Tax Incentives Research Articles

Research on the Two-Pillar Solution and Its Implication

With the rapid development of economic globalization and digitalization, new business models are activating the world economy while exacerbating the remaining problems of base erosion and profit shifting (BEPS). In the face of intensifying international tax avoidance, The Organisation for Economic Co-operation and Development (OECD) has announced its Two-pillar solution to the international community, proposing a global minimum tax regime, which is effectively a coordination of global anti-tax avoidance measures. At present, Pillar 2 has come into effect, and Pillar 1 has also been opened for signature, marking the implementation stage of the two-pillar solution. In this paper, the two-pillar solution is the main research object. Firstly, from the perspective of large-scale tax avoidance by multinational corporations, this paper systematically analyzes the historical background of the introduction of the two-pillar solution of the OECD. After a detailed analysis of the provisions of the two-pillar solution, the existing institutional deficiencies and obstacles to its implementation are proposed. Finally, in response to the issues raised, practical recommendations are made that the elements of the two-pillar solution should aim to achieve general equity, balance the interests of developing countries and be in harmony with existing international tax policies. The governments should also optimize the structure of tax incentives.

The green bonus of tax incentives: Evidence from China

Using a novel dataset covering over one million firm-level energy consumption entries from 2007-2016, we employ a difference-in-differences approach to estimate the causal effect of tax incentives on carbon emission intensity by exploiting China’s staggered implementation of accelerated depreciation policies for fixed assets in 2014 and 2015. We find that the accelerated depreciation policy leads to a significant 9.19% reduction in carbon emission intensity, equivalent to 0.11 tons of carbon emissions per 10,000 RMB of industrial value added. The policy effect is more pronounced for large firms, those with medium-term assets, and in regions with greater market integration and industrial agglomeration. Our firm-level analysis reveals that the policy reduces energy consumption, promotes a shift towards a cleaner energy portfolio and increases R&D investments in abatement technologies, as well as climate-friendly innovations. The above results show high consistency with verification at the aggregation level using satellite-based observations. Our findings highlight the potential of well-designed fiscal policies to contribute to global climate action efforts in developing economies.

Impact of Fiscal Policy on Corporate Innovation in an Emerging Market Economy: Evidence from Brazil

This study investigates the impact of fiscal policy on corporate innovation in an emerging market economy, focusing on Brazil. Utilizing a comprehensive dataset of firms listed on the B3 Brazilian Stock Exchange from 2010 to 2020, we employ panel data analysis and the difference-in-differences (DiD) method to examine the effects of tax incentives, government subsidies, and public investment in innovation infrastructure on corporate innovation activities. Our findings reveal that tax incentives significantly enhance innovation outputs by reducing the financial burden of R&D investments. Similarly, government subsidies are shown to lower the cost and risk associated with R&D projects, thereby fostering greater innovation. Furthermore, public investment in innovation infrastructure plays a crucial role in creating an enabling environment for corporate innovation. These results provide robust evidence supporting the effectiveness of fiscal policy in promoting innovation in emerging markets, offering valuable insights for policymakers aiming to foster sustainable economic growth and competitiveness.

Pengaruh pemahaman perpajakan, insentif pajak, dan sanksi perpajakan terhadap kepatuhan wajib pajak orang pribadi pemilik UMKM di Kota Manado

Taxation is a crucial aspect that can overcome economic difficulties and contribute to the sustainable development of the country. The purpose of this research is to determine the effect of tax understanding, tax incentives and tax sanctions on tax compliance among individual taxpayers who own MSMEs in Manado, partially and simultaneously. The sample data consists of 100 individual taxpayers who own MSMEs in Manado. This study adopts an associative quantitative research approach using multiple linear regression analysis. The results indicate that partially, tax understanding and tax incentives have a positive and significant effect on compliance among individual taxpayers who own MSMEs in Manado City, and tax sanctions have no significant effect on compliance among these taxpayers. In addition, tax understanding, tax incentives and tax sanctions have a simultaneous effect on compliance among individual taxpayers who own MSMEs in Manado City.

