Tax Litigation Research Articles

Tax Litigation and Corporate Debt: A Brazilian Perspective

Objective: The study aims to explore the impact of tax litigation on the indebtedness levels of Brazilian firms. The research is motivated by Brazil's high volume of tax disputes and the lack of existing studies focusing on the relationship between tax litigation and firm indebtedness in this particular context.
 Method: The sample includes non-financial firms listed on the Brazilian stock exchange from 2017 to 2022. Linear regression methodology, utilizing panel data and fixed effects, was employed to analyze the relationship. Tax litigation was quantified by summing tax provisions and contingent liabilities, which were then relativized by the firms' total assets. Data were sourced from Comdinheiro software, with additional information manually gathered from company explanatory notes.
 Results or Discussion: The study found a positive relationship between tax litigation and firm indebtedness in Brazil. This suggests that companies involved in more tax disputes tend to have higher levels of debt, pointing towards a complex relationship between the two variables in the Brazilian economic landscape.
 Contributions: This research fills a gap in existing literature by investigating the effects of tax litigation on the capital structure of Brazilian firms. It provides valuable insights that can be beneficial for policymakers, regulatory bodies, and firms in understanding the implications of tax disputes on financial strategies.

Policy Forum: Some Reflections on Ethical Considerations in Tax Litigation

Discussion of ethics in taxation usually concerns tax avoidance. But what ethical principles are or should be involved in the conduct of tax litigation? Both parties must observe the ordinary rules of conduct required of them by the court. Are they free, however, to advance any argument to make their case? Taxpayers will be appealing a tax assessment contrary to their view of the tax that the law requires of them. They are bound to make any argument that is open to them. A revenue authority should have broader considerations in mind, as the body responsible for the overall administration of the tax system and as a repeat litigant in court. Consistency of approach and respect for the integrity of the tax system and for a taxpayer's right to demonstrate that tax is not legally due should be among the ethical principles that the revenue authority adopts in conducting tax litigation.

Tax Litigation in Portugal: A Legal and Empirical Study of Tax Arbitration

Tax Litigation in Portugal: A Legal and Empirical Study of Tax Arbitration

The effect of shareholder scrutiny on corporate tax behavior: Evidence from shareholder tax litigation

AbstractThis study examines the effect of shareholder scrutiny of corporate tax avoidance behavior and its related financial reporting. Specifically, we explore the factors associated with shareholder tax litigation and its effect on the future tax behavior of the sued firm and its peers. We find that sued firms have lower cash and GAAP effective tax rates (ETRs) and engage in extreme tax avoidance before litigation. After litigation, they decrease tax avoidance activities, relative to matched control firms. Peer firms in the same industry as sued firms similarly reduce their level of tax avoidance and the likelihood of extreme tax avoidance after the litigation, relative to control firms. Additional analyses suggest that sued firms change their tax avoidance behavior, rather than merely their tax financial reporting. Finally, the spillover results are strongest for peer firms with the most tax avoidance (i.e., the lowest cash ETRs) when the sued firm's alleged misconduct is revealed.

Discussion on the Relationship between the Inquisitorial Investigation and the Objective Burden of Proof in Tax Litigation: Focusing on the Administrative Judgment of Supreme Administrative Court (110) Shang-Zi No. 300

Discussion on the Relationship between the Inquisitorial Investigation and the Objective Burden of Proof in Tax Litigation: Focusing on the Administrative Judgment of Supreme Administrative Court (110) Shang-Zi No. 300

THE COMPLEXITY OF AUTONOMOUS TAXATION IN THE TAX ARBITRATION JURISPRUDENCE OF THE CENTER FOR ADMINISTRATIVE ARBITRATION

This research has the overall objective of analyzing the complexity of the Autonomous Taxation (hereinafter TA), in the context of the Portuguese tax system, through an approach to the tax arbitration case law of the Administrative Arbitration Center (hereinafter CAAD). The frequent litigation between taxpayers and the Portuguese Tax and Customs Authority (abbreviated as AT) about this additional tax justifies the relevance of this study. Based on the analysis of tax arbitration jurisprudence, more specifically of 443 CAAD cases, whose object of discussion corresponded to the TA issue, it was found that the litigation in arbitration courts is significant, resulting in an excessive level of tax litigation between taxpayers and the AT. Therefore, for the study in question, 93 arbitration decisions related to the tax complexity of the TA were selected, from which it was found that the existence of a high number of cases in CAAD is associated with a high amount spent on procedural costs, and that the costs related to cases about the TA and brought before CAAD are quite expensive, especially for taxpayers.

