analyze the provision of tax incentives by the government to respond to the economic impact caused by the Covid-19 pandemic, as well as the impact on tax revenue on the tax incentive scheme or policy undertaken. This research is a descriptive study with a qualitative approach, which describes an event that becomes a phenomenon, then explains the situation based on the data obtained and analyzed.From several of the incentives and tax policies undertaken, more emphasis is placed on the regulatory function than on the budgetary. This step was taken to face the difficult economic conditions due to Covid-19. Losses in the form of loss of tax revenue due to the consequences of tax incentives can be calculated through the Tax Expenditure analysis, to measure the effectiveness of the tax incentives provided. © 2021 Karadeniz Technical University. All rights reserved.

Economic benefits of construction waste recycling enterprises under tax incentive policies.

To further explore the development of construction waste recycling enterprises and promote the recycling of construction waste resources in China, a system dynamics model of the economic benefits of construction waste recycling enterprises is established using the system dynamics method and taking the tax incentive of the Guangzhou Municipal Government as an example. The economic benefits of construction waste recycling enterprises are analyzed from the perspective of the total cost, total revenue, and total recycling amount. The results of the MATLAB simulation and numerical analysis show that (1) by simulating the effects of different taxes such as value-added tax (VAT), education surcharge, urban construction tax, and enterprise income tax on the economic benefits of construction waste recycling enterprises, it is found that when tax incentives reach 70%, the VAT favorable policies bring the highest gains, followed by enterprise income tax, whereas favorable education surcharge policies and urban construction tax have the least impact on economic benefits. (2) Taking the monetary subsidy of the Guangzhou municipal government as an example, it is estimated that the total revenue of construction waste recycling enterprises will increase by 33.56% annually in 2030. When the new production technology is adopted, the return on investment (ROI) will reach 46.8% in 2030 compared to previous technological improvements. In the simulation scenario, the ROI will be 42.2%, which has a good incentive effect on the cost control of enterprises. (3) Increasing the available power to VAT and corporate income tax can improve the profitability of construction waste recycling enterprises in China; however, tax incentive policy will no longer be the main factor affecting the benefits of enterprises when a certain time is reached. (4) It is suggested that the government improves the relevant tax laws incentive policies, increase tax incentives, and add equipment tax incentive policies, actively change the tax mode, and increase indirect tax models to improve the economic benefits of enterprises. The research results provide a decision-making reference for the government to formulate laws and policies related to the economic benefits of construction waste recycling and promote the development of the construction waste recycling industry, the development of new industries, such as waste recycling and treatment, and the formation of industrial chains, to achieve the strategic goal of sustainable development.

Improve the Rapid Development of “High-tech” Industry Based on SWOT Model

In order to promote the renewal and development of the capital city and avoid the "low-speed development trap" in the economy, the government proposed to use "high-tech" industries as the driving force to accelerate the construction of a "high-tech" industrial economic structure and increase investment in industrial innovation, so as to better guide and support overall and long-term development of economic and social. This article uses the SWOT analysis model, based on the actual development of Beijing’s industry, deeply analyzes the advantages, disadvantages, opportunities and challenges of the city’s development of "high-tech" industries, and proposes four aspects of countermeasure, such as improving fiscal and tax incentive policies, improving financing methods, optimizing industrial layout, promoting dual-chain integration. Beijing Municipal Government should speed up a reasonable "high-tech" industrial structure, give full play to the role of "high-tech" industries in "improving quality and efficiency" in Beijing's economic development, and then optimize and enhance the core functions of the capital.

How Does the Evolution of R&D Tax Incentives Schemes Impact Their Effectiveness? Evidence From a Meta-Analysis

A growing interest in R&D tax incentive policies has given rise to a large number of evaluations, which provide contrasting results about their effectiveness. Our meta- analysis aims to explain the heterogeneity found in the R&D tax incentive evaluations by the features of tax incentives. We document that on average R&D tax incentives stimulate R&D expenditures across two streams of empirical studies. However, this averaged effect is moderated by the underpinning features of tax incentives. Our samples evidence that the estimations linked to incremental bases and related to targeted rules towards SMEs drive the positive results found in the literature. Introducing a cap or a pre-approval process does not decrease the effectiveness of R&D tax incentives, allowing governments to monitor the indirect support needed to stimulate private R&D expenditures. Our results highlight the importance of setting up a clear and stable tax incentives framework. Sources of uncertainty regarding the timespan, the amount of the financial returns from tax claims but also the main criteria to apply are likely to decrease their effectiveness in the short run.