Artificial Intelligence in Socioeconomic Research: Identifying Key Drivers of Unemployment Inequality in the U.S

Unemployment inequality remains one of the most vexing socioeconomic quagmires confronting the United States. This research project aimed to pinpoint how AI can be applied in the enumeration of key drivers of unemployment inequality in the United States and set a framework for further research and policy development. In this study, the researcher has drawn a massive volume dataset from the Economic Policy Institute's State of Working America Data Library, along with research performed by the Federal Reserve Bank of St. Louis. The unemployment incidents data was classified in terms of age, education level, gender, race, and other demographic factors. Subsequently, the analyst employed Linear Regression from the Scikit-learn library. Overall performance evaluation showcased that linear regression performed excellently with the least error in MSE and RMSE and, hence, was the best in terms of accurately predicting unemployment indicators. Accurate prediction of the unemployment rate using the proposed linear regression model can help the U.S. government proactively warn against economic downturns by deploying the. Besides, by executing the Linear Regression, government officials can influence favorable policies through tax incentives or labor laws. Evidently, the linear regression framework is a powerful AI tool that can help bring huge enhancements to unemployment inequality research and policy development in the future. This model not only provides a quantification of the relationships but allows for the making of predictions, thus making it useful for evaluating the possible results of different policy scenarios. Furthermore, the Linear Regression framework can also be used in the assessment of the effectiveness of pre-existing policies aimed at reducing unemployment.

THEORETICAL BASIS OF THE FORMATION AND DEVELOPMENT OF GREEN BUILDING

Green construction is a key element of Ukraine's sustainable development, as it contributes to reducing the impact on the environment and increasing the energy efficiency of buildings, which is critically important in the face of global climate change and modern challenges. Green construction also supports Ukraine's integration into the international economy through the implementation of environmental standards, which increases the competitiveness of domestic companies. The purpose of the article is to single out the theoretical basis of the formation and development of green construction, as well as to determine the main problems in this field in Ukraine and ways to solve them. The analysis of Ukrainian and foreign studies have showed that the development of green construction in Ukraine has significant potential, especially under the condition of effective implementation of international standards and their adaptation to local realities, which will contribute not only to the preservation of the environment, but also to economic development, improving the quality of life and health population. The theoretical basis of the formation and development of green construction is systematized. The legislative and regulatory framework for green construction aimed at supporting ecologically sustainable development and construction in Ukraine has been analyzed. The main problems faced by green construction on the way to its development in Ukraine (insufficient regulatory framework, high cost of implementing ecological technologies, low level of public awareness and environmental culture, lack of qualified specialists, technical limitations and infrastructure challenges) are identified, and also given possible solutions to these problems. It is noted that for the further development of green construction, it is necessary to implement comprehensive strategies, which include stimulating investments in the green sector, developing and implementing new technologies, raising quality standards, and promoting environmental education. It is emphasized that government support through financial instruments, such as tax incentives and subsidies, can also contribute to increasing the number of green buildings.

Effects of SUDENE’s tax incentives on job creation in the Northeast region of Brazil

ABSTRACT This paper analyzes the effects of tax incentives on job creation by companies located in the Northeast region of Brazil, disaggregated by sector. The generalized synthetic control method is employed to handle this problem. The evidence indicates that the incentives have beneficial effects on increasing firm employment. Specifically, we observed positive impacts in the labour-intensive manufacturing sector. Therefore, the results provide positive evidence for using tax incentives for regional development, although the effects are concentrated in the manufacturing sector.

FISCAL ASPECTS OF ESG BUSINESS DEVELOPMENT CONCEPTS

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

Employee share ownership in SMEs – extending benefits for start-ups to conventional firms and social enterprises

