Profit Tax Research Articles

Comparative Analysis of the Financial and Distribution Policy of the Largest Non-ferrous Metallurgy Corporations in the BRICS Space

Non-ferrous metallurgy is of crucial importance in the life of society. The industry’s products are present in household items (household appliances, plumbing, electronics, tableware), construction, automobile and machine tool construction, batteries, etc. With the existing wide range of non-ferrous metals applications, large companies, with a high degree of vertical integration and business effi ciency, have large volumes of revenue, are able to meet the needs of consumers in a wide variety of products, and also have the opportunity to fi ll the budget system of their countries and territories where they are based. The article focuses on a comparative analysis of the fi nancial results of the largest non-ferrous metallurgy corporations in the BRICS space, namely PJSC MMC Norilsk Nickel (Russia) and Vale S.A. (Brazil), which have a total revenue of about $72.4 billion by 2021. The purpose of the study is to identify the features of the fi nancial and distribution policy of the largest metallurgical corporations in the BRICS space. The results of the study for 2009–2023 showed an increase in average net profi t by 71 % (up to 5.1 billion dollars) for the Russian company and by 1 % (up to 10.4 billion dollars) for the Brazilian company. The average profit tax rate for companies decreased by 4.9 and 9 percentage points to 21.7 and 16.9 %, respectively. The increase in dividend payments amounted to 97 and 15 % to 3.2 and 5.8 billion dollars. accordingly, at the same time, the share of net profi t allocated by companies to dividends has increased: at Norilsk Nickel — by 8.4 percentage points to 62.5 %, at Vale S.A. — by 6.5 percentage points to 55.9 %. The information base of the study was the official consolidated fi nancial statements of PJSC MMC Norilsk Nickel and Vale S.A., domestic and foreign industry literature, data from information and analytical and news agencies, information on the exchange rates of Russia and Brazil.

Valorization of Biomass Through Anaerobic Digestion and Hydrothermal Carbonization: Integrated Process Flowsheet and Supply Chain Network Optimization

Utilization of biomass through anaerobic digestion and hydrothermal carbonization is crucial to maximize resource efficiency. At the same time, supply chain integration ensures sustainable feedstock management and minimizes environmental and logistical impacts, enabling a holistic approach to a circular bioeconomy. This study presents an integrated approach to simultaneously optimize the biomass supply chain network and process flowsheet, which includes anaerobic digestion, cogeneration, and hydrothermal carbonization. A three-layer supply chain network superstructure was hence developed to integrate the optimization of process variables with supply chain features such as transportation modes, feedstock supply, plant location, and demand location. A mixed-integer nonlinear programming model aimed at maximizing the economic performance of the system was formulated and applied to a case study of selected regions in Slovenia. The results show a great potential for the utilization of organic biomass with an annual after tax profit of 23.13 million USD per year, with the production of 245.70 GWh/yr of electricity, 298.83 GWh/yr of heat, and 185.08 kt/yr of hydrochar. The optimal configuration of the supply chain network, including the selection of supply zones, plant locations and demand locations, transportation links, and mode of transportation is presented, along with the optimal process variables within the plant.

TAX REVENUE AND ITS IMPACT ON NIGERIA'S ECONOMIC GROWTH

This research examines the relationship between tax revenue components and economic growth in Nigeria, using quarterly data from 1994 to 2022. The research investigates three primary tax components: Petroleum Profit Tax (PPT), Value Added Tax (VAT), and Other Tax Revenue (OTH), employing an Autoregressive Distributed Lag (ARDL) model to analyze both short-run and long-run relationships. Data was sourced from Central Bank of Nigeria’s bulletins, National Bureau of Statistics, etc. The findings reveal a significant positive relationship between overall tax revenue and economic growth, with a 1% increase in total tax revenue leading to a 0.234% increase in GDP growth. Among the tax components, VAT demonstrates the strongest positive impact (0.289%), followed by Other Tax Revenue (0.178%) and PPT (0.156%). The error correction term (-0.567) indicates that approximately 56.7% of any disequilibrium is corrected within one year, suggesting efficient adjustment mechanisms. The study's diagnostic tests confirm the models' statistical validity, with high R-squared values and no significant issues of serial correlation or heteroskedasticity. Based on these findings, the study recommends enhancing VAT administration, expanding the tax base, modernizing tax collection systems, and implementing strategic reforms to diversify revenue sources beyond petroleum. These results have important implications for tax policy formulation in Nigeria, particularly in the context of economic diversification efforts and sustainable development goals.