영상콘텐츠 산업 세제지원 제도 비교 연구: 미국, 영국, 프랑스, 헝가리 사례를 중심으로

This research aims to examine how major North American and European countries including the United States, the United Kingdom, France, and Hungary implement their tax incentive policies for the content industry. To systematically examine each country’s tax incentive policy and regulations for this industry, this study analyzed the issue based on seven different comparative analysis frames:1) when tax incentive policies for the content industry are enacted; 2) the considerations under which tax incentive policies for the content industry are introduced; 3) the concrete goals of tax incentive policies for the content industry; 4) how the subjects and qualifications of tax incentive beneficiaries are defined; 5) how tax incentive schemes and the scale of tax incentives are planned; 6) how the main criteria and concrete policy procedures related to tax incentives for the content industry are classified; and 7) whether tax incentives for foreign companies or individual investors exist. Regardless of the differences among the sampled countries, this research reveals main trends and major characteristics commonly found in terms of 1) active use of refundable tax credits or cash refund systems; 2) promotion of high tax reduction rates; 3) active use of tax incentive policies for foreign firms’domestic location production; 4) encouragement of tax incentives for overseas producers participating in international co-production; and 5) promotion of investor tax incentive systems. Based on these findings, this study suggests that tax incentive policies for the content industry in these countries are used as an effective policy tool— not only to preserve cultural identity by promoting a national content industry, but also to achieve economic benefits by attracting more active international exchanges and foreign investments.

Tax Incentives as a Part of Governments’ Applied Mechanisms for the Third Pension Pillar in Estonia, Latvia, and Lithuania

The main objective of the improvements to public pension systems is to create a balanced three-pillar pension structure and increase public accountability for pension capital formation. Most pension systems are based on the first two pension system pillars – mandatory contributions in the state compulsory unfunded pension scheme and the state-funded or accumulated pension scheme in pension funds. However, the pension level adequacy has been reached by adding the third pension system pillar - voluntary investments in private pension funds. Governments are private pension system policymakers by defining a legal framework and providing tax incentives for voluntary investments for retirement. In the Baltic countries – Estonia, Latvia, and Lithuania, the third pension pillar is at an early stage of its development, and as such, should be particularly stimulated. This research focuses on the tax incentives utilized by the governments of Estonia, Latvia, and Lithuania and aims to ascertain and compare the effectiveness of the tax incentive policies applied to the third pension pillar by the governments of the three Baltic countries. It questions the effectiveness of the incentive mechanisms the governments of the Baltic countries have chosen, which include involving most of the population in the private pension saving programs. The research methods used are the analysis of scientific publications on the previously conducted research, acts of legislation of Baltic countries, as well as an analytical study of statistical data on the development of voluntary pension fund contributions in Estonia, Latvia, and Lithuania. The research results indicate that the tax incentives are the mechanism to motivate the population to create savings in the third pension pillar in all three Baltic countries. However, Latvia being the country with the highest coverage rate of the third pension pillar has the most unfavorable conditions for creating savings. There are no tax incentives on returns on investment and tax-exempt withdrawals in Latvia, while Estonia and Lithuania have all positions tax-exempt. A more detailed analysis of the tax incentives at the contribution stage explains the underdeveloped third pension pillar in Lithuania, as Lithuanian personal income tax reliefs are targeted at low or medium wages or gross income. The research has highlighted the impact of tax incentives on voluntary savings for retirement in the three Baltic countries, opening a discussion about the effectiveness of governments' applied mechanisms.

Carbon tax incentive policy towards air passenger transport carbon emissions reduction

With the rapid expansion of the aviation industry, air passenger transport fossil fuel consumption and carbon emissions have attracted increasing attention. To reduce fossil fuel consumption and carbon emissions, this paper investigates an air passenger transport carbon tax incentive policy setting problem, in which the carbon tax incentive policy includes a carbon tax and competitive tax rebates. Then a bi-level programming model is proposed to solve this problem. An interactive solution approach combining a genetic algorithm with fuzzy logic controllers is developed to find solutions based on the ICAO and airlines related data. The results indicate that the incentive policy could encourage airlines to improve fuel consumption and emission performance under proper conditions. Besides, the government should effectively control the carbon tax incentive level based on application effect and financial support, and airlines could select proper improvement strategies and carbon tax transfer ratios under the incentive policy.

Tax incentive policy and firm performance: evidence from Vietnam

This paper aims to assess the impact of the tax incentive policy on firm performance after privatization in Vietnam. Using research data of 260 privatized enterprises in Vietnam, this study sheds light on whether tax incentive policies can help improve firm performance after privatization. The paper utilizes a pre-post comparison approach proposed by Megginson, Nash, and Van Randenborgh (1994). The research results reveal that privatized enterprises with tax incentives have improved profitability (ROA, ROE, ROS) and operating efficiency (NIEFF) and reduced leverage after privatization. A statistical reduction in the number of employed and an improvement in output (real income) after privatization are not observed. Besides, there is no statistical evidence proving that privatized enterprises have experienced significant changes in standard deviations of firm performance measures after privatization in Vietnam. Given significant improvements in the profitability of post-privatized enterprises with tax incentives, the authors propose some managerial implications for the Vietnamese government, investors and non-privatized state-owned enterprises (SOEs).