Procedures for Reviewing Tax Disputes of Entrepreneurial Entities and Practical Analysis of Proceedings (Comparative Analysis)

This article presents the procedures for reviewing tax (business) disputes in Georgia, the peculiarities of imposing liability in case of violation of entrepreneurial, tax and customs legislation and practical shortcomings. The article provides a practical analysis of tax (business) litigation based on important interpretations of common courts and Constitutional Court decisions. Also, the significant clauses of the Association Agreement between the EU and Georgia are analyzed, which, on the one hand, ensure the regulation of tax relations and the other hand, Georgia's European integration and stable, sustainable economic progress. The paper discusses the regulatory norms of business disputes in the member countries of the World Trade Organization and the existing statistics. The paper discusses the regulatory norms of business disputes and existing statistics of the member countries of the World Trade Organization, as well as analyzes European and American case law and legislative regulations for resolving business disputes.

Tax Litigation and Its Impact on Capital Structure in Brazil

Tax Litigation and Its Impact on Capital Structure in Brazil

Security Deposits in Nigerian Tax Litigation: Challenges and Recommendations

Security Deposits in Nigerian Tax Litigation: Challenges and Recommendations

Determinants of Corporate Tax Litigation: A Multifactor Analysis

Determinants of Corporate Tax Litigation: A Multifactor Analysis

The Straw That Broke The Claimant’s Back: An Assessment of the Supreme Court’s Reasoning in FII (no. 2)

The importance of FII no. 2 is mainly to be found in its treatment of the limitation period for restitutionary claims of payments made as a result of a mistake. Prior to this case, claimants enjoyed a generous limitation period, so they could be certain of success at the point at which they brought their case and could expect payments to be backdated to the date at which the payment was made. The financial consequences of this for defendants (who in the overpaid tax litigation were public bodies) was nothing short of disastrous. In the aftermath of this decision, claimants can no longer benefit from such a favourable position due to the Supreme Court’s interpretation of what “reasonably discoverable” means. The decision has been described as a “triumph of coherence in English limitation law”. That is certainly true, but parts of the decision are regrettable – mainly the lack of reckoning with jurisprudential questions on the nature of mistakes.

Using Audit Command Language to Predict Tax Litigation Risk of Vietnamese SME Companies: A Teaching Case for Tax and AIS Course

<p>The auditing industry will be strongly affected by emerging technology, as many of the auditing processes can be carried out automatically. Responding to this challenge, students in auditing majors must be trained in applying information technology to their work. In this teaching case, students will learn to analyze a large dataset of simulated SMEs survey to identify the tax risk of small and medium enterprises (SMEs), and to use technology (i.e CAATs, Computer Assisted Audit Techniques) to figure out the issues. Learning through a specific situation helps students to not only understand the process of applying technology to auditing, but also to develop analytical skills to assess what technology can and can-not do. These essential skills are needed for long-term career growth.</p> <p> </p>

The De Novo Doctrine: Irrelevant to Relevancy in Civil Tax Litigation

"A tax case is a de novo proceeding and the thoughts, procedures, conclusions, reasoning, or factual findings of Internal Revenue Service employees about a taxpayer's liability are irrelevant."Any attorney who has handled a tax case on a taxpayer's behalf has likely heard this argument, or a variation of it, during the discovery process, during motion practice, or even in the courtroom when attempting to introduce evidence. Many attorneys from the Internal Revenue Service ("Service") or Department of Justice who defend or bring tax cases on the government's behalf have likely asserted some version of the "de novo doctrine." Indeed, the Service and Department of Justice commonly raise the de novo doctrine in an attempt to defeat taxpayers' requests to discover or introduce into evidence information about the Service's audit or facts and information gathered by the Service and contained in its audit file.2 The asserted ground for withholding such information from taxpayers is that none of it is relevant to the court's inquiry, which is to determine the merits of taxpayers' liabilities.

Conformidade Cooperativa: Análise SWOT para o Programa CONFIA Brasileiro

Cooperative compliance ensures that the taxpayer–Tax Administration relationship is based on transparency, mutual trust, and preventive actions of assistance and collaboration. These three foundations are formalized into six characteristics, two of which (transparency and disclosure) apply to taxpayers and five of which (commercial awareness, fairness, proportionality, transparency, and responsiveness) apply to the Tax Administration. This article discusses cooperative compliance concepts, requirements, advantages, tax control framework (TCF), tax risk, and governance issues. It then considers some Brazilian initiatives, highlighting the exposure of the CONFIA proposal as a cooperative compliance program of the Brazilian Revenue Service (RFB). Using a SWOT analysis based on international experiences, we discuss the strengths, weaknesses, opportunities, and threat points for success in implementing the CONFIA program. Additionally, we offer recommendations regarding how to ensure an environment of increasing cooperation in the tax field in order to reduce tax litigation, which is a chronic problem of the Brazilian tax system. Cooperation between taxpayers and Tax Administration should be based on the responsibility of both parties operating under mutual trust and not tolerating opportunistic behavior on either side of the tax relationship.

