Tax Provisions Research Articles

Amicus Brief of Tax Scholars in Support of Appellants

It is hard to describe tax law succinctly. The federal Internal Revenue Code is over 6,000 pages and contains over 4 million words. As scholars who write about taxation, we are well aware of this challenge. Nevertheless, the 100-word summary that appeared on Invest in Education’s petitions accurately describes its proposed change to Arizona tax law. Arizona's Invest in Education initiative would establish a new, separate surcharge of 3.5% on taxable income above certain threshold amounts. This new surcharge shall be imposed “[i]n addition to any other tax imposed by this chapter” and, it will be “collected regardless of whether the income tax rate brackets in this chapter are changed, replaced or eliminated by an act of the legislature.” Invest in Education’s 100-word summary described this provision as “establishing a 3.5% surcharge on taxable income above $250,000 annually for single persons or married persons filing separately, and on taxable income above $500,000 annually for married persons filing jointly or head of household filers.” This description straightforwardly describes the tax law change proposed in the initiative text. The Arizona trial court held there were three tax-related problems with the 100-word summary. The trial court concluded that the use of the term “surcharge” rather than “tax” was misleading, and it held that the description omitted two principal provisions: the relative percentage change in the marginal tax rate and the fact that the definition of taxable income includes income that individuals earn as owners of pass-through entities. The trial court’s conclusions are based in confusion about tax law and a misreading of the Arizona Supreme Court's decision in Molera v. Reagan. As this brief explains, there is nothing misleading about the 100-word summary, and it accurately described the principal tax provision.

Contemporary Tax Issues Related to Farmers and Ranchers

In the United States, farmers and ranchers account for one percent of GDP and utilize 40 percent of the land in the 48 contiguous states Tax statutes can appear -within any law passed by Congress Recent tax legislation provides tax benefits for farmers and ranchers This paper will discuss the substantive tax provisions impacting or directed at these economic enterprises that appear in four recently passed legislative acts: (1) Tax Cut and Jobs Act of 2017;(2) Agriculture Improvement Act of 2018;(3) Families First Coronavirus Response Act;and (4) Coronavirus Aid, Relief, and Economic Security Act of2020

Classification of transfer pricing systems across countries

This paper analyses the characteristics of transfer pricing (TP) rules across countries to create a classification of TP systems based on regulatory similarities. We apply hierarchical clustering method for the analysis of 57 qualitative and quantitative TP characteristics. Our sample comprises 44 countries for the period of 2010–2016. Our results indicate the existence of four distinct TP systems. The largest group is composed of countries with TP rules that are consistent with the OECD TP guidelines, while the other three groups include countries with domestic provisions that are substantially different from the baseline OECD standards. Overall, characteristics related to the priority of TP methods, to advanced pricing agreements and to the efficiency of competent authority procedures are the most relevant differences among groups. Simple applications of our TP classification indicate a systematic association between TP systems and income tax rates, suggesting a trade-off with respect to governments’ policy preferences between TP rules vs. tax rates. Our analysis contributes to the current literature as it provides a non-ordered classification of TP systems that is significative and consistent for the complete period, and has the advantage of being more robust methodologically and not depending on assumptions about the enforcement of specific tax provisions. Our results provide relevant information about the key differences on TP rules across countries and thus support the review of existing anti-shifting mechanisms as proposed by the OECD.

The Tax Provisions of the HEALS Act

This paper summarizes the tax proposals in the Health, Economic Assistance, Liability Protection and Schools Act (HEALS Act) introduced on July 27, 2020.

