Tax Reform Research Articles

The Brazilian Tax Reform: Potential Impacts to the Financial Sector

The Brazilian tax system, known for its complexity, underwent a major change with the approval of Constitutional Amendment Proposal 45 (PEC 45), which was converted into Constitutional Amendment 132 (EC 132) on 20 December 2023. EC 132 aims to simplify the existing tax framework by consolidating five taxes into two – the CBS (contribuição sobre bens e serviços) and IBS (imposto sobre bens e serviços). However, the changes brought by the new system pose challenges, especially for the financial sector, which has, until now, benefited from special tax regimes given the uniqueness of financial transactions, not properly framed by the goals of the most typical VATs. This paper explores the current Brazilian tax system, EC 132’s changes, and their potential impact on the financial sector, focusing on the levy of VATs on financial transactions. Considering that alternatives for the VAT taxation were discussed, the National Congress, as the party responsible for regulating the new tax regime of financial institutions, still has the responsibility of bringing a balanced approach to the issue, noticing the corresponding complexities of the application of the VAT on margin transactions and the broader economic implications, especially to the cost of credit in Brazil.

Assessing the Impact of GST on Profitability: Insights from Education, Hospitality, and Logistics Sectors

Goods and Services Tax (GST) has made a revolutionary impact on all sectors of the economy, impacting their overall financial performance. The study has focused on the role of GST on the financial performance of service sector entities namely, education, hospitality, and logistics, with special emphasis on profitability. Employing analysis of secondary data and in-depth interpretation, the study attempts to understand the role of GST deployment on company profits, examining both pre-GST and post-GST scenarios. By scrutinizing trends and patterns in profitability data and comparing performance before and after GST enactment, this study focuses on the sector-specific effects of the tax reform on profitability. The study adopts a quantitative approach to assess the role of the GST on the financial performance of service sector companies, with a specific focus on profitability. Data was checked for normality. Subsequently, Correlation & Paired t-tests were done using R-Studio. The analysis of the education, hospitality, and logistic sectors post-GST implementation reveals diverse impacts on mean profit changes. The study will help develop customized policies for each sector that promote sustainable development amidst changing tax legislation.

Research on Global Tax Governance under the Background of Digital Economy

<p style="text-align: justify;"><span lang="EN-US" style="font-size: 14pt; font-family: 'times new roman', times, serif;">Under the background of digital economy, global tax governance has become one of the important topics in today's world development and change. In recent years, new challenges, such as tax base erosion and profit transfer, and the imbalance of cross-border tax source division, have become prominent, forcing the reform of international tax rules and the reshaping of international tax order. Based on this, the article first deeply digs into the scale and cross-border characteristics of the spatial-temporal aggregation of the digital economy, and comprehensively evaluates its impact on the global tax governance pattern. After that, the article combs out the realistic picture and challenges of the current digital tax reform from the aspects of theoretical basis, basic principles and governance mechanism. Finally, based on China's basic national conditions, the article puts forward some institutional ideas and policy suggestions, with a view to improving China's participation, voice and influence in global tax governance, and also enabling governments, enterprises and residents of various countries to enjoy the fruits of world economic development fairly and promote the construction of Community of Shared Future for Mankind.</span></p>

VAT credit refunds and firm productivity: Evidence from China's VAT reform

This study exploits the implementation of the value-added tax (VAT) credit refund policy in China as an exogenous shock to examine the policy's impact on firm productivity. We find that pilot firms' total factor productivity increases significantly following the implementation of the tax reform due to higher operating cash flow, increased innovation incentives, and improved human capital investment in highly educated labor. Further tests show that the effect of the VAT credit refund policy is more pronounced among large firms, manufacturing firms, firms with strong financing constraints, and those located in regions with low levels of marketization and financial development. Our results provide novel evidence regarding the economic benefits of the VAT credit refund policy, and highlight its role in fostering firm productivity and economic growth.

Impact Study of Environmental Tax Reform Policy on Corporate ESG Performance

The concept of sustainable development is an important issue concerning the national economy and people's livelihood. With the prosperity and development of the economy and society, human beings are increasingly aware of the importance of the ecological environment. This article takes the listed companies on the Shanghai and Shenzhen stock exchanges from 2011 to 2021 as the research sample, using the double difference method to explore the impact of environmental protection tax reform on corporate ESG performance and its mechanism. The study found that the implementation of the “Environmental Protection Tax Law” has a restraining effect on corporate ESG performance. Mechanism analysis reveals that green technology innovation, social welfare expenditures, and the proportion of overseas background executives play an intermediary role in the impact of environmental protection tax reform on corporate ESG performance, with the indirect effect of green technology innovation being the largest. This article provides a new research perspective on the impact of environmental protection tax reform on corporate ESG performance and offers empirical insights for improving environmental tax policies and enhancing corporate ESG performance.

