Tax Measures Research Articles

Selectivity as discrimination: lessons from the case law on fiscal measures for identifying State aid

Abstract Article 107(1) of the Treaty on the Functioning of the European Union was originally designed to regulate the grant of subsidies by Member States, but it has been applied increasingly in recent years to regulate tax measures. Attempts to apply the State aid rules in this way have been met with controversy as they have been applied in unpredictable ways that have introduced significant changes to the existing tests in the case law for identifying State aid. These changes include a broader interpretation of the concept of selectivity, one of the criteria used to identify aid, which has been reoriented around the discrimination standard, whereby a measure is selective if it differentiates between categories of undertakings without being capable of justification by some legitimate public policy objective. Most controversially, this has facilitated the enforcement of the State aid rules against a wider range of State interventions. This article argues that the discrimination standard represents the most plausible and effective way of understanding selectivity among the alternative tests which have been proposed in the case law and academic literature. However, it goes on to identify a significant deficiency in the discrimination standard in the manner in which it is currently applied by the Union courts. The test inevitably requires certain value judgments to be made, but these are not made explicit by the existing case law. This article then proceeds to give further reflections on options for the refinement of the framework for assessing selectivity based on the discrimination standard and the existing logic of the case law and the objectives of the State aid control regime, which indicates how principled and coherent boundaries to the notion of State aid might be assessed in an individual case.

COMPARATIVE LEGAL ANALYSIS OF TAX MEASURES TAKEN IN CRISIS CONDITIONS

The world's economic and legal systems are facing a huge challenge to overcome the negative consequences imposed by recent social distortions. In 2020, what started as a health crisis quickly turned into an economic-social problem where an express response was required to ensure the functioning of social actors. This economic-social crisis was followed in a short period by new security crises with additional consequences on national systems. The response to the newly created conditions requires a multidisciplinary approach that will include measures of a health, economic, social, and security nature, adopted on the principles of legislation and expediency within the national legal systems. These measures have their own direct or indirect tax component. The purpose of this paper is to perform a legal analysis of the tax measures taken in the national systems. The scope of the research covers the member states and candidate countries for membership in the European Union. The focus is on the more recent crisis period, with particular emphasis on the COVID-19 period. The analysis primarily focuses on the legal element of the tax measures, the procedure of their implementation, and their legal nature. Also analyzed are the challenges that they have on the taxpayers and the administrative authority for their performance. The method of comparison in the paper is used to compare the similarities and differences between the tax measures in the different national systems and to detect the legal challenges imposed by the established crisis conditions. At the end, conclusions are given about the current situation and recommendations on how the establishment of tax systems should be in the future in crisis conditions.

Taking shared parenting seriously: a comparative study of how family policies accommodate shared physical custody in post-separation households

Shared physical custody (SPC) is a care arrangement following parental separation, whereby children alternatively reside with their mother and father. Very little is known about how family policies accommodate SPC, which is all the more unfortunate, as it represents a key opportunity to understand how family policies can efficiently facilitate shared parenting. To address this gap, this article presents a modest attempt at designing a new comparative family policy approach that considers SPC arrangements, by examining the extent to which Belgian, French and Italian family policies accommodate a more equal sharing of parenting post-divorce. In so doing, we encourage studies of defamilialization to take better account of the diversity of contemporary family forms. The theoretical section traces back key feminist debates around defamilialization and proposes to consider SPC arrangements as an ‘atypical’ family configuration that best illustrates contemporary tensions around defamilialization and gender equality. It also takes stock of the few studies of family policy and SPC to highlight key issues at stake. The analysis section starts with the main characteristics of the family law, welfare regime and family policies of the three countries. Then, we examine a selection of emblematic and national-level family policies from the following areas: (1) Family benefits; (2) Financial support to access to services; and (3) Tax measures. Our comparison focuses on three main criteria: scope; entitlement; and shareability of benefits between parents in the context of SPC. Our analysis reveals the variety of approaches to SPC in family polices across countries and policy areas, and the significant lack of support for a more equitable distribution of parenting within SPC. We conclude by highlighting the usefulness of taking SPC into account in reflecting on and evaluating the implementation of defamilialization policies, and by identifying some of the challenges to be met by future research.

Preferential Personal Income Tax Regimes in the European Union: A New Form of Permitted (Harmful) Tax Competition?