TAX REFORMS FOR THE DEVELOPMENT OF FISCAL SPACE

A reduction of the tax burden on corporate income in order to stimulate drivers of economic development has become the important issue of tax reform in many countries in recent decades. Tax competition forces national governments to take well-balanced solution on increasing outward and domestic investments as well as ensuring the fiscal capacity of the budget to cope with urgent socio-economic problems under enhancing fiscal risks. The purpose of the article is to assess the impact of tax reforms, addressing reducing the corporate income tax burden, on the fiscal space and investment processes in the EU countries and Ukraine, to establish directions of improvement of the tax system in Ukraine and other transition economies in order to spur the expansion of fiscal space. The research subject covers tax policy settings that shape fiscal space development. Research methodology. In accordance with the purpose of the article, the research methods are set as follows: abstract-logical; systemic analysis; analysis and synthesis; graphical method. Findings. By summing up theoretical ideas on the issue of feasibility of cutting corporate income tax, we have arrived at the conclusion that this measure has a significant impact on the improvement of tax competitiveness of the national economy. The gain from its application is confirmed by the best practices of many European countries. The results of the tax reform in Ukraine have proved that a traditional approach to the choice of tax issues – in contrast with developed economies – do not comply with theoretical provisions on increasing the competitiveness of the national economy and fostering investments. This is conditional on the specific tax effects in Ukraine due to the restriction of the key economic freedoms (investment, financial, property rights protection and judicial effectiveness) needed for successful entrepreneurship, as well as of a high rate of corruption, which increases the costs of business activity. Such effects include, in particular, a drop of tax revenues in the short and long term while reducing the level of corporate income taxation; a high level of tax evasion, capital outflow instead of expanding investment in the national economy. It is argued that the emphasis while carrying out tax reforms and expanding fiscal space in transition economies considering the specific effects of changing corporate income tax provisions, should be made on ensuring the long-term sustainability of public finances through measures of budget adjustments aimed at avoidance shifting the existing fiscal problems on future generations; harmonization of national tax legislation with the EU regulations and prevention of tax evasion; increasing the financial capacity of enterprises by introducing targeted innovation tax incentives, which will gain higher competitiveness of the country in the world markets and as a result facilitate the growth of the country’s future revenue receipts.

COVID-19 and Fiscal Policies: The Paycheck Protection Programme: A Tax Expenditure in Reverse?

The Paycheck Protection Programme (PPP) enacted by the US Congress in March 2020 furnishes an example of a spending programme that could have been structured as a tax provision. If it had been enacted as a tax provision, the PPP would almost certainly have been drafted more tightly, in a way that could support a precise revenue estimate. The Internal Revenue Service might have administered the PPP more effectively and at a lower administrative cost than was involved in using private banks. The lack of public hearings before enactment contributed to poor design of the PPP. Tax expenditures, technical corrections, legislation, public hearings, administrative costs.

Case Law Note: Arm’s Length Net Income for German Withholding Tax and Tax Declaration Purposes

One hundred years after its creation in 1920, (DE: section 49 (1) no. 6 had originally been created as section 2 no. 2 of the ITA 1920; its content had been moved to the current section 49 in 1934: see M. Stöber, W. Anissimov, I. Heß, G. Hiller, T. Kaligin, J-P. Naujok, section 49, no. 1902 in: Income Tax Act, Commentary, (F. Lademann ed. Publisher, 2020; formerly commented on by Jü. Lüdicke). ) section 49 (1) no. 6 and its 1994 derivative no. 2f Income Tax Act (ITA) are becoming the focal point of a heated discussion, primarily among US headquartered multinationals. The reason for this development is that the Big Four, as their auditors, are forcing their audit clients to build reserves for the potential application of sec. 49 (1) no. 6/no. 2f ITA.( For years after 2005, DE: section 49 (1) no. 2f ITA is the only applicable provision as it reflects the change in scope of DE: section 8 (2) Corporation Tax Act to only assume a business activity by nature of a corporate body if such corporate body was subject to unlimited tax liability in Germany. ) The reason is that this provision may apply to a specific type of cross-border intra-group transaction into which US headquartered multinationals have entered. Transactions in scope are the sale or licensing of intellectual property that a larger number of US multinationals have entered into in the aftermath of the introduction of the BEPS measures to the extent that they have a German nexus.(OECD, Final Reports on Actions 1 through 15, OECD/G20 Base Erosion and Profit Shifting Project, (OECD Publishing, 2015), https://www.oecd.org/tax/beps/beps-actions/ (accessed 28 May 2020). These measures have been translated into national tax provisions, e.g. the German ATAD Transformation Act, Bill as of 24 Mar. 2020, and treaty provisions through the OECD, Multilateral Convention to implement Tax Treaty related Measures to prevent Base Erosion and Profit Shifting (OECD Publishing, 2016) (Multilateral Instrument or MLI), available at, https://www.oecd.org/tax/treaties/multilateral-convention-to-implement-tax-treaty-related-mea sures-to-prevent-beps.htm (accessed 28 May 2020)). Limited tax liability, withholding tax, Germany transfer pricing, taxation at source sale, transfer of intellectual property (IP), licensing of IP, intellectual property, cost plus method, routine patent/trademark registration services.