An Evaluation of the Effectiveness of Tax Incentives on Economic Growth: Evidence from Nigeria

Assessing the Relationship between Tax Incentives and Economic Growth in Nigeria is aimed at determining the effect of tax incentives on economic growth in Nigeria. The study adopted Ex Post Facto Research Design and time-series data was used. Relevant secondary data for this study were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics (NBS) and the Federal Inland Revenue Service (FIRS). The study employed ordinary least square estimation and used regression analysis to test the relationship between Tax Incentives and Economic Growth in Nigeria. The study shows that tax incentive policy is positively and significantly related to gross domestic product. The findings showed that there is a degree of relationship between corporate income tax and gross domestic product; and that there is degree of co-variability between investment allowance and gross domestic product in Nigeria. The implication of this finding is that since tax incentives have positive and significant impact on gross domestic product, policy reform in other factors that affect economic growth is needed also to complement these incentives so that a better result can be achieved. The study recommends that tax incentive policy should be designed bearing in mind the economy’s macroeconomic objectives like rapid economic growth and development. Keywords: Tax incentives, Economic growth, Corporate Income Tax, Investment Allowance DOI: 10.7176/RJFA/11-14-13 Publication date: July 31 st 2020

Fiscal equalization as a driver of tax increases: empirical evidence from Germany

This paper exploits the devolution of taxing powers in the German federation to study the effects of fiscal equalization on subnational governments’ tax policy. Based on an analysis of the system of fiscal equalization transfers, we argue that the redistribution of revenues provides incentives for states to raise rather than to lower their tax rates. The empirical analysis exploits differences in fiscal redistribution among the states and over time. Using a comprehensive simulation model, the paper computes the tax-policy incentives faced by each state over the years and explores their empirical effects on tax policy. The results support a robust and strong incentive effect that works through the tax-base. When facing full equalization, a state is predicted to set the rate of the real estate transfer tax at about 1.3 percentage points higher than without. Our analysis also shows that the incentive to raise tax rates has proliferated because individual states’ decisions to raise their tax rates have intensified fiscal redistribution over time.

Taxation and Tax Incentive Defined: Promoting the Inflow of Foreign Direct Investment in Nigeria through Taxation

In a world where a waxing number of governments contend emulously to attract multinational companies, fiscal policies have become a global phenomenon. Taxation as a critical fiscal policy measure poses as a veritable tool for magnetizing participation, otherwise conceptualized in this context as foreign direct investment (FDI), which has been used by several countries in the world to further their economic objectives. The paper in adopting a qualitative research method, examines the sensitivity of direct investment in Nigeria to taxation practices. The paper highlights that the tax incentive policy of the Nigerian tax system is a good driver of investment in Nigeria. While the efficacy of taxation remains questionable, the paper whilst in conclusion recommends a justifiable level of fiscal incentives, and a stable political and economic climate as a panacea in achieving the desired effect.

Tax Incentives and Investment Growth: The Nigerian Perspective

Tax Incentives and Investment Growth: the Nigeria perspective is aimed at determining the effect of tax incentives represented by corporate income tax rate and investment allowance on investment growth in Nigeria from 1985-2018. The study adopted Ex Post Facto Research Design and time-series data was used. Relevant secondary data for this study were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin, the National Bureau of Statistics (NBS) and the Federal Inland Revenue Service (FIRS). The study employed ordinary least square estimation and used regression analysis to test the relationship between Tax Incentives and investment growth in Nigeria. The study shows that tax incentive policy is positively and significantly related to gross fixed capital formation. The findings showed that tax incentives have positive impact on gross fixed capital formation. The findings showed that there is a degree of relationship between corporate income tax and gross fixed capital formation; and that there is degree of co-variability between investment allowance and gross fixed capital formation in Nigeria. The result also indicates that a higher company income tax rate is associated with lower private investment and slower gross fixed capital formation. The implication of this finding is that since tax incentives represented by company income tax allowance and investment allowance have positive and significant impact on gross fixed capital formation, policy reform in other factors that affect investment growth is needed also to complement these incentives so that a better result can be achieved.