The aim of this contribution is to examine whether the current normative framework of the European Union is adequately equipped to deal with the potentially harmful effects of the so-called preferential personal income tax regimes (PPITRs). For that purpose, after providing an overview of these special tax measures within the EU landscape, the article analyses whether these regimes could be considered a new form of harmful tax competition under the international soft law instruments developed by the OECD and European Union. It is highlighted that these instruments at present do not cover personal income tax rules, although the effects of PPITRs can be as harmful as those of preferential corporate income tax regimes. With regard to other EU instruments (State aid rules, fundamental freedoms and the fundamental right to equality), it is concluded that they are not adequate to tackle in a systematic way the potential harmful effects of special tax regimes targeting individuals. To remedy this hiatus, a proposal is made to extend the mandate of the EU Code of Conduct and adapt the currently applicable criteria under the Code to enable it to capture harmful PPITRs.

The role of environmental tax in guiding global climate policies to mitigate climate changes in European region

AbstractThe purpose of this study is to perform a practical inquiry into the influence of environmental tax laws on the execution of climate‐related financial policies. Our research will assess the effectiveness of environmental tax measures in 23 European countries from 2011 to 2020. The panel‐corrected standard error (PCSE) model and the feasible generalized least squares (FGLS) model are used in the empirical examination of the link between environmental tax laws and the implementation of climate‐related financial measures. This study is based on panel data with cross‐sectional dependence. The results of our estimation highlight the need to improve policy effectiveness by using all four ecological tax indicators. These include total environmental tax revenue, energy tax revenue, pollution and resource tax revenue, and transportation tax revenue. Furthermore, we provide actual evidence clarifying the process by which the implementation of environmental tax policies improves the efficacy of climate‐related financial policies in the short term as well as the long term. According to the findings, a third of environmental tax policy indicators have a long‐term effect on the implementation of climate‐related financial measures, with no short‐term effects seen. Our findings are critical for economists and policy‐makers who support the environmental tax as an effective tool to promote a country's climate policy implementations.

Systematic Literature Review (SLR): Analisis Rekonsiliasi Fiskal Atas Laporan Keuangan Komersial Terhadap PPH Badan yang Terutang pada Perusahaan

The aim of this research is to analyze fiscal reconciliation of commercial financial reports against corporate income tax that businesses must pay, as determined by the systematic literature review (SLR) approach. determining the amount of income tax due following fiscal adjustments and determining whether the recorded income or costs match the relevant tax measures. In order to explain this issue, this research gathers, evaluates, and synthesizes pertinent prior work from a variety of approved journals, including Sprott, Google Scholar, and Pop. Systematic Literature Review (SLR) is the research methodology employed in this study. Fifteen reviews of the literature address the research subject for 2019 and 2024. According to the study's findings, every organization prepares fiscal reconciliation and commercial financial reports with the same inconsistencies. Thus, there are disparities in the calculation of corporation tax payable as well.

Corporate Tax Planning and Financial Performance of Listed Consumer Goods in Nigeria

The multiplicity of tax laws and heavy tax burden facing companies in developing countries such as Nigeria has resulted in the adoption of different strategies to reduce tax liabilities. The main objective of this study therefore was to examine the effect of tax planning on financial performance of listed consumer goods firms in Nigeria from 2013 to 2022. The measures of tax planning adopted in this study were effective tax rate, tax incentives, debt tax shield and capital intensity. Return on assets was the measure of financial performance. The research design adopted for this study was ex-post facto because secondary data was used. The population of this study consisted of 21 listed consumer goods companies in Nigeria and purposive sampling technique was employed to select 18 of these companies. The ordinary least square regression technique was used to analyze the data and the statistical package employed was E-views version 10. The findings of the study revealed that effective tax rate has a negative and insignificant effect on the return on assets (ROA); tax incentives has a significant positive effect on return on assets; debt tax shield has significant and positive effect on return on assets; capital intensity has a positive but insignificant effect on return on assets of listed consumer goods firms in Nigeria. Thus, it was concluded that tax planning activities impact on the financial performance of listed consumer goods firms in Nigeria. Based on the above it was recommended among others that the management of consumer goods companies should focus on long term tax planning rather than solely concentrating on reducing effective tax rate. The management of consumer goods companies should also explore and take full advantage of available tax incentives by capitalizing on applicable tax incentives provided by the regulatory environment.

