Tax Law Research Articles

Peculiarities of Transfer Pricing Supervision in Uncontrolled Transactions

The aim of this article is to scrutinize the authority of tax agencies concerning the transfer pricing supervision in uncontrolled transactions among related parties. The interpretation of tax laws by the Russian Federal Tax Service has significantly broadened the supervision capabilities of tax agencies over taxpayer transactions initially not meant for scrutiny, resulting in ambiguity and inconsistency in legal proceedings. The article provides an analysis of the legal framework, methodology, and procedures for tax control of prices in uncontrolled transactions, as well as examines the concept of “multiple price deviations” and taxpayer defense strategies. The methodological basis of the article includes both general scientific and specialized scientific methods. In particular, the author employs analysis, synthesis, formal legal, and historical-legal methods. The findings suggest disparities in the treatment of taxpayers in transfer pricing supervision due to the absence of specific safeguards outlined in Section V.1 of the Tax Code of the Russian Federation. Consequently, the author advocates for an extension of transfer pricing laws to encompass all taxpayers, thereby ensuring parity in rights and protections while mitigating arbitrary actions and uncertainties by tax agencies, thereby fostering a more equitable and transparent tax supervision system.

Tax Law as Muse <br>

Tax Law as Muse <br>

Combating trade in illegal wood and forest products with machine learning.

Trade in wood and forest products spans the global supply chain. Illegal logging and associated trade in forest products present a persistent threat to vulnerable ecosystems and communities. Illegal timber trade has been linked to violations of tax and conservation laws, as well as broader transnational crimes. The United States is the largest importer globally of wood and forest products, such as pulp, paper, flooring, and furniture-importing $78 billion in 2021. Transaction-level data such as shipping container manifests and bills of lading provide a comprehensive data source that can be used to detect and disrupt trade that may be suspected of containing illegally harvested or traded forest products. Owing to the volume, velocity, and complexity of shipment data, an automated decision support system is required for the purposes of detecting suspicious forest product shipments. We present a proof of concept framework using machine learning and big data approaches-combining domain expertise with automation-to achieve this objective. We formulated the underlying machine learning problem as an anomaly detection problem and collected and collated forest sector-specific domain knowledge to filter and target shipments of interest. In this work, we provide the overview of our framework, with the details of domain knowledge extraction and machine learning models, and discuss initial results and analysis of flagged anomalous and potentially suspicious records to demonstrate the efficacy of this approach. The proof of concept work presented here provides the groundwork for an actionable and feasible approach to assisting enforcement agencies with the detection of suspicious shipments that may contain illegally harvested or traded wood.

Environmental regulation and corporate exports: Quasi-experimental evidence from China's environmental protection tax law.

How can we create a dual benefit scenario that improves both the ecological environment and export performance? This study aims to investigate whether the introduction of the Environmental Protection Tax Law (EPTL) has promoted the growth of corporate export. By treating the formal implementation of China's EPTL on January 1, 2018, as an exogenous economic event, this paper takes A-share listed companies in China from 2013 to 2022 as a sample and uses the Difference-in-Differences (DID) model to analyze the specific effects of the EPTL on corporate exports. The results indicate that the EPTL improves corporate exports significantly. Furthermore, the EPTL enhances corporate export capacity by increasing research and development (R&D) innovation, alleviating financing constraints and reducing agency costs. Additional analysis reveals that there is heterogeneity in the influence of the EPTL on corporate exports. Specifically, the promoting effect is stronger for corporates which are with larger scales, in non-heavily polluting industries, with higher levels of competition, in regions with weaker law enforcement, or in the areas with higher levels of marketization. This finding provides empirical support for understanding how the EPTL affects corporate exports through microeconomic mechanisms, offering important insights for evaluating the macroeconomic effects of the EPTL and refining related environmental policies.