Determinants of the Temporality of Corporate Income Tax Litigation by Large Brazilian Banks in the CARF

Determinants of the Temporality of Corporate Income Tax Litigation by Large Brazilian Banks in the CARF

The Rhetorical Handling and Construction of Uncertainty in Tax Litigation Concerning Valuation of Financial Instruments

Abstract A tax litigation concerning the value of non-traded financial instruments is impregnated by uncertainty. The aim of this paper is to study how uncertainty inherent in financial valuation models is discursively and rhetorically handled and constructed by the litigating parties as well as the court. A discourse analysis guided by the notion of hedging is conducted on The Swedish Tax Agency v. PwC (2013, 2014). The analysis demonstrates a sparse use of hedging. Rather, certainty characterizes tax litigation. However, the analysis shows that the litigating parties as well as the court participates in the construction of claims as facts, distancing themselves from their own claims and decisions.

The Rights of the Taxpayer and Tax Litigation in Finland

In this article, the authors examine some taxpayer issues that arise during tax procedures in Finland.

Is tax aggressiveness associated with tax litigation risk? Evidence from D&O Insurance

Is tax aggressiveness associated with tax litigation risk? Evidence from D&O Insurance

Tax Sovereignty and Investor Protection: Why the Proposed Global Minimum Tax Is not the Final Frontier for Corporate Tax Arbitrage

Over the past decade, international tax governance has evolved with bewildering speed in response to the challenges of digitalization and widespread corporate tax avoidance. Since the launch of the Group of 20 (G20)-Organisation for Economic Co-operation and Development (OECD) base erosion and profit shifting (BEPS) initiative in 2012, 135 countries and 14 international organizations have joined the BEPS Inclusive Framework, committing to implement new global standards on corporate tax, which has already been lauded as a revolution in the architecture of international tax law and policy. Even further expanding the scope of the OECD’s work on international taxation in a landmark announcement in March 2021, the U.S. administration further proposed imposing a global minimum corporate tax at a rate of 21% to be implemented through an international agreement by mid-2021. If the new OECD initiative is agreed, will the plan to implement a minimum corporate tax be fully implemented by G20 members, and if so, will it do enough to address the tax challenges of digitalization embodied in corporate tax arbitrage? Although the evidence suggests legislative and public policy compliance is likely to be high among G20 members, this article argues the minimum tax initiative is unlikely to go far enough to address deficiencies in global tax dispute resolution, which are extremely germane to the success of the proposed minimum tax. As explained in this article, U.S. leaders and global policymakers must enhance the mutual agreement procedure (MAP), a cornerstone of tax dispute resolution, given a growing body of tax litigation in investment law that threatens the implementation of BEPS 2.0. To do so, global policymakers must also reconcile the conflict of norms between tax sovereignty and investor protection contained in the investor-state dispute settlement (ISDS) regime. Only by addressing the conflict between the principles of tax sovereignty and investor protection can they prevent a tidal wave of investor disputes that will challenge the implementation of the minimum tax through national tax laws.

ITAT’s Power to Grant Stay: Is the Supreme Court Decision in Pepsi Foods the Last Word?

In India, In the current hierarchy of tax litigation, the disputes are addressed at the first level by a tax officer, the appeal against which is determined by another tax officer, albeit a senior one. The second appeal lies before a quasi-judicial tribunal, against whose orders further appeals lie only on substantial question of law before the High Court and the Supreme Court. Viewed from this perspective the tribunal occupies an important space in the tax litigation sphere for multiple reasons. Foremost of these is the fact that the tribunal is the first intrinsically independent forum which examines the correctness of the views and positions taken by the tax officers. Second, the tribunal is the last fact-finding authority and its factual determinations are binding even on the High Court and Supreme Court unless they are perverse. Third, while the instructions of the tax administration are binding on the tax officers, their rigours are inapplicable to the tribunal, thereby the tribunal is free to take an independent view dehors the tax administration’s understanding of the law. For these reasons, the positioning and empowerment of the tax tribunal becomes extremely crucial. A case to the point is the vexed question relating to the power of the Income Tax Appellate Tribunal (‘ITAT’) to grant stay against recovery of demands confirmed by the tax officers. This article examines a recent decision of the Indian Supreme Court, in Pepsi Foods, which addresses the change in the legislative scheme diminishing the empowerment of the ITAT to grant stay. On a larger perspective, this decision favours an approach whereby the taxpayers have effective remedies against the enforcement powers of the tax officers and thereby underscores the need for ensuring an empowered tax tribunal which can effectively maintain supervisory jurisdiction over the functioning of the tax authorities.