Pengaruh E-SPT, Sanksi, Sosialisasi, Pengetahuan Perpajakan, dan Moralitas pada Kepatuhan Wajib Pajak

Taxes are the largest source of state revenue in Indonesia. Compliance is an important factor in increasing tax revenue because tax compliance is the attitude of compliance, compliance, submission, and application of tax provisions. This research was conducted at KPP Pratama Tabanan using a sample of 390 non-employee taxpayers who were determined using the nonprobability sampling method with accidental sampling technique. The data analysis method used in this study is multiple linear regression analysis. The results found that, e-SPT, sanctions, socialization, tax knowledge, and morality had a positive effect on the tax compliance of non-employee individuals registered at the KPP Pratama Tabanan.
 Keywords: E-SPT; Sanctions; Socialization; Taxation Knowledge; Morality; Taxpayer Compliance.

Is Incorporation the Solution to the Enigma of Corporate Tax Residency for International Tax Purposes?

Incorporation of a company for testing residency—if applied uniformly—is likely the best and most accurate way to reflect corporate residency for tax purposes. However, it does not always reflect economic reality. There is not a consensus on what the best approach is. The Organization for Economic Cooperation and Development (“OECD”) countries overwhelmingly use three tests for residency: incorporation, central management and control, and domicile. Indeed, a court in the United States or other jurisdictions may often ask if tax-avoidance motives exist when incorporation occurs in one jurisdiction and central management and control occurs in another. This Article follows the 2017 Tax Cuts and Jobs Act on many international tax provisions that caused a shift in thinking at both the U.S. level, and at the international level in terms of deciding what formulations would be the best way to ensure proper taxation while promoting horizontal and vertical equity. The genesis of this Article is a response and critique of an article on the same subject by the same author: Charles Edward Andrew Lincoln IV, Is Incorporation Really Better Than Central Management and Control for Testing Corporate Residency? An Answer to Corporate Tax Evasion and Inversion, 43 Ohio N.U. L. Rev. 359 (2017). The author now critiques the point of that article and comes to a different conclusion based on different criteria: specifically, new case law, Musgrave’s economic theory of accretion of wealth, and the importance of substance-over-form doctrines.

Who CARES? Evidence on the Corporate Tax Provisions of the Coronavirus Aid, Relief, and Economic Security Act from SEC Filings

We use U.S. Securities and Exchange Commission (SEC) filings to provide initial large-sample evidence regarding utilization of corporate tax provisions by U.S. firms under the Coronavirus Aid, Relief, and Economic Security Act (CARES). These tax provisions were intended to provide firms immediate liquidity to prevent widespread bankruptcies and layoffs in response to the COVID-19 pandemic. However, critics have argued that the provisions were poorly targeted and amounted to “giveaways” for shareholders of large corporations. We find that 38 percent of firms discuss at least one of the CARES tax provisions in their SEC filings, a result primarily attributable to the net operating loss (NOL) carryback provision. Firms experiencing lower stock returns during the COVID-19 outbreak are more likely to discuss CARES tax provisions, but not firms in states or industry sectors exhibiting large increases in unemployment. Further, we find a higher likelihood of tax provision discussions for firms with pre-pandemic losses and higher financial leverage. Finally, we document some evidence that firms facing potential reputational or political costs from discussing these tax provisions may have avoided doing so. Our analyses suggest that tax provisions under CARES were not material for most publicly-traded U.S. firms, were not likelier to benefit firms in greater need of liquidity during the pandemic, and that some firms perceived that disclosing benefits would be costly. These findings are important for policymakers as they consider additional economic relief for U.S. corporations while the coronavirus pandemic lingers.

Tax Provisions of the CARES Act: The International (and Institutional) Implications

This article outlines the measures affecting both corporations and individuals that the United States has adopted in response to domestic and international taxation issues to which the COVID-19 pandemic has given rise. Those measures include announcements by US tax authorities extending time limitations and otherwise providing relief as well as enactment of the Coronavirus Aid, Relief, and Economy Security Act by the US Congress.

ECONOMIC PRINCIPLES OF TAXATION: PROBLEMS OF DEFINITION AND EMBODIMENT IN THE TAX LEGISLATION OF UKRAINE AND THE EUROPEAN STATES