PurposeAs this article reports, in recent years most legislative activities focused on start-ups, with as many as 12 European Union (EU) Member States having introduced tax incentives for employee share ownership (ESO) in this type of small and middle-sized enterprise (SME). But incentivising ESO in SMEs should be extended to all SMEs, the engine of the European economy, including those from the social economy, having shown their crucial function for the resilience of our societies during the COVID-19 pandemic.Design/methodology/approachAgainst the background of this recent and very dynamic development this article, it provides an overview of the start-up business segment in comparison to other types of companies, particularly focusing on differences with the SME sector; examines the legal regulations that hinder a broader adoption of ESO in European start-ups; presents best-practice examples to demonstrate the favourable conditions already established in some EU Member States and discussed whether these reforms and best practice examples could be extended and – as is already the case in some countries – applied to the whole SME population including social economy enterprises.FindingsSince the European Commission launched the 2011 Social Business Initiative (SBI) followed by the 2016 Start-up and Scale-up initiative, many actions to support social enterprises in view of their potential to address societal challenges and contribute to sustainable economic growth have followed. Most recently, the 2021 Social Economy Action Plan of the European Commission gave important impulses. The potential of employee buyouts offering a continuation perspective to SMEs owners looking for successors was highlighted in the 2022 EC report “Transition Pathway for Proximity and Social Economy,” calling for the implementation of Employee Stock Ownership Plans (ESOPs).Originality/valueThe situation of employee share ownership in start-ups has some parallels with that in traditional SMEs, but in many respects, they differ fundamentally. Although, on the other hand, social enterprises may also have to compete with large firms for qualified staff and face challenges when growing or scaling their activities, the reason why ESO in this enterprise segment is not widespread in the EU is altogether different. In the absence of a prescribed legal form of incorporation, social enterprises operate in various forms (be it for profit or non-profit), e.g. cooperatives, closely held limited liability companies, mutuals, associations, voluntary organisations or foundations. Therefore, this article looks into the extension of the incentives for ESO to social enterprises inasmuch as they are organised in legal forms allowing for share ownership, above all in the form of limited liability companies.

Propuesta para desarrollar el turismo y actividades conexas en el área rural (Creación de empresas comunitarias en un enfoque de RSE)

Although there is a law to promote tourism, applying it is difficult due to the current contextual conditions in Bolivia. The objective of the research is to define some regulatory actions that should be developed to encourage the creation of productive community tourism businesses in the area rural, generating incentives for locals. The present work is qualitative descriptive, for this purpose the experiences developed in other countries are compared and based on consultation with experts and inspired by Corporate Social Responsibility (CSR), a proposal is developed that could respond to the peculiarities of this reality. The proposal establishesthe development of specific tax exemptions and a tax incentive from the use of the Corporate Profits Tax (IUE) in coordination between the community companies created and the communities based on their social control, with a differentiated treatment with external investors and in national parks in addition to a State that assumes different roles than those it has traditionally assumed in recent years.

Uptown on the upslope? Heritage and gentrification in Chicago’s Sheridan Park

ABSTRACT This article analyses governmental historic preservation programmes and their propensity to reshape neighbourhoods in urban America. Using Chicago as a case study, we explore the flagship preservation programme of the United States, the National Register of Historic Places, and the tax incentives offered specifically for revenue-generating real estate, such as multi-unit apartment rentals. Our focus is on the historic Sheridan Park enclave of Chicago’s Uptown neighbourhood during the watershed decades of the 1980s and 1990s. Of particular interest is how the local investment community – realtors and developers in particular – promoted the National Register and follow-on incentives as a means to attract investment and, ultimately, to revalue the neighbourhood and facilitate gentrification. Given the popularity of the National Register and the tax relief offered to historic property owners, in Chicago and in communities nationwide, surprisingly little research exists to clarify the role of investors as drivers of gentrification in historic neighbourhoods.