Environmental tax reform and corporate tax avoidance: A quasi-natural experiment on China’s environmental protection tax law

Environmental tax reform and corporate tax avoidance: A quasi-natural experiment on China’s environmental protection tax law

Research on Pharmaceutical Tax Management Issues in the Digital Economy

In the era of the digital economy, the deep integration of information technology with the pharmaceutical industry has become a new engine for innovation and development in the pharmaceutical sector. However, the integration of the pharmaceutical industry faces a series of challenges, such as difficulties in the identification of tax elements, asymmetry of tax-related information, low levels of informatization in pharmaceutical enterprises, insufficient information technology capabilities in tax authorities, and incomplete policies and regulations in the pharmaceutical industry, which constrain the healthy development of pharmaceutical companies. Against the backdrop of modern tax governance reform, the pharmaceutical industry urgently needs to strengthen tax management to adapt to new changes. Firstly, tax authorities need to leverage information technology to innovate and transform the systems of tax law enforcement, services, and regulation. Secondly, pharmaceutical companies need to use information technology to solidify their management foundations and enhance their capabilities and skills. Lastly, tax laws and policies related to the pharmaceutical industry need to be adjusted and improved in a timely manner to meet the new requirements of the digital transformation in the pharmaceutical sector. With the joint efforts of all parties, support and protection can be provided for the healthy development of the pharmaceutical industry. 在数字经济时代，信息技术与医药产业的深度融合，已成为推动医药行业创新和发展的新引擎。然而，医药产业融合发展过程中面临一系列挑战，税收要素认定困难、涉税信息不对称、医药企业信息化水平不高、税收部门信息化征管能力不足、医药行业政策法规不健全等，制约医药企业健康发展。在税收治理现代化改革背景下，医药行业亟需加强税收管理以适应新变化。首先税务机关需要利用信息技术，实现税务执法、服务、监管制度的创新和变革。其次医药企业需要运用信息化手段，夯实管理基础，提升能力与本领。最后医药税收法规政策需要与时俱进的调整与完善，以适应医药行业数字化转型的新要求。在多方共同努力之下，为医药行业的健康发展提供支持和保障。

The Impact Of Tax Avoidance On Firm Value

Taxes are crucial because the government uses them to fund public welfare and development. Tax revenue in 2022 demonstrates an equally dispersed economic recovery in Indonesia across a number of industries. However, due to a number of factors, including instances of tax avoidance and corporate practices that exploit technicalities in tax laws, Indonesia's tax collection has fallen short of its proper amount. This study sought to ascertain how tax evasion affected the company value of coal mining businesses that were listed between 2018 and 2021 on the Indonesia Stock Exchange. Panel data regression analysis techniques are employed in the data analysis method using the Eviews version 12 software. Choosing model estimates the Chow test, Hausman test, Langrange multiplier test, normality test, panel data regression test, and hypothesis testing is how data testing is done. The analysis concluded that there is no relationship between tax avoidance and corporate value.

Defining intent as a form of fault: Implications for taxpayers

The relevance of the research topic determines the systematic analysis of individual aspects of responsibility in the field of tax relations regulation. The study of the nature of individual elements of a tax offense is a prerequisite for a detailed analysis of the subjective side of a tax offense. The purpose of the article is to evaluate modern views on the nature and significance of finding out guilt when forming a holistic structure of a tax offense. At the same time, detailing the types of guilt and focusing principled attention on intent becomes important. This is due to the fact that the tax legislation and the specifics of the application of norms intentionally connect different amounts of fines for taxpayers. Achieving the set goal is based on the selection of the basic principles of clarifying the legal nature of the financial sanction depending on the specifics of the intentional behavior of the obliged person. The research uses a broad approach to the analysis of methods of scientific knowledge. The system method is implemented in the assessment of the grounds for the existence of a single system of financial responsibility based on the definition of all elements of the composition of a tax offense. This method makes it possible to build the basis of systematicity on two levels: on the one hand, through the formation of the system of elements of the composition of a tax offense, on the other hand, through the detailing of the system of types of intent. A certain continuation of the system method is the method of comparative analysis. Applying it in the work, attention is focused on the common features of various types of intent, the characteristics of the objective and subjective grounds of the composition of the tax offense. In addition, comparability characterizes the analysis of individual aspects of intent in the sense of criminal law and tax law regulation. The agreement of the prerequisites for the determination of intentionality in the assessment of the behavior of the payer and its application to the assessment of the relevant signs of intentionality were studied. Options for harmonizing the legislation, analysis of the Supreme Court's practice regarding the occurrence of adverse consequences in the form of the application of a fine when detailing the intentionality in the actions of the obliged persons are considered. The level and availability of scientific studies related to the characteristics of the problems included in the analysis of the composition of tax offenses and certain aspects of the assessment of intentionality in the actions of the subjects of the offense were analyzed. On the basis of the conducted research, conclusions were drawn and recommendations were made regarding the assessment of the behavior of tax offenders, the determination of their intent and the application of financial sanctions accordingly.