Today, almost every state feels the impact of the financial crisis and is looking for ways to overcome it. It is obvious that the development of economic relations of any state is influenced by taxation, and through taxes, the state has an impact on the property of individuals and legal entities. At the same time, establishing the optimum level of taxation for both taxpayers and the state is an important factor for economic uplift, ensuring the balance of public and private interests in tax and legal regulation, under which there is a proper financial support for the performance of the tasks and functions by the public authorities with reasonable and justified interference of the state in the right of private ownership of persons by means of the taxes. The construction of the tax system, the amount of taxes and their rates should not depend solely on the funds necessary for the state. This process is also influenced by other factors that find their objectification in the relevant principles, because taxation should be reasonable. The purpose of the article is to characterize certain economic principles, which should be the basis of taxation and which should be defined in tax legislation. This will be performed with the dogmatic method, the methods of analysis and synthesis, the systemic method and the case study method. The basis for building the tax system, determining the amount of taxes, the size of their rates, is in the economic factors, which should be taken into account to ensure the effectiveness of taxation and tax regulation as a whole. They have their reflection in the relevant principles as the initial provisions of taxation, acting as fundamental in regulating tax relations. The range of economic principles, which taxation is based on, and the content of which is currently debated in scientific circles, is as follows: proportionality (taxability), cost-effectiveness of taxation, fiscal sufficiency, economic basis of tax, economic justification for tax. They do not exist in isolation from each other, but constitute a clear system, in which their logical connection and influences are traced. Results. Proportionality as a principle of taxation is determined by analyzing the payer's financial position, the actual ability to pay taxes, and the economic benefit he/she receives in the course of paying taxes and fees (the economic result of the payer). The principle of cost-effectiveness of taxation means that the establishment of taxes and fees should be such that the amount of revenues from their payment to the budget exceeds public expenditure and leads to effective taxation (the economic result of the state). The principle of tax sufficiency provides a reasonable restriction on those public needs that need to be met through taxpaying, since these needs cannot be absolute. The principle of the economic basis of the tax indicates source for its payment, which is formed by the corresponding taxation of transactions or other taxable objects. The principle of economic justification for the tax determines the set of relevant factors that allow to approach the characteristics of taxation in different ways, taking into account certain economic indicators, by ensuring that the balance of private and public interests in tax and legal regulation is achieved. In fact, it combines an assessment of compliance with the principles of proportionality (taxability), costeffectiveness of taxation, tax sufficiency, and the economic basis of tax. The results obtained are original, they will allow to improve the normative provisions before consolidating the principles of taxation in tax legislation.

ANALISIS PERHITUNGAN PAJAK PENGHASILAN BADAN PADA PT REDSUN LESTARI TAHUN 2018

Tax revenues in Indonesia mostly come from income tax, especially corporate income tax. The purpose of this research is to find out whether the calculation of Corporate Income Tax including the fiscal profit / loss statement compiled by the company is in accordance with the applicable tax provisions in Indonesia. The research method used is descriptive method. The results of this research are the fiscal corrections compiled by the company that are not in accordance with the provisions of taxation because there are still accounts that have not done fiscal correction, and the calculation of corporate income tax is also not in accordance with the taxation laws caused by fiscal correction errors and the application of the calculation of the Act Article 31E Income Tax.

The Wade Case: An Analysis

The Australian Taxation Office (ATO) considers ALL animals sold as part of a primary production business to be trading stock. However, the word ALL is not contained in s 995 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997), rather the ATO view is based on its interpretation of the findings of Federal Commissioner of Taxation v Wade (Wade Case). This paper looks at the cases examined by their Honours in the Wade Case and similar cases related to the sale of livestock. It argues that findings of the Wade Case may have been misinterpreted, and that the ATO view is not as valid as is generally accepted. It argues that the revenue from sale of stud, or breeding, animals should be taxed under the capital gains tax provisions of the ITAA 1997 and not as income according to ordinary concepts.

Summary of the Tax Provisions of the CARES Act

This paper summarizes the tax provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Summary of the Tax Provisions of the HEROES Act

This paper summarizes the tax provisions of the Health and Economic Recovery Omnibus Emergency Solutions Act (the HEROES Act), introduced in the House of Representatives on May 12, 2020.

Pemberlakuan Pajak terhadap Barang Hasil Transaksi Jasa Titip Online

Seiring dengan semakin majunnya zaman, teknologi pun berkembang semakin maju. Salah satu hasil dari perkembangan teknologi yang kerap kiita rasakan dan nikmati adalah internet. Internet merupakan sebuah jaringan yang mampu menghubungkan tiap-tiap manusia yang ada di seluruh penjuru dunia. Internet telah memberikan dampak positif kepada penggunanya, salah satunya adalah dengan terpenuhinya kebutuhan sehari-hari secara lebih efektif. Dengan adanya internet kegiatan bisnis yang sebelumnya dilakukan secara konvensional kemudian perlahan tergantikan secara elektronik dan menggunakan jaringan komputer yaitu menggunakan internet. Bisnis ini kerap dikenal dengan instilah toko online, melalui toko online banyak orang yang membuka peluang usaha dengan cara berjualan, bahkan menawarkan jasa. Jasa titip online kemudian muncul seiring dengan menjamurnya belanja online. Dalam mekanisme jasa titip online terdapat beberapa barang yang diperoleh dari luar negeri, hal tersebut membuat munculnya pesaing baru kepada para pelaku usaha dalam industri yang terkait. Namun dalam prosesnya jasa titip tidak dikenakan pajak yang sama dengan para pelaku usaha besar lainnya. Barang yang diperoleh dari jasa titip tersebut seharusnya dikenakan pajak layaknya pelaku usaha lainnya supaya terjadi persaingan yang sehat antar para pelaku usaha. Pajak yang saat ini berlaku adalah berdasarkan Peraturan Menteri Keuangan No. 203 Tahun 2017 yang menjelaskan bahwa masuknya barang impor yang dibawa seseorang untuk milik pribadi yang total nilainya dibawah USD 500 akan bebas bea masuk atau free on board di Indonesia. Aturan ini dirasa kurang efektif karena maraknya pelaku jasa titip online yang meski membawa barang bawaan diatas USD 500 tidak dikenakan pajak bea masuk.