Impact of air pollution perception on environmental governance satisfaction

This study critically examines the factors influencing satisfaction with environmental governance in China, focusing on air pollution perception, environmental tax, and government trust within the Environmental, Social, and Governance (ESG) framework. Utilizing data from Chinese societal surveys, the research investigates the impact of air pollution perception on environmental governance satisfaction, as well as how this relationship is mediated by environmental tax and moderated by government trust. The findings reveal a strong inverse correlation between air pollution perception and satisfaction with environmental governance, highlighting the direct impact of environmental challenges on ESG outcomes. The relationship is nuanced by regional and demographic variations, highlighting the diverse impact of air pollution perception across different segments of society. The study also reveals the pivotal role of environmental tax in mediating this relationship, suggesting that tax policies can effectively enhance ESG strategies. Additionally, government trust is identified as a key moderating factor, underscoring the importance of trust in governance for the effectiveness of ESG practices. This research contributes to the broader field of air pollution perception and environmental governance, providing valuable insights into the complex interplay between public perception, tax policy, and trust in government. It offers practical implications for policymakers seeking to use taxation and trust-building measures to mitigate pollution and improve public satisfaction with environmental governance within the ESG ambit.

Obstacles and appeal of environmental taxation: Insights from sub-Saharan Africa

Increasing the slow pace of adoption of environmental taxes across low-income countries has become a significant priority among international financial institutions, multilateral development banks, and international donors. Yet little is known about the practical institutional, administrative, and political obstacles that have led to their slow implementation and how they can be made more appealing, especially across sub-Saharan Africa. Based on a review of the literature and 16 in-depth interviews with ministries of finance, revenue authorities, and other government representatives across six African countries, this paper provides exploratory evidence of these stakeholders' view about environmental taxes deployment in their countries' context. By increasing the visibility of these policymakers’ opinions and priorities, this study aims to individuate areas in which further research can provide support for the introduction of environmental fiscal measures. While there are differences across the countries covered, a lack of data and analytical capacity to develop effective environmental taxes is a common theme, as well as the historical prioritisation of their revenue mobilisation capacity over their environmental impact. A great variety of government actors with a mandate over natural resources, often with competing policy priorities, coupled with a lack of coordination fora, has also impeded the harmonisation of the environmental charges they levy. These measures are also often perceived to be regressive and to pose an obstacle to industrial development, lowering their appeal, given that poverty reduction and employment creation are an overarching priority. Nonetheless, support for introducing specific environmental tax measures exists across the population and policymakers, especially if their revenue can be earmarked for environmental purposes.

Foreign experience in enforcing tax liabilities

This paper is devoted to the study of foreign experience in the field of legal regulation of tax liabilities enforcement through the prism of comparing the approaches of different countries with the provisions of the tax legislation of Ukraine. The author traces the development of national legislation in recent years in the system of tax administration, which is reflected in the improvement of Ukraine's position in the Doing Business ranking, including the easing of the taxation system after the start of large-scale military aggression. The scientific study of foreign experience in the field of regulation of tax liabilities enforcement is aimed at examining various legislative and practical approaches to implementing effective mechanisms into the tax legislation of Ukraine. The author traces the development of the Republic of Georgia in terms of improving the efficiency of tax compliance. A comparative analysis of the experience of France and Ukraine regarding the procedure for collecting tax debt and the role of the tax authority in deciding on the further operation of the enterprise or its liquidation is made. The peculiarities of tax administration in the United States and approaches to tax debt repayment are identified. Innovative amendments to the tax legislation of Poland to counteract tax evasion are investigated. The author describes Italy's experience in tax administration and measures to collect tax debt. The author formulates the types of enforcement of tax liabilities in Ukraine and other countries, determines their effectiveness and consideration in the development of national legislation. The author substantiates the need to improve the national regulatory framework for ensuring the fulfilment of tax obligations by introducing new innovative approaches to improve taxpayers' tax discipline.