Осмысление проблемных вопросов проводимой на глобальном уровне реформы международного налогообложения цифровых компаний

The author's interest in the topic of the article is caused by the fact that in the context of a new geopolitical reality, the process of transformation of the international tax order and, within its framework, the rules for taxation of profits of foreign digital companies is accelerating. In the article, the author analyzes and comprehends the problematic issues of the reform of international taxation carried out by the Organization for Economic Cooperation and Development (OECD) at the global level. The author gives an assessment of the International Approach to taxation of profits of digital companies developed by the OECD and implemented by it. The article also analyzes the author of a new approach proposed by the OECD to the distribution of global profits received by digital companies from the supply of digital products in the market of foreign jurisdictions for users of these products. In addition, the author identifies the legal grounds and expediency of introducing a tax on digital services by some states. In order to achieve the goal of sustainable economic development of states, an effective solution to the problem of international taxation of profits of digital companies is becoming increasingly important. The global community of states and their tax administrations face a strategic task: to achieve a situation in which the international tax system will reflect all trends in the development of the digital economy. To achieve this goal, it is necessary to achieve coherence between the actions of States at the regional and global levels. Due to the significant increase in the volume of activities of foreign digital companies, the digital business has increased the need to develop and implement a unified international approach to taxation of income of digital companies and primarily Multinational companies (TNCs) received from the supply or digital services (products) to the markets of foreign jurisdictions. In the context of the active development of the digital economy, scientists and practitioners faced a question that requires a clear answer – on what grounds and to what extent the procedure for taxation of corporate income within the digital economy differs from the procedure for taxation of corporate income in the traditional economy. With the expansion of the scale of digital business projects, the number of the largest digital companies (the so-called giants) is growing, new digital facilities are being allocated, the number and geography of users' consumption of digital products is increasing, and the number of user contracts they conclude using digital company data is growing.

The Statutory Format of Structured Financial Statements Has Limited Impact on the Profit Tax Determination and Shall Not Be Used as an Argument for Not Allowing the Voluntary Use of IFRS. Evidence from Slovakia

Objective: The objective of this research was to verify whether it is useful to proceed with financial statements in the legally ordered form to determine the profit tax. Theoretical Framework: Financial statements in Slovakia display the amount of profit tax without any information about how the tax has been determined. Method: Despite the fact that the tax rate is given by the law and the tax base is calculated from the financial profit before taxation, we have examined whether structured financial statements bear the information required to determine or verify the profit tax amount. On the random sample of publicly available financial statements from Slovakia we examined whether any of the 201 disclosed variables correlate to the profit tax and whether disclosed figures could be used to determine or verify profit tax. Results and Discussion: We have shown that requiring the submitting of official financial statements in a legally ordered structured form, has no added value regarding to profit tax. Research Implications: Profit tax determination from financial statements cannot be used as a relevant argument to require a legally ordered structured form of financial statements. Companies should be given the possibility of issuing their financial statements based on IFRS or IFRS for SMEs, if the company wishes to do so in order to better display their financial statements. Originality/Value: This research shows that legal requirements on financial statements shall be regularly evaluated whether their structure is still relevant considering technological progress, information value and effort companies, especially SMEs, must expend.