Analysing The Interest In Buying Electric Motorbikes In The Community In Jakarta

This study aims to analyse the Technology Acceptance Model (TAM) on the interest in buying electric motorbikes in DKI Jakarta. TAM is a model used to understand how users accept and use new technology. This model involves several main dimensions, such as Perceived Usefulness (PU), Perceived Ease of Use (PEOU), and Attitude (A). This research uses purposive sampling method for sample selection. The analysis techniques applied include descriptive analysis and average score calculation. The results showed that the Attitude Towards dimension received an average score of 3.37 which was included in the "strongly agree" category and was in the very highlevel interval. The Perceived Ease of Use dimension obtained a score of 3.37 which is in the high interval scale range. Meanwhile, Perceived Usefulness received a score of 3.30 which is also in the very highlevel interval. Of the three dimensions, Attitude Towards has the highest effectiveness value, followed by Perceived Ease of Use, and then Perceived Usefulness. This suggests that a positive attitude towards electric motorbikes is the most powerful factor influencing purchase intention, followed by ease of use and perceived usefulness. The implications show that the factors that influence the purchase interest of electric motorbikes can be measured using TAM, which plays an important role in measuring purchase interest in the Jakarta community. In addition, the results of this study can also serve as a basis for the government in designing policies that support the use of electric motors, such as tax incentives or subsidies for the purchase of electric motors.

Do tax incentives for innovation attract high‐technology investment from emerging markets? Evidence from China's outward foreign direct investment

AbstractWe examine whether the innovation box regime (IBR), a tax incentive with lower tax rates on intellectual property (IP)‐related income, attracts high‐technology investment from emerging markets. Using the staggered difference‐in‐differences (DID) method, we find that China's high‐technology investment in IBR countries, relative to non‐IBR countries, increases significantly after the implementation of IBR. This finding is robust to a battery of sensitivity tests. The mechanism analysis suggests that the attraction of the IBR for high‐technology investment is realised through the encouragement of innovation, and this finding is also verified in the heterogeneity analysis. We also find that the IBR has a positive effect on high‐technology investment only if the tax incentives apply to pre‐existing IP before the regime implementation, and the ease with which enterprises can directly use the latest technologies in the host country does not have an impact on the effectiveness of the IBR. Moreover, the effect of IBR on M&A is larger than that on greenfield investment. Our study contributes to the literature and policy assessment on IBR.

Tax incentives for jobs: bang for the buck or wasted resources?

Tax incentives for jobs: bang for the buck or wasted resources?

Impact of tax benefits on Peruvian companies' financial results

This study investigates how tax benefits influence corporate profitability in companies in Chachapoyas, Peru, emphasising the importance of proper fiscal management to improve financial performance. The relevance of tax incentives in profitability management is discussed, and challenges associated with legislative uncertainty and the lack of tax training are examined, which limit efficiency in resource management and the optimisation of financial assets. Using a quantitative approach, financial and tax data are analysed to examine the relationship between tax benefits and corporate profitability in a natural context, employing descriptive and inferential analysis techniques with SPSS software. The findings indicate a significantly positive correlation between tax benefits and profitability, demonstrating that tax optimisation can support sustainable economic growth for businesses. A deficiency in the knowledge and application of efficient tax strategies is identified. The study highlights the need for educational and tax optimisation programmes to improve tax management in businesses, which can contribute to a broader tax base and greater state capacity to finance essential public services. The article provides an applied and strategic perspective on fiscal and economic management, offering valuable implications for public policy formulation and corporate decision-making, and highlighting the importance of a holistic approach that integrates fiscal, financial, and corporate management.

Tax incentives and environmental performance: The pay-as-you-throw policy in Emilia-Romagna, Italy

This study investigates the impact of implementing the pay-as-you-throw policy as a fiscal incentive mechanism for municipal waste management across municipalities in the Emilia-Romagna region, Italy. Utilizing panel data from 2010 to 2022 and employing a synthetic control with staggered treatment adoption, we evaluate the policy's effects on environmental and local public finance performances. Our findings reveal that treated municipalities witness an average 10% increase in separate waste collection alongside a parallel reduction in municipal waste production since the policy outset, equating to approximately 60 kg per capita annually. Furthermore, our analysis indicates that the policy enables local governments to reduce current energy and environmental expenditures by roughly €130 per capita annually in our optimal model. Notably, results hold robust across three recently developed estimators using difference-in-differences with staggered treatment adoption over time. The policy proves overall effectiveness in promoting circularity within municipal waste management systems, leading to better environmental performances, and decreased environmental management expenses. These implications underscore the potential value for local governments to adopt similar strategies where not yet envisaged.

Can reducing corporate income tax rates decrease tax avoidance?