INFLUENCING FACTORS AND IMPROVEMENT PATH OF TAX COMPLIANCE IN CHINESE SMES

The purpose of this paper is to explore the influencing factors and improvement paths of tax compliance in Chinese small and medium-sized enterprises (SMEs). Through semi-structured interviews with the staff of 12 SMEs, this study finds that the failure to establish a tax compliance system, the lack of professional competence of SMEs' tax staff, the failure to use tax incentives correctly, and the complexity of tax laws and regulations are the main obstacles affecting SMEs' tax compliance. Based on the results of the study, this paper puts forward targeted suggestions to improve the tax compliance level of SMEs, with a view to providing references for the government to improve tax policies and SMEs to improve their tax management level.

Uloga korespondirajuće korekcije dobiti u međunarodnom i u srpskom poreskom pravu

The role of corresponding adjustment in international tax law is to eliminate economic double taxation, so the aim of the research is to identify its regulation in international and in Serbian law, as well as to propose solutions to identified issues. A comparative method was used to analyze international regulations (OECD and UN Model conventions, EU regulation, BEPS initiative), with a focus on application issues and its relationship with current changes. Special attention was given to the relationship between corresponding adjustment and the Income Inclusion Rule contained in Pillar Two. The position of Serbia was also reconsidered, considering foreign direct investments in the context of applying the corresponding adjustment clause in tax treaties, concluding its favorable position, as well as an assessment of Serbian legislation in relation to Pillar Two, where proposal was made to focus on implementing Qualified Domestic Minimum Top-up Tax. The results highlighted disadvantages in the adopted solutions, especially in the mutual agreement procedure, and in the recently adopted solutions, for which there is no consensus in the literature.

The Concept of Sustainability from the Perspective of Tax Law

The article addresses the systemic findings on the tax context of the concept of sustainable development. The objective of the paper is to identify and give rationale to the systemic relationships occurring between tax law and the concept of sustainability, expressed normatively in EU law. For the purposes of the research, it has been assumed that such a relationship exists. It results from the role tax law plays in shaping the internal market of the European Union. The issues centred around sustainable development are interdisciplinary and multifaceted. Their timeliness and importance (both scientific and utilitarian) have increased in connection with the first ESG reporting period, which falls in 2024. This article is based on scientific and research methodology. The analysis employs a dogmatic-legal method for the examination of EU law, a theoretical-legal method in relation to tax law and elements of the historical method in terms of the references to the genesis and evolution of the concept of sustainable development. The issues addressed in this paper, which pertain to the systemic relationships between tax law and the normative objectives of sustainable development, constitute a component of an international scientific discourse, particularly within the context of the EU.