GST: A Journey Towards Excellence in Taxonomy

Goods and services tax is a uniform indirect tax levied on all goods and services produced in the country and all goods and services imported from abroad. GST is a single uniform indirect tax which will treat India as one market. In today’s scenario we pay various taxes i.e. Direct and Indirect taxes, which are felt as burden on us and due to these taxes the corruption is increasing. So, to overcome from all these taxation system the Central Government has decided to make one tax system i.e. Goods and Services Tax (GST). GST is one of the most critical tax reforms in India. It is a comprehensive tax system that will subsume all indirect taxes of State and central Governments and whole economy into seamless nation in national market. It is expected to remove the burden of existing indirect tax system and play an important role in growth of India. GST includes all Indirect Taxes which will help in growth of economy and proves to be more beneficial than the existing tax system. GST will also help to accelerate the overall Gross Domestic Product (GDP) of the country. GST is now accepted all over the world and countries are using it for sales tax system. This paper will help to show that, what will be the impact of GST after its implementation, difference between present Indirect Taxes and GST and what will be the benefits and challenges of GST after implementation

A Comprehensive Analysis of China’s Water Resources Tax Reform

In response to the growing disparity between the supply and demand of water resources, the Chinese government has piloted a more binding and reformed water resources tax to realize the sustainable utilization of water resources. However, reasonable tax standards and their water-saving effects and economic benefits are important and worthy of attention. Therefore, in this study, we combine the virtual water theory with the price input–output model to discuss the impact of water resources taxation on the economy and its water-saving effects. The results show the following: (1) A water resources tax has a significant water-saving effect, and is predicted to save 33.12 billion cubic meters of virtual water. (2) Consumers’ expected reductions in spending on food and tobacco manufacturing and agriculture are predicted to save more virtual water at a lower economic cost. (3) The collection of water resources taxes can actively and simultaneously guide water savings in terms of consumption and production. The water consumption of the construction industry is worthy of attention. The expected output value reduction accounts for 67.2% of the total output value reduction, and its water savings account for 96% of the total water savings. Other service sectors also have ample room to optimize the utilization of their water resources.

Losing ground: business power, standardized assets and the regulation of land acquisition taxes in Germany and Sweden

Abstract Previous literature on the nexus between land, finance and business power has not systematically analysed the role of the liquidity of businesses’ assets. Combining process tracing with a comparative design, this study contributes a perspective on the role of standardized assets for business power. It investigates land acquisition tax reforms asking why institutional landowners’ structural and instrumental power was successful in Sweden but not in Germany. In Germany, a reform was passed in 2021 which disadvantages the private market institutional landowners compared to their public counterparts. This study argues that the standardization of landed property as liquid stock enabled publicly listed property companies to unite with other stock market actors, increasing their power resources and allowing them to successfully promote their interests due to the liquidity demands of their assets. This stands in contrast to the poorer reception of the liquidity of private market actors in their land-related transactions.

Ripples of change: Assessing the impact of water resource tax reform pilot on the green growth of China's coastal cities

Coastal cities, despite being close to expansive oceans, are still susceptible to water constraints. The water resource tax reform pilot has been instrumental in promoting water conservation and effective utilization, so contributing significantly to the green growth of the coastal cities where it has been implemented. Utilizing data from prefecture-level cities in China's coastal areas from 2007 to 2019 and adopting the Green Total Factor Productivity as a measure of green growth, this study is dedicated to exploring the impact of water resources tax reform on the green growth of coastal cities. It treats the water resource tax reform pilot as a quasi-natural experiment and utilizes multi-period DID and PSM-DID methodologies to examine the effects of this reform on Green Total Factor Productivity. The findings indicate that the water resource tax reform pilot has made a significant contribution to green growth, primarily by reducing water consumption and enhancing governmental focus on marine environmental regulation. Expanding upon these findings, the article provides suggestions in several domains like the establishment of distinct tax rates, allocation of tax money, government oversight, and implementation of taxes on agricultural water resources. These findings can serve as a scientific benchmark for the development and execution of water resource tax policies in other areas.