Correction: Effects of royalty payment on petroleum profit tax evasion: evidence from the Nigerian non-renewable energy sector

Correction: Effects of royalty payment on petroleum profit tax evasion: evidence from the Nigerian non-renewable energy sector

ANALISIS FAKTOR-FAKTOR YANG MEMENGARUHI PENYALURAN KREDIT DOMESTIK PADA ASEAN COUNTRIES

This research aims to analyze the determinants of interest rates, profit tax, total debt service, gross domestic product (GDP), and time to resolve insolvency on domestic credit by banks in ASEAN countries. This research is descriptive quantitative research using secondary data obtained from the World Bank website in 2013-2022 by taking a sample of ASEAN countries namely Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, and Brunei Darussalam. The analysis used in this research is the panel data regression method. This research is expected to contribute to government policy, namely improving credit quality in Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, and Brunei Darussalam. The result show that time to resolve insolvency is significant to domestic credit to private sector by banks, while nominal interest rates, profit tax, total debt service, and gross domestic product have no significant effect.

Improving Commercial Banks’ Profit Taxation

This article examines the issue of taxation in favor of commercial banks. The research examines theoretical and empirical research on the impact of profit tax on the activities of commercial banks. In the conducted analysis, it was determined that the profit tax paid by the banks has a positive effect on the profitability of the bank. As a result of the conducted analysis, conclusions were formed on the improvement of taxation in favor of commercial banks.

Full Federal Court Allows PepsiCo’s Appeal and Reverses Decision to Impose Royalty Withholding Tax and Diverted Profits Tax on “Embedded Royalties”

In PepsiCo, Inc v. Commissioner of Taxation, the Full Federal Court has allowed PepsiCo’s appeal against the decision of Moshinsky J at first instance, ruling that: (i) no portion of payments made to PepsiCo under an Exclusive Bottling Agreement by an unrelated bottler and distributor – for syrup concentrate for manufacturing soft drinks – was a “royalty” for Australian royalty withholding tax (RWHT) purposes and (ii) PepsiCo did not obtain a “tax benefit” by not paying RWHT and therefore was not liable to pay diverted profits tax (DPT). The decisions of the Full Court and the trial judge are the first to consider the Australian tax treatment of “embedded royalties” and the DPT rules (which were introduced in 2017) and include detailed reviews of the tax issues raised by the licensing of valuable trademarks and intellectual property.

Effects of royalty payment on petroleum profit tax evasion: evidence from the Nigerian non-renewable energy sector

AbstractThe impact of the tax regime on the non-renewable energy sector has been neglected in the current literature. The sector is reported to be at the heart of most oil and gas producing economies. Considering the immense contributions of this sector, the present study investigated the effects of royalty payments on petroleum profit tax evasion in Nigeria’s non-renewable energy sector. A survey, in the form of a questionnaire, was used to collect data from 312 oil and gas companies; while SPSS and PLS software were used to analyze the data. The results indicate that there is positive and significant relationship between tax rate, detection probability, and penalty, and petroleum profit tax evasion. Additionally, the result shows that there is a significantly negative relationship between royalty payment and petroleum profit tax evasion. The findings have significant policy implications for the non-renewable energy sector across the globe. The findings confirm the fact that higher tax rate, detection probability, and penalty, have a direct impact on petroleum tax evasion. The findings also call on policymakers to reconsider the level of royalty rates to a more reasonable level so as to reduce the extent of petroleum tax evasion among the oil and gas companies.

EFFECTS OF DISAGGREGATED TAX REVENUES ON ECONOMIC GROWTH IN NIGERIA (1995-2023): ARDL BOUND TEST APPROACH

<p>Tax revenue has been a great tool of fiscal policy harnessed toward the economic development of a nation. Its different components have collective effects on the economic growth of a nation. This study examined the effects of disaggregated tax revenue on Nigeria's economic growth from 1995 to 2023. The data was sourced from the Central Bank of Nigeria and the Federal Inland Revenue Service databases. This study examined the effects of disaggregated tax revenue on Nigeria's economic growth from 1995 to 2023. The data was sourced from the Central Bank of Nigeria and the Federal Inland Revenue Service databases. Employing multiple regression analysis within an Autoregressive Distributed Lag (ARDL) model, the study assessed the impact of Value Added Tax (VAT), Companies Income Tax (CIT), Petroleum Profit Tax (PPT) and Personal Income Tax (PIT) on economic growth. The diagnostic tests confirmed the model's validity, with unit root tests showing that all variables, except PIT, achieved stationarity after differencing. The findings revealed that each tax revenue component positively influences economic growth. Based on these results, the study recommends enhancing the legal and regulatory frameworks for businesses, including regular evaluations and updates of tax laws and stronger enforcement mechanisms. It also underscores the need to strengthen anti-corruption efforts, promote property rights, uphold the rule of law, and prioritise good governance to foster public confidence and ensure the effective use of tax revenues for economic development.</p><p><strong>JEL: </strong>C32, H20, H24, H25</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0785/a.php" alt="Hit counter" /></p>