The Economic Evolution of the Romanian Defense Market in the Context of the World Crisis (Post-pandemic) and the Imbalance of International Security (Military Conflict in Ukraine)

Abstract The analysis of crisis management shows that any crisis will generate risks and opportunities for certain industrial sectors. The current security crisis overlaps today with other crises (climatic, economic, energy, and medical crises generated by COVID-19). The medical crisis generated by the COVID-19 pandemic has recorded considerable profits for the pharmaceutical industry and companies in the medical equipment manufacturing industry. (John A. Parnel). The defense market and armaments production industry has been steadily growing at national and international levels due to the imbalance in international security caused by Russia's military conflict. An economical inside perspective is provided due to an internal study case based on the evolution of this industry's key sector. As per the analyzed data, the market demand is currently higher than the production capacity, both at European and national levels. The industry cannot meet the requirements of the defense market. Nonetheless, the turnover of the profile companies experienced significant increases with positive effects on the recorded profit rates. After conducting a thorough evaluation of the domestic defense industry, the solution might be to privatize state-owned companies in the security industry, which may involve merging companies with similar activity profiles. Also, financial incentives, such as tax measures like those granted to personnel working in the IT industry, can help overcome the human resources issue that the Romanian defense industry is currently facing.

Advancements in hydrogen energy systems: A review of levelized costs, financial incentives and technological innovations

Hydrogen energy systems (HES) are increasingly recognized as pivotal in cutting global carbon dioxide (CO2) emissions, especially in transportation, power generation, and industrial sectors. This paper offers a comprehensive review of HES, emphasizing their diverse applications and economic viability. By 2030, hydrogen energy is expected to revolutionize various sectors, significantly impacting CO2 abatement and energy demand. In electricity and power generation, hydrogen could reduce CO2 emissions by 50–100 million tons annually, requiring 10–20 million tons of hydrogen and an investment of $50–100 billion, underscoring its role in grid stabilization. Additionally, in the heating sector, hydrogen could facilitate a CO2 abatement of 30–50 million tons. We examine the levelized cost of hydrogen (LCOH) production, influenced by factors like production methods, efficiency, and infrastructure. While steam methane reforming is cost-effective, it poses a larger environmental impact compared to electrolysis. The global life-cycle cost of hydrogen production decreases as production scales up, with current costs ranging from $1–3 per kg for fossil-based sources to $3.4–7.5 per kg for electrolysis using low-emission electricity. These costs are projected to decrease, especially for electrolytic hydrogen in regions with abundant solar energy. However, despite the technical feasibility of decarbonization, high production costs still pose challenges. A systematic and effective transition to a hydrogen economy requires comprehensive policy and financial support mechanisms, including incentives, subsidies, tax measures, and funding for research and development of pilot projects. Additionally, the paper discusses hydrogen's role in advanced storage technologies such as hydrides and Japan's ENE-FARM solution for residential energy, emphasizing the need for strategic investments across the hydrogen value chain to enhance HES competitiveness, reduce LCOH, and advance the learning rates of hydrogen production technologies.

Distribution and use of tax support for housing in the Czech Republic

AbstractThis article focuses on mortgage interest deduction (MID) as an indirect tax support for acquiring one's housing. This form of support is the most widely used in the Czech Republic compared to other tax reliefs and causes the highest losses for the government budget. This paper provides quantitative evidence on how the MID was distributed among taxpayers in the Czech Republic in the period 2008–2019 in relation to taxable income and revenue losses for the government budget. Furthermore, it assesses the effectiveness of these tax measures in reducing socioeconomic inequalities among taxpayers. Research based on the application of the MID in tax returns has shown the effective distribution of the MID until 2017. Tax support for housing was used mainly by taxpayers with low taxable income, which is also the largest group. The essence of vertical equity has been fulfilled, which contributed to reducing the level of social inequality. This positive distributional effect has diminished over time. As of 2019, the highest share of public expenditure was redistributed to taxpayers with higher taxable income, indicating the existence of inequalities in the tax system. The different developments over time have shown that the use of the mortgage interest deduction cannot be assessed statically, as it evolves dynamically over time.

The role of ICT investment, digital financial inclusion, and environmental tax in promoting sustainable energy development in the MENA region: Evidences with Dynamic Common Correlated Effects (DCE) and instrumental variable-adjusted DCE.