CORPORATE TAXATION THROUGH THE INDIAN PRISM: CONSEQUENCES OF GST AND DTC

The Indian taxation landscape has witnessed significant reforms in recent years, with the introduction of the Goods and Services Tax (GST) and proposed changes in the form of the Direct Tax Code (DTC). This comprehensive analysis explores the dual facets of these reforms and their consequential impact on corporate taxation in India. The study encompasses a detailed examination of the implications of GST implementation and the potential effects of the impending Direct Tax Code on corporate entities. The Goods and Services Tax (GST) was introduced in India in July 2017, heralding a paradigm shift in the taxation system by replacing multiple indirect taxes. Simultaneously, the Direct Tax Code (DTC) has been proposed as a comprehensive reform of direct taxes, aiming to simplify and rationalize the existing tax structure. This analysis delves into the impact of these reforms on corporate taxation, considering the intricate interplay between indirect and direct taxes. The implementation of GST streamlined the indirect tax system, reducing cascading effects and enhancing overall tax efficiency. This, in turn, has had a direct impact on corporate taxation by simplifying compliance procedures and reducing the burden of multiple taxes on businesses. The analysis explores how these changes have contributed to increased tax compliance among corporate entities. GST introduced the concept of Input Tax Credit (ITC), allowing businesses to offset taxes paid on inputs against their final tax liability. This section assesses how the availability of ITC has influenced cost management for corporations, promoting a more transparent and efficient taxation system. The GST regime prompted corporations to reevaluate their supply chain structures to optimize taximplications. The analysis investigates how companies have adjusted their operations to align with the GST framework, leading to improved logistics, reduced lead times, and cost savings. The proposed Direct Tax Code envisions revisiting tax slabs and rates, potentially altering the corporate tax landscape. This section examines the anticipated impact of changes in tax rates on corporate entities, exploring the implications for businesses of varying sizes and sectors. The DTC proposes a reevaluation of existing tax incentives and deductions. The study analyzes the potential impact on corporate decision-making, investment patterns, and overall economic growth. It delves into the implications for sectors currently benefiting from specific incentives. The DTC aims to align international taxation principles with global standards, impacting the taxation of multinational corporations operating in India. The analysis assesses the potential challenges and opportunities for such entities, considering the implications for transfer pricing and cross-border transactions.

고령화 시대 일본 소비세 인상의 정치경제

This study examines Japanese citizens’ attitudes toward the consumption tax hike, focusing on satisfaction with democracy and political efficacy, outside of age. Especially, this study enhance the validity of the survey by utilizing data presumed the trade-offs between the consumption tax hike and the welfare transition for all generation. Using data from the “Democratic Fragmentation and the Role of the Electoral System” survey conducted in January and February 2018, this study empirically demonstrates that age, satisfaction with democracy, and political efficacy have a significant impact on citizens’ attitudes toward the consumption tax hike amid the tax and welfare reforms. First, this study empirically find that those in their 20s and 30s are more supportive of tax increases than those aged 65 and older. Next, this study show that satisfaction with democracy and political efficacy, which have been neglected by previous studies, are positively and statistically significantly related to tax increase attitudes. The significance of this study has several implications. While previous studies have focused on analyzing the axis of burden-benefit conflict centered on generation and income, we show that despite this conflict, satisfaction with democracy and political efficacy can serve as mechanisms to mitigate this conflict. It shows that governments need a wellfunctioning democratic governance system and a sense of trust and efficacy to mobilize citizen support for comprehensive reforms including taxation and welfare re-calibration.

Does the Water Resource Tax Reform Bring Positive Effects to Green Innovation and Productivity in High Water-Consuming Enterprises?

Water resources are a fundamental natural and strategic economic resource and are closely related to high-quality economic and societal development. This paper uses the pilot implementation of the water resource tax reform to explore the impact of that reform on the green innovation and total factor productivity of enterprises. The study sample includes data for high water-consuming A-share listed enterprises in Shenzhen and Shanghai, China, from 2007 to 2021; the double-difference method was used for the analysis. Study findings indicate that replacing water resource fees with taxes significantly improves the green innovation level and total factor productivity of enterprises. Green innovation has a significant partial mediating effect between the water resource tax reform and total factor productivity. The water resource tax reform promotes green innovation in enterprises, enhancing total factor productivity. When considering different types of enterprise property rights, the economic effect of the water resource tax reform is more pronounced in non-state-owned enterprises, compared to state-owned enterprises. This paper provides empirical evidence for expanding the pilot scope of the water resource tax reform.