EU State aid and the tax allocation of multinationals’ profits

This contribution examines the impact of the EU prohibition of State aid over the tax allocation of multinationals’ profits. All EU Member States apportion the taxable profit of multinational groups in accordance with transfer pricing regulations based on the arm’s length standard, namely, following a market valuation rationale. Although apparently neutral, such a standard may lead to prohibited aid both at the level of its regulatory design and its enforcement. These issues have been recently exacerbated due to the assessment of the “tax rulings” cases, i.e. State aid proceedings opened against the granting of individual, unpublished rulings by certain Member States to some of the largest multinationals operating in the EU, recently reviewed by the ECJ. Unlike most of the scholarly literature, which has focused on the specific issues raised in these cases, this article aims to comprehensively analyse the issues raised by the said regulations when confronted with the EU State aid regime, in line with the latest jurisprudence in this field. The examination starts by defining the aim and contradictions of the arm’s length standard, which is necessary to build a proper reference framework against which deviations resulting in a selective advantage may be detected. Such derogations potentially resulting in prohibited aid may arise when assessing the scope of these regulations, the existence of specific regimes deviating from the arm’s length standard rationale, and in the context of individual administrative acts (e.g. tax rulings) deviating from the content of the applicable transfer pricing regulations.

A New Model Tax Convention for a World of Increasing Remote Work and Mobility of Individuals

Model Tax Conventions have been the subject of eternal and very heated discussions regarding corporate income taxation, particularly in the recent times as a result of the BEPS Project and its epilogue (the Pillars). However, very little attention has been paid to the challenges and risks posed to tax treaties by the generalization of remote work (a phenomenon that is on the rise, most notably after the 2020 pandemic) and the consequent increased opportunities for individuals to move across jurisdictions, temporarily or permanently relocate in new jurisdictions or even embark on a nomadic life. In the present paper, the author will attempt to provide an in-depth reflection on the impact that these phenomena may trigger in the application of tax treaties on the taxation of income of both individuals and linked entities. They will subsequently propose adjustments to the Model Tax Conventions such as reviewing the tie-breaker rules for resolving dual residency issues (article 4), reinterpreting or modifying the permanent establishment concept for the taxation of business profits (article 5), assessing the elimination of the independent personal services clause (article 14) and revising the rules on the taxation of employment income (article 15). In all cases, specific and near final proposals will be provided for the redrafting of the relevant articles.

Profit Tax as a Character of Regional Budget of Our Time

The authors develop approaches to tax decentralization based on the theory of imperfect institutions by T. Eggertsson, in terms of the critically important profit tax for regional budgets of Russia. We see the goal of our research in finding a balance between the action of formal rules and informal, social norms, technologies, and models for distributing the profits of the largest Russian companies as a tax base between the federal center of Russia and the regions depending on the actual location of employees and assets. The article is devoted to the action of a successful and unique formal rule of the tax institution for the Russian Federation – the formation of consolidated groups of taxpayers (CGT). The novelty of the article lies in the study of the phenomenon of transformation of the domestic system of paying profit tax in 2023 as a replacement of one formal rule (action of CGTs) with another formal rule – the introduction of a new excess profit tax for Russia. An empirical study of the regional distribution of payments of legal entities-payers of profit tax according to the formal rules of the CGTs from among the largest Russian companies registered outside Moscow was conducted. Based on the results of the study, a general conclusion was made about the acute contradiction of the current economic policy in Russia in the content of the tax institution: between the new informal social norm on territorial decentralization of the largest Russian companies and the opposite formal rules of tax centralization in terms of profit tax. In this regard, the current policy of coincidence of territorial and tax decentralization in terms of state-owned companies in China deserves attention.