Pemberlakuan Pajak terhadap Barang Hasil Transaksi Jasa Titip Online

As time goes by, technologies are developing more and more. One of a result of it that we know is internet. Internet is a network that enable to connect every human being in all over the world. Internet gave us many positive impacts, to fulfil our daily needs is one of them. Thanks to internet we can do our business activities more effective. One of the business activites that we can do is vending, selling things by internet known as online shopping. Many people can sell anything through online shopping such as goods and services. They called “Jasa Titip Online”, is one type of a business that let consumer told us what they want to and then we look and buy goods that consumers want. “Jasa Titip Online” devided into two kinds, first is domestic purchases and the second is overseas purchases. Problems arise from the overseas purchases, person who conduct “Jasa Titip Online” must collect things from other country then bring it to Indonesia. That will create new competitors for large companies involved in the export-import business. Goods that sold by export-import companies supposed to be taxed when entering Indonesian territory. However same things didn’t happen to a person who commit “Jasa Titip Online”, it should be taxed to create fair business competition. The tax provisions currently in force are stated in Peraturan Menteri Keuangan No. 203 Tahun 2017 that define imported goods brought by a person for personal purposes that worth under US$ 500 will be free on board. That provisions are less effective due to more people conduct “Jasa Titip Online” that somehow brought things more than US$ 500 but still free on board.

PENDAMPINGAN PENYUSUNAN PELAPORAN KEUANGAN PADA KELOMPOK USAHA KECIL DAN MENENGAH BROSEM SEMERU

Financial statements are a means used by companies to communicate their activities and performance to stakeholders. Such is the case with UMKM Brosem. Financial reports are also prepared as a form of accountability of fund managers to "stakeholders. Among other groups of SMEs who are members of the UMKM Brosem and the government in the aspect of taxation. This community service activity is expected to provide benefits and provide outputs that can be sustained for the management of Brosem, especially in the aspects of preparing financial statements. So that managers can compile financial reports according to standards, tax calculations in accordance with tax provisions, as well as the determination of the cost of production that is accurate as a basis for determining the selling price. If the financial statements can be prepared properly, it is expected to be able to realize transparent and accountable governance. Based on observations and interviews agreed with the service program partners focused on solving problems related to the preparation of financial statements. Therefore it is necessary to assist in the preparation of financial reports in accordance with EMKM financial reporting standards. KEYWORDS: Brosem Semeru; SAK EMKM; UMKM.

The Recent Restrictive ECJ Approach to Exit Tax and the ATAD Implementation

The article discusses the development of the European Court of Justice approach to exit tax and the perspective adopted by ATAD (Anti-Tax Avoidance Directive) exit tax provisions. Following a first European Court of Justice (ECJ) orientation according to which Member States were allowed to tax corporations on latent capital gains at the time of the transfer of the place of effective management to another Member State, but deferring the collection until the actual realization of the assets to five yearly instalments, the more recent ECJ approach allows an exit tax imposed upon the transfer regardless of the actual realization, payable over a five-year period. On the lines of the second ECJ approach, ATAD provides a mandatory harmonized exit tax imposed at the moment of the exit, allowing a deferral over five yearly instalments. It represents the first form of income taxation provided by a EU Directive, which does not take into account if some EU Member State did not have any exit tax. The ECJ shifting and the restrictive ATAD approach on exit tax may determine a wider rethinking of the movement of companies within the EU having the ATAD exit tax provision partially emptied the content of the freedom of establishment principle. Mandatory harmonized exit tax, ATAD, Corporate taxpayers, Latent capital gains, Freedom of establishment principle, ECJ shifting, Income taxation, Deferral of taxation, Discrimination, Income inclusion approach