His research investigates the interplay among investment in Information and Communication Technology [ICT], digital financial inclusion, environmental tax policies, and their impact on the progression of sustainable energy development within the Middle East and North Africa [MENA] region. Recognizing the distinctive hurdles impeding sustainable energy advancement, effective policy formulation and implementation in MENA necessitate a comprehensive understanding of these variables. Employing a Dynamic Common Correlated Effects [DCE] model alongside an instrumental variable-adjusted DCE approach, this study explores the relationship between ICT investment, digital financial inclusion, environmental tax, and sustainable energy development. The DCE model facilitates the analysis of dynamic effects and potential correlations, while the instrumental variable-adjusted DCE model addresses issues pertaining to endogeneity. The results indicate that both ICT investment and the promotion of digital financial inclusion significantly and positively impact sustainable energy development in the MENA region. Additionally, the study underscores the importance of environmental tax implementation in fostering sustainable energy advancement, highlighting the critical role of environmental policy interventions. Based on these findings, governmental prioritization of ICT investment and initiatives for digital financial service integration is recommended to bolster sustainable energy growth in MENA. Furthermore, the adoption of efficient environmental tax measures is essential to incentivize sustainable energy practices and mitigate environmental degradation. These policy recommendations aim to create a conducive environment for sustainable energy progression in the MENA region, contributing to both economic prosperity and environmental conservation.

On taxation of small business in the context of integration of new regions

The subject of the study is the mechanism of tax support for small businesses from the perspective of successful adaptation of taxpayers of southwestern subjects to the tax conditions of the Russian Federation. The paper examines the peculiarities of taxation of small businesses in the Donetsk and Lugansk People's Republics, Zaporizhia and Kherson regions, identifies some specific features of the development of small business in regions with high-risk conditions of activity. The hypothesis is formulated that changes in tax legislation regarding the simplified taxation system, which come into force on 1.01.2025, may be extremely negative for the absolute majority of taxpayers in the analyzed regions. The author focuses on the need to introduce temporary norms aimed at maintaining the level of tax burden of small businesses, even in conditions of low budget provision of new subjects of the Russian Federation, along with traditional methods of scientific analysis, such methods as a retrospective analysis of the development of small businesses; analysis of forms of statistical tax reporting of the Federal Tax Service of Russia; elements of the modeling method – for forecasting the performance indicators of taxpayers and the tax burden in the event of changes in tax legislation In the course of the study, the following tasks were solved and the relevant conclusions were formulated: - the dynamics of the number of small businesses in the southwestern regions of the Russian Federation is analyzed; it is determined that the growth rate of the number of taxpayers significantly exceeds the national average, while almost 80% of taxpayers belong to micro-businesses; - the specifics of taxation of small businesses in new territories and its impact on the level of tax burden are studied taxpayers. It has been revealed that the tax burden of SMEs in the new subjects of the Russian Federation is significantly lower than in regions with a comparable level of "subsidization" due to the introduction of reduced regional tax rates and a reduced tariff of insurance premiums; - assumptions are formulated that the new norms of the Tax Code of the Russian Federation regarding taxpayers of the USN may be the reason for a significant increase in the tax burden of small businesses; - separate recommendations have been formulated on the introduction of temporary tax measures that ensure the preservation of the tax burden and promote integration processes

Tax havens reexamined: The impact of global digital tax reforms on international taxation

This review delves into the evolving landscape of tax havens in the wake of comprehensive digital tax reforms. This study scrutinizes the implications of global efforts to address tax evasion and profit shifting, particularly in the context of the digital economy. With the proliferation of digital services and cross-border transactions, traditional tax frameworks have struggled to capture the economic activities of multinational corporations operating in cyberspace. Consequently, tax havens have emerged as facilitators of aggressive tax planning strategies, exacerbating global tax inequalities and eroding fiscal sovereignty. Against this backdrop, the study analyzes the efficacy and repercussions of recent digital tax reforms spearheaded by international organizations and individual nations. It examines the implementation challenges, compliance burdens, and potential loopholes associated with these reforms. Moreover, the research evaluates the impact of digital tax measures on the behavior of multinational enterprises, exploring their responses in terms of tax planning strategies and business models. Furthermore, the study investigates the broader implications of digital tax reforms on international taxation dynamics, including their influence on tax competition, investment flows, and economic development. Special attention is paid to the implications for developing countries, which often bear the brunt of revenue losses resulting from profit shifting to tax havens. By synthesizing empirical evidence, policy analysis, and theoretical insights, this study offers a comprehensive reevaluation of tax havens in the digital age. It sheds light on the complex interplay between technological advancements, regulatory frameworks, and global economic dynamics shaping contemporary tax landscapes.