This research aims to examine and analyze the effect of reducing corporate income tax rates on tax avoidance practices carried out by non-cyclical consumer sector companies. This research involves secondary data analysis using the Panel Data Regression approach with 6 research samples taken from the non-cyclical consumer sector on the LQ45 index for the 2018-2022 period. The total sample used in the study amounted to 30 observations based on purposive sampling. The test results show that reducing the corporate income tax rate positively and significantly affects tax avoidance practices in non-cyclical consumer sector companies on the LQ45 index. This research is expected to encourage the government to formulate other tax incentive policies and provide insights into the effectiveness of the implemented tax policies. One of the expected objectives of companies utilizing tax incentives is to accelerate the economic growth of society. Lower tax burdens are hoped to encourage companies to expand their businesses and potentially absorb more labor, triggering multiplier effects in the economic sector to advance public welfare. In terms of literature, this research contributes to enriching the discussion about the effect of reducing corporate tax rates on companies' tax avoidance, and it is expected to contribute to the development of tax accounting literature.

Sustainable practices for cotton production in Bangladesh: economic and environmental perspectives

Cotton is a major cash crop in the agriculture of Bangladesh, primarily fueling its substantial textile industry. Although local production is limited, cotton has the potential to bolster the country’s economic growth by supporting local economies and improving agricultural sustainability. An in-depth sustainability assessment of this integral crop is essential to ensure its long-term economic and environmental viability. This study aims to evaluate the sustainability of cotton production in Bangladesh and suggest strategic enhancements and policy measures to improve its environmental, economic, and social aspects. Data were collected from 60 farmers in two villages of Jashore district using a simple random sampling technique. A combination of descriptive, mathematical and statistical techniques was used to analyze the data. The findings highlighted a profitable benefit–cost ratio of 1.88 for cotton production. Positive impacts on cotton profitability were notably linked to the costs of labor, land preparation, and insecticides and pesticides. Despite this, 60% of farmers faced substantial challenges, including financial barriers, limited access to modern agricultural technologies, and a lack of training in sustainable practices. Economic constraints were a major barrier, although the environmental benefits of sustainable practices were widely acknowledged. To address these issues, the study recommends optimizing inputs like labor, land preparation, and pest management, and advocates for policy actions such as subsidies, tax incentives, and enhanced training programs to support the widespread adoption of sustainable practices across Bangladesh.

The Use of Tax Incentives to Attract Foreign Investment to Ukraine: A Solution to the Current Economic Instability

This article analyses the effectiveness of existing tax incentives aimed at developing the Ukrainian economy and contributing to post-war reconstruction. Statistical economic analyses, trend comparison and forecasting were used to examine the incentive instruments. The article details various tax incentives and analyses the activities of international agencies and funds that provide security for such financing. Recent examples of international brands investing in Ukraine’s reconstruction are considered, as well as the State Tax Service of Ukraine’s guide to tax incentives. In addition, the article looks at the distribution of recovery investment projects, both by region and chronology.

A Lost Opportunity? Environmental Investment Tax Incentive and Energy Efficient Technologies

AbstractThis paper examines the impact of the Spanish Environmental Investment (EI) tax credit on adoption of green technologies by employing data from 2567 industrial firms for 6 years. It makes use of the sudden re-introduction of the tax incentive in March 2011, that aimed at favouring energy efficient over solely pollution abating technologies. I exploit this unexpected change and perform a difference-in-differences analysis to study its effect on green investments and as an extention on green employment outcomes. The policy change, aimed at switching financing to energy efficient technologies, is assessed as semi-effective. Admittedly, it decreased investment in end-of-pipe technologies, but the investment in superior cleaner production technologies increased only for the small firms (below 50 employees), which are especially vulnerable to the capital market failure. Unfortunately, the policy change had also a few unexpected indirect effects, firms in response to the tax incentive regime modification reduced the number of their green employees and their associated salaries. In stark contrast to the decision of the Spanish government on this EI tax credit, the results of this analysis seem to be quite encouraging for the continued use of this green fiscal policy and show that the modifications in the precision of the existing fiscal policies can be successful.