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.

PepsiCo Embedded Royalties’ (Intermediate) Win – Zoom-Out Lessons

In June 2024, the Full Federal Court of Australia ruled in favour of PepsiCo against the tax authorities, overturning an earlier decision. The case involved potential embedded royalties in beverage concentrate agreements, focusing on withholding tax and the diverted profits tax. Beyond the ruling, the case highlighted key international tax issues like substance over form, transaction recharacterization and the principal purpose test. The differing views among the three judges emphasized the complexity of these concepts, suggesting future disputes are likely.

Determinants of German firm’s adjusted effective tax rate

ABSTRACT This analysis examines firm-specific determinants of the effective tax rate of German limited liability companies. The effective tax rate is calculated by considering the local trade tax, corporate profit tax, and solidarity tax for 9,318 firms from 2020 based on the Orbis data base. Our findings demonstrate a inverse u-shape relationship between the effective tax rate and firm size. Furthermore, companies with major shareholders tend to have lower tax rates, while those with a supervisory board tend to pay higher tax rates on average. These findings are consistent with the theoretical considerations on tax aggressiveness.

Business taxes, management delegation, and growth

We examine the interaction between agency issues and business taxation in a growth model with an endogenous market structure. Agency issues arise from two types of management delegation: day-to-day production and research and development (R&D) activities. We calibrate the model to the US economy. A reduction in profit tax fosters business dynamics, R&D investments, and income growth in the short and medium term but hampers long-term growth. Lower-quality governance dampens short-term income gains and amplifies long-term growth losses. Additionally, we compare the effects of profit tax cuts with those from dividend and executive income tax cuts. Our analysis includes a welfare and inequality evaluation of profit tax reforms.

System of sources and principles of international tax law

In international cooperation on taxation, countries strive to achieve equality in international taxation and, thus, create the basis for a fair international tax system. Justice exists in an international system of taxation only when states allocate taxing powers among themselves in a manner consistent with dominant views of justice internationally. A fair international tax system will not exist until there is some international consensus on how countries should allocate taxing powers among themselves. International cooperation allows countries to improve the coordination of tax policy at the international level. We can talk about several types of coordination. For example, one type aims to make a country’s tax system more similar to others - in other words, to harmonize taxes. Other types aim to establish minimum or maximum tax rates to avoid double taxation of cross-border income streams, prevent transfer pricing, coordinate arrangements with competent authorities and limit harmful tax competition. The current official agreements mean business activities through a permanent establishment and give the source country the primary right to tax profits from this operation. The country of residence is obliged to exempt these profits from tax, at least to the extent that they were taxed by the country of source. A tax treaty also often provides for an exemption from taxation of the employee’s income from personal services provided the employee is in the country for no more than a specified period of time and the compensation is received by a non-resident employer without a permanent establishment. The treaty usually reduces or eliminates withholding tax on at least some items of investment-type income, such as interest, dividends, rents and royalties, that are not attributable to business carried on through a permanent establishment. The tax treaty also provides that the country of residence can tax capital gains.

Taxation of MNE profits in an R&D driven economy: Beneficial tax havens and minimum taxes

AbstractResearch and development (R&D) by multinational enterprises (MNEs) generates substantial positive cross‐country spillovers. With R&D incentives primarily provided by the MNEs' host countries, these nations bear the entire cost of incentivising R&D but only reap a fraction of the benefits, resulting in inefficiently low R&D incentives and investment from a global perspective. Allowing MNEs to shift their profit to a tax haven shelters the firms' profit from foreign taxation and increases the net returns to R&D without reducing the domestic tax base. In this setting, tax havens can be welfare beneficial because they help to internalise the positive cross‐country spillovers of R&D. The optimal effective minimum tax balances a reduction in wasteful profit shifting and more efficient R&D incentives for MNEs. Regardless of the welfare effect of R&D, a strictly positive minimum tax is optimal for each country. Uncoordinated minimum taxes may be excessively high, if R&D investment has a strong impact on productivity. Under certain circumstances, IP boxes are a welfare‐improving substitute for tax havens.