The macroeconomic impact of policy measures, technological progress and societal attitude in energy transition scenarios

This paper compares the macroeconomic impacts of different decarbonization storylines until 2050 using two Computable General Equilibrium models. The modeling shocks are harmonized across models to simulate four decarbonization scenarios through three main drivers: technical development, societal attitude, and policies. The study explores the contribution of each of these drivers to the European decarbonization. The results show that the decarbonization scenarios have moderate effects on GDP; decarbonization scenarios rather result in sectoral shifts. The impact of temperature on labor productivity minimally alters expected growth levels, since larger differences in temperature between the scenarios are only expected to occur in 2100, not yet in 2050. Electricity demand is increasing in all scenarios, particularly with stronger political guidance leading to additional tax and subsidy measures to encourage the use of electricity and discourage fossil-based fuels. When society is a driving factor, it is found that circular business models result in an increase in the service industry but might have a slightly negative impact on overall growth due to stronger spillover effects linked to the manufacturing industry. Technology appears to be the only driver to facilitate decarbonization while maintaining steady economic growth.

Article: Digital Services Tax: Analytical View of Challenges and Successes in Kenya and the United Kingdom

The rapid expansion of digital services is dramatically reshaping the panorama of global taxation. This transformation is notably impacting multinational enterprises (MNEs) that operate in countries where they lack a physical presence. In this study, the authors focus the attention on the implications of digital services offered by these non-resident MNEs operating in the Republic of Kenya and the United Kingdom and representing developing and developed economies, respectively. The article delves into how the burgeoning digital economy challenges international tax laws by scrutinizing the implementation of the digital service tax (24DST) and highlighting the weaknesses of the two-pillar plan in comprehensively addressing the digitalization of the economy. It also broadens the comprehension of the unique obstacles and potential opportunities inherent in the digital economy from an international taxation perspective. The significance of this research lies in its potential to inform tax policy in an increasingly digitalized global economy. Policymakers can develop strategies that are more effective in ensuring fair taxation practices by understanding the nuanced interactions between digital services and international tax regulations. Additionally, MNEs can use this research to better navigate the complex tax implications of their digital services in various economic contexts and thereby foster sustainable and ethical business practices. Digital economy, digital service tax (DST), Kenya, multinational enterprises (MNEs), organisation for economic co-operation and development (OECD), pillar one and pillar two, taxation, tax base, unilateral tax measure, United Kingdom (UK).

Does Spain Need the Tax Measures Included in the Debt-Equity Bias Reduction Allowance (DEBRA) Directive Proposal?

In this article, the author analyses the proposed EU debt-equity bias reduction allowance (DEBRA) Directive proposal, which has been temporarily suspended. This pause provides an opportunity to determine whether or not the existing measures in Spain for reducing the unequal tax treatment of debt and equity are sufficient and, therefore, whether or not measures like those in the Proposed DEBRA Directive are even necessary or recommendable in Spain.

Residents’ Willingness to Pay for Forest Ecosystem Services Based on Forest Ownership Classification in South Korea

South Korea is one of the countries with a significant proportion of its national territory covered by forests. However, it remains unclear what management strategies for providing forest ecosystem services are preferred by the residents. This study explores South Korean residents’ preferences for managing local forest ecosystem services, with a focus on how these preferences vary by forest ownership. Using the choice experiment method, this research identified residents’ willingness to pay for seven key local forest ecosystem services, along with a tax measure. The findings indicate a strong preference for biodiversity as the primary ecosystem service in both national/public and private forests, with residents willing to pay an average of KRW 28,370 (USD 21.80) per household per year and KRW 31,670 (USD 24.34) per household per year, respectively, for its enhancement. Preferences varied depending on forest ownership, with noticeable differences in perceptions of services like water supply, non-timber forest product supply, carbon storage, and recreation. Based on forest ownership, these variations in perceptions highlight the importance of managing ecosystem services in line with national/public forests and private forests, which significantly influences residents’ preferences. The study emphasizes the necessity of formulating ecosystem service management policies that account for the region’s unique natural resource characteristics, aiming to maximize ecological benefits for the local population.