The Influence of Company Reputation, Service Quality and Directors’ Tax Knowledge on Tax Compliance Behaviour of Malaysian Large Companies

Tax compliance behaviour among Malaysian large companies is a crucial area of investigation, particularly considering the significant contribution of corporate taxes to national revenue. Researchers have suggested that tax compliance behaviour of large companies in Malaysia is likely influenced by their surrounding compliance practices. However, to date, no published studies have explored the relationship between company reputation, service quality, and directors’ tax knowledge, and corporate tax compliance behavior, which has led to this research. For the purpose of this study, the Behavioural Decision Theory (BDT) was employed to explain optimality in decision-making, judgment, and human choice, in tax compliance behaviour. An online questionnaire was distributed to 500 Malaysian large companies in Peninsular Malaysia through the systematic random sampling method, of which 161 companies (32.2%) responded. The data was analysed using Partial Least Squares-Structural Equation Modelling (PLS-SEM). The results reveal a significantly positive relationship between directors’ tax knowledge and large companies’ tax compliance behaviour. On the other hand, negative relationships are documented for company reputation and service quality, and tax compliance behaviour. The results, however, are not significant. This study recommends that the tax knowledge of company directors is important to ensure companies comply with the tax law voluntarily. Hence, training programmes for directors should be conducted regularly so as to assure their knowledge is current, ultimately promoting ethical decision-making, i.e., minimising tax evasion and misreporting.

Impact of Environmental Protection Tax on Enterprise Capital-Labor Allocation in the Context of High-Quality Economic Development

Using a double-difference model, this paper examines the impact of the 2018 Environmental Protection Tax Law of the People’s Republic of China on the capital-labor ratio of A-share listed enterprises in China. The results indicate that the implementation of the environmental protection tax significantly increases the capital-labor ratio of firms, leading to a preference for capital-intensive production. The mediating role of total factor productivity (TFP) in this process suggests that the environmental protection tax enhances the capital-labor ratio by fostering TFP growth. Heterogeneity analysis reveals that the effect of the environmental protection tax on the capital-labor ratio is more pronounced in economically developed regions, state-owned enterprises, and enterprises with a longer operational history.

Application оf Administrative Procedures in Tax Law as a Means of Unloading the Judicial System

The relevance of the chosen problem lies in the need for general unification of administrative procedures. A long practical and theoretical discussion was implemented in the Law of Ukraine "On Administrative Procedure" adopted by the Verkhovna Rada of Ukraine. This act provides for the unification of administrative procedures (with a certain exception), which will affect administrative procedures in tax law (tax procedures). The adoption of the Law of Ukraine "On Administrative Procedure" led to the need to amend the Tax Code of Ukraine (TC of Ukraine). This provides for the period between publication and entry into force of the Law of Ukraine "On Administrative Procedure". The article examines the influence of the Law of Ukraine "On Administrative Procedure" on administrative procedures in tax law. Individual provisions of the TC of Ukraine are analyzed, which will require bringing into compliance with the requirements for administrative procedure. The main focus is on the provisions of Art. 56 of the Tax Code of Ukraine, which regulates the procedure for appealing decisions of regulatory bodies, and which will require significant changes. The procedure of administrative appeal against decisions of regulatory bodies for bringing into compliance with unified requirements will require conceptual changes – expansion of the object of appeal. Currently, the ТC of Ukraine provides for the possibility of administrative appeal exclusively against the decisions of the supervisory authority. Instead, according to the requirements of the Law of Ukraine "On Administrative Procedure", not only the decision is subject to appeal, but also actions and inaction. It is also necessary to bring into compliance with the provisions on the procedure for filing a complaint, terms of appeal and consideration, renewal of missed deadlines. The situation when changes to the ТC of Ukraine for the unification of administrative procedures will not be made on time has been investigated. The Law of Ukraine "On Administrative Procedure"provides the possibility of establishing the peculiarities of administrative proceedings for certain categories of administrative cases. At the same time, the features should comply with the principles of the administrative procedure, which also found their fixation in the above regulatory legal act. The expediency of the principles of administrative procedure is considered from the point of view of the possibility of monitoring compliance with them and the consequences of violation.