Policies on Tax Incentives and Tax Avoidance through the form of Transfer Pricing of FDI Enterprises in Vietnam

The increasingly broad participation in world economic organizations provides Vietnam with many opportunities to attract foreign investors. However, Vietnam faces a situation where many foreign investors would take advantage of the gaps in the Government’s tax incentive policies to avoid taxes. This has caused many losses and serious state budget deficit. Not only does the state lose a large amount of money which businesses have an obligation to pay, but it also creates a bad precedent, unfairness in tax for businesses. In this article, the author will analyze and assess the state of affairs of the Government’s preferential tax policies and the tax avoidance in the form of transfer pricing in Vietnam by foreign investors. Following after are recommendations to complete the tax incentive policies and prevent tax avoidance in the form of transfer pricing of foreign investors.

Tax Incentive Policy for Geothermal Development: A Comparative Analysis in ASEAN

This paper examines tax incentive policies in geothermal industries in ASEAN to better understand the development of geothermal industry investment in the ASEAN Member States (AMS) using a qualitative method. The results indicate that tax incentive policies have supported the investment climate and the development of geothermal industries in the AMS. Geothermal investments and production capacities in AMS have increased significantly. AMS that provide geothermal tax incentives include Indonesia, Lao PDR, the Philippines, Thailand and Vietnam. The performance of geothermal tax incentive policies is reflected in the level of utilization of geothermal potential, which is higher in states that provide greater tax incentives. The results also indicate that geothermal power plants in AMS use dry steam, flash and binary cycle technologies with flash plants being the most common. Results suggest that the future development of geothermal energy in AMS will be related to the tax incentive policy and investment climate in those states. Furthermore, the granting of various types of tax incentives should be focused on the initial investment in geothermal development. ©2020. CBIORE-IJRED. All rights reserved

Industrial policy, energy and environment efficiency: Evidence from Chinese firm-level data

Based on a unique micro-level dataset of 30,689 mining enterprises from 2008 to 2011, this paper uses the non-radial directional distance function (NDDF) to calculate the unified efficiency index (UEI) and energy-environmental performance index (EEI) for China's mining enterprises. The double bootstrap method is then used to test how tax incentive policies affect the UEI and EEI of China's mining enterprises. The results show that: (1) the UEI and EEI of Chinese mining enterprises first decreased and then increased over the sample period; overall, Chinese mining enterprises had low energy and environmental efficiency, especially the coal mining enterprises, private mining enterprises and mining enterprises in the central and western regions. (2) Tax incentives positively affect the energy and environmental efficiency of mining enterprises, especially the efficiency of coal mining enterprises, non-state-owned mining enterprises and mining enterprises in the central and western regions. Our results remain robust after using the propensity score matching estimator (PSM). (3) There is a positive feedback between tax incentives and energy and environmental efficiency, more efficient mining enterprises receive more government incentives. Further analysis shows that although tax incentives do not reduce the total energy consumption of enterprises, reducing the energy consumption of enterprises can improve their UEI and EEI. In addition, R&D investment, profitability and resource taxes all contribute to improving the UEI and EEI of mining enterprises.

Tax Incentive Policy Evaluation on Donation for Disaster Charity in Indonesia

This research is conducted to evaluate tax incentives for donation activities of disaster management based on policy evaluation criteria by William Dunn which consists of effectiveness, efficiency, adequacy, equity, responsiveness, and accuracy. The research method used is qualitative approach and qualitative data analysis techniques. In qualitative research, the researcher occupied theory as a tool to guide the research by collecting data through interviews and literature study until reaching the conclusion. The data used in this research is qualitative data, gathered through literature review, documentation study, and in-depth interviews with experts (policymakers, policy implementers, academicians, civil society). The result of this study indicates that the tax incentive policy on donations for disaster management has not met William Dunn's policy evaluation criteria. The research shows that quite limited benefit granted and less clear of technical guidance of tax incentives implementation for disaster donations lead the taxpayer which has been undertaking the role as donators to not utilize the incentives. In order to occupy tax incentives to contribute to disaster management effectively, the government needs to socialize the implementation with clear guidance.

Effect of government subsidies on renewable energy investments: The threshold effect

By considering 92 renewable energy listed enterprises in China between 2007 and 2016 as sample, this paper constructs a panel threshold effect model to investigate the threshold effect of government subsidies on renewable energy investment and further explores the effects and differences regarding government subsidy types and enterprise size on the threshold effect. The results show that, first, government subsidies have a positive threshold effect on renewable energy investment of China. When energy consumption intensity and bank credit are greater and the level of economic development is less than the threshold value, the contribution of government subsidies to renewable energy investment is significantly enhanced. Second, monetary subsidies and tax incentive policies can promote renewable energy investment, but the effect of tax incentives is more significant. Third, government subsidies are the main force supporting the development of medium-, small-, and micro-sized renewable energy enterprises. On the basis of these results, the Chinese government should strengthen policy support in those areas with high economic costs of energy transition, encourage the investment in renewable energy in large-sized enterprises, play a policy-guiding role, and focus on strengthening subsidies for medium-, small-, and micro-sized enterprises.