Cultura tributaria en Colombia: una herramienta contra la evasión y la elusión

Introduction: The collection of taxes is essential for the economy of any country, including Colombia, enabling the State to fulfill its social and cultural responsibilities. However, the question arises whether there is a contributory culture in Colombia that avoids practicessuch as tax evasion and avoidance. Colombia's Tax Administration, through DIAN, has implemented programs like "Culture of Contribution in School" and "For a More Honest Colombia" to promote a tax culture and avoid coercion through severe sanctions. Objective: The purpose of this article was related to know according to the literature the cultural aspects that surround the tax culture in Colombia and how they are used as tools against tax evasion. Methodology: The paper is based on a quantitative methodologicalapproach, seeking to identify literature published in academic and scientific journals. This article theoretically examines tax culture, tax evasion and avoidance, and the sanctioning regime in Colombia, assessing how these factors influence the rates of tax evasion and avoidance and the country's sanctioning stance. Results: Aspects such as citizens' reluctance to pay taxes, the uncertainty generated by constant tax reforms, and the need to promote tax compliance for the country's development are discussed. Conclusion: Itconcludes that citizen contribution will increase if there is observed good management of state resources, equitable tax reforms, and effective educational work on the importance of contributing, thus increasing the tax culture in Colombia.

Environmental protection tax collection, financing constraints, and corporate green technology innovation

The article empirically examines the relationship between environmental protection tax levy and enterprises’ green technology innovation and the moderating effect of financing constraints between the two with a sample of heavy polluters listed in A-share companies in Shanghai and Shenzhen from 2015 to 2021. It is found that the levy of environmental protection tax significantly promotes the green technology innovation investment of heavily polluting enterprises. It is further found that enterprise financing constraints have a negative moderating effect in the process of environmental protection tax stimulating enterprise innovation input. The article proposes to continue to strengthen the reform of environmental protection tax to form a collection model with both incentives and constraints and at the same time, to improve the financing efficiency of enterprises through green digital finance to alleviate the impact of financing constraints on enterprise technological innovation.

Taxation Aspects of Corporate Taxpayers

This research delves into the intricate taxation aspects surrounding corporate taxpayers. It examines the various dimensions of corporate taxation, including the principles governing corporate tax liabilities, tax planning strategies, and compliance obligations. The study navigates through the complexities of corporate tax regimes, analyzing the implications of tax laws, regulations, and reforms on businesses. Furthermore, it explores the evolving landscape of international taxation and its impact on multinational corporations. The paper also discusses contemporary issues such as tax avoidance, transfer pricing, and tax incentives, shedding light on their implications for corporate taxpayers and tax authorities. Through a comprehensive review of literature and case studies, this research provides valuable insights into the challenges and opportunities associated with corporate taxation, offering recommendations for policymakers, tax practitioners, and corporate entities to navigate the ever-changing tax environment effectively.

The political business cycle of tax reforms

A political business cycle (PBC), with governments adjusting and timing economic policy for electoral gains, has long been hypothesized. A lack of data has so far limited testing of this phenomenon for government policies as opposed to fiscal outcomes such as tax revenue or government deficit, especially at the national level. We use new monthly data on tax reform announcements for a set of 22 democracies, 1988–2014, to test the PBC hypothesis for taxation. In addition to the traditional electoral strategy formulation of the PBC, we also put forward and test a capacity version of the PBC. We find evidence for the capacity version but not the traditional version of the PBC: tax reforms are less likely to be announced before elections and more likely after elections, independently of whether they are increases or decreases. Our evidence suggests that while a PBC exists, it may be less driven by strategic electioneering and more innocuous than previously assumed.

Unveiling the “Five Catalysts” for the Success of the Core Tax Project

The objective of this investigation is to evaluate the determinants impacting the efficacy of the Volume III tax reform, specifically the implementation of the Core Tax Administration System, among employees as primary users of these system enhancements. Employing a qualitative case study methodology, this research scrutinizes the experiences of staff at the Small Tax Office of Muara Bungo. Utilizing both primary data, derived from questionnaires and interviews, and secondary data, sourced from an extensive literature review, this study employs thematic analysis to dissect the data. The findings identify five critical factors influencing the successful implementation of the Core Tax Administration System Update. These insights aim to inform the Directorate General of Taxes about critical considerations necessary for augmenting preparedness and optimizing the execution of tax reform initiatives.

Comparative Welfare Analysis of German Public Policies

This paper implements the comparative welfare analysis method Marginal Value of Public Funds (MVPF) developed by Hendren and Sprung-Keyser (2020) for historical public policies in Germany between 1990–2018 across the domains of taxation, job training, social insurance, and infrastructure. It contributes to the public finance literature by constructing among the first MVPF collections of public policies outside the United States, identifying key similarities and differences between MVPF results of the two nations, expanding the MVPF framework into the field of public infrastructure, and shedding light on the approach’s particular weaknesses. German tax reforms generated positive and significant MVPFs; retirement and unemployment