The Realization Rule as a Legal Standard

The realization “rule” in tax law is better characterized as a legal standard. This characterization matters after the Supreme Court’s decision in Moore v. United States, which sets the stage for future courts to decide that the Constitution mandates realization—an identifiable event before accrued income is reportable by taxpayers. The stakes of a constitutional realization requirement are underappreciated. Because current statutory law embeds realization as a background principle, a constitutional realization requirement would operate as a taxpayer-initiated antiabuse doctrine—a sword that taxpayers could use selectively to invalidate parts of the Internal Revenue Code and Treasury Regulations. This novel constitutional tool has adverse, and underappreciated, implications for the U.S. tax system’s structure and complexity. Through the lens of the longstanding academic literature on legal rules and standards, the dangers of a constitutional realization requirement extend beyond top-down risks to individual Internal Revenue Code provisions or, as the Moore majority posited, entire taxing regimes. Instead, a constitutional realization requirement threatens to erode federal income tax law from the bottom up, through incremental public and private challenges to the fundamental mechanics of taxation. Realization and nonrealization permeate business entity taxation in deeply technical ways. In these areas, a constitutional realization requirement may facilitate aggressive private planning, undermine the law’s coherence, and dampen reform efforts. Even Moore’s whisper of a constitutional realization requirement ventures into poorly charted territory, with potentially detrimental consequences that may prove difficult to unwind. Moreover, a constitutional realization requirement portends increased complexity in tax law. Government-asserted antiabuse doctrines constrain complexity by allowing lawmakers to write simpler rules that cover high-frequency transactions. Low-frequency transactions, including those that reflect inappropriate tax planning, are addressed through (and discouraged by) open-ended standards in the enforcement process. As a taxpayer-initiated antiabuse doctrine, a constitutional realization requirement would have the reverse effect, increasing complexity by increasing the frequency of tax-planned transactions, encouraging more costly government responses to taxpayer abuse, and changing the dynamics of enforcement. The resulting complexity would be systemic—and could increase over time.

Pursuing Cleaner Skies: A Study on the Impact of China’s Environmental Protection Tax Law on Haze Pollution

Haze pollution control is integral to green development, and fiscal and taxation policies are fundamental mechanisms supporting this effort. This study leverages the implementation of China’s Environmental Protection Tax (EPT) Law as a quasi-natural experiment to assess the impact and mechanisms of the greening of the tax system on haze pollution based on panel data from 281 prefecture-level cities in China from 2012 to 2021. The findings indicate that (1) the implementation of the EPT Law significantly reduces haze pollution, with results confirmed after a series of robustness tests; (2) the EPT Law controls haze pollution through promoting cleaner industrial structure, fostering green technological innovation, and strengthening the rigidity of environmental law enforcement; (3) fiscal decentralization enhances the inhibitory effect of the implementation of the EPT Law on haze pollution; (4) the haze-reduction effect of the EPT Law is especially notable in non-old industrial bases, areas with less pressure on officials’ promotions, and areas with higher public environmental awareness. This study not only enriches research on the policy effects of the EPT Law but also contributes to the environmental sustainable development goal of greening the tax system and continuously fighting for blue skies.

Nexus of Tax Law and Non-Profit Organizations: Incentives and challenges in compliance with tax laws by Public Benefit Organizations in South Africa: a scoping review

This study examines the tax incentives and challenges faced by Non-Profit Organisations (NPOs) in South Africa, with a focus on those registered as Public Benefit Organisations (PBOs). NPOs play a vital role in addressing socio-economic issues, and serving vulnerable communities. While these organizations operate for non-profit purposes, the tax incentives provided by the government are crucial for their financial sustainability. Therefore, establishing a supportive tax framework is essential to promote their growth and operational capacity. A scoping review methodology was employed, analyzing literature on tax incentives and compliance challenges faced by South African NPOs from 2010 to 2023. Key provisions include income tax exemptions under Section 10(1)(cN), capital gains tax exclusions, and Section 18A tax-deductible donations. The study also explored the legal framework governing tax-exempt status and trading activities. Findings show that while tax incentives provide significant benefits, NPOs face challenges in maintaining compliance, such as complex regulations, limited financial resources, and a lack of expertise. Many struggle with differentiating between exempt and taxable activities. Strategies to address these issues include simplifying tax processes, enhancing financial management education, and improving communication between SARS and NPOs. Introducing user-friendly tax reporting systems and tailored support could further boost compliance and ensure NPOs maximize available benefits. These insights are valuable for policymakers and tax authorities seeking to strengthen the regulatory framework and support the growth of NPOs in South Africa.

OECD:n ohjeiden kasvava merkitys kansainvälisessä verotuksessa

The development of international tax law is increasingly based on different OECD models and guidelines. Originally OECD models and guidelines were followed only as recommendations, but more and more often they are implemented as binding EU directives or domestic legislation. This development raises difficult issues of application and interpretation. This article discusses the changing status of the OECD guidelines and the application and interpretation issues related to the development. The issues are illustrated using transfer pricing adjustment provisions and the provisions concerning minimum taxation of large groups of companies as examples. The author concludes that despite difficult interpretation and application issues, there are good reasons to implement OECD models and guidelines in the European Union in the form of binding EU Directives.

Determinants of Small Business Tax Compliance Behaviour: Evidence From Zimbabwean Small Businesses

Many developing countries have implemented tax regulations for small enterprises and the simplification of tax systems in recent times. Tax compliance attitudes within this sector vary significantly due to the high cost to comply and the technical nature of tax law. Many different factors influence presumptive tax compliance and previous research did not necessarily identify the determinants of this phenomenon. Two hundred and nineteen small business owners/managers participated in the study. The validation of the measurement model and the structural model was performed using the Partial-Least Squares Structural Equation Model. The study evaluated the impact of tax morale, corruption and taxpayer/tax office relationships on presumptive tax compliance in the Zimbabwean context. It was found that corruption significantly influences small business operators’ compliance levels under a presumptive tax system. Significant differences were found in small business owners and managers who differed in their perceptions of their relationships with the tax office. The results of this study would assist tax authorities in understanding small businesses’ perceptions when reviewing the current presumptive tax systems. JEL classification: H20, H29 Article History: Received: June 28, 2024; Reviewed: September 5, 2024; Accepted: November 11, 2024; Available online: December 17, 2024.

Tax Law Enforcement and Redistributive Policies

The Inflation Reduction Act signed by President Biden on August 16, 2022, allocated $80 billion in additional funding for the IRS. While Democrats unanimously supported the bill, not a single Republican voted in favor of it. The first legislation advanced by the new Republican majority in 2023 was to repeal this increase in IRS funding. Given the diminished state of IRS enforcement capacity, increasing the resources devoted to tax enforcement seems like an obvious imperative without a clear partisan valence. One might think that political and ideological battles would be fought over what the tax law is, not whether the IRS has the resources to enforce it. But IRS funding has become a major political point of contention. Why is tax law enforcement such a partisan issue? In this Article we propose an answer. We argue that the income tax is the primary instrument for income redistribution, and so the efficacy of tax enforcement shapes people’s support for redistribution. When the IRS makes sure people pay their taxes, support for income redistribution increases. And when the IRS is unable to enforce the nation’s tax laws, support for income redistribution decreases. Thus, for political progressives increasing tax enforcement generates a double dividend. It both provides more funds for redistribution and also increases political support for redistribution, which can then be translated into redistributive changes to the tax law. For symmetric reasons, reducing tax enforcement generates a double dividend for those who disfavor income redistribution. To support our theory, we use unique data from the General Social Survey on perceptions of tax law enforcement. We show that perceptions of tax enforcement are strongly correlated with redistributive preferences. Specifically, people who think that tax law is underenforced are less likely to support income redistribution. We find similar results when looking at specific redistributive welfare programs. To disentangle causation from correlation, we administered a national representative survey which specifically asked about the effects of increased tax law enforcement on support for redistribution. Thus, tax law enforcement does not only determine the amount of tax revenue we collect; it also shapes our redistributive preferences which in turn affects our redistributive polices. This means that as long as our political parties are divided about the desirability of income redistribution, the political battles around IRS funding and enforcement are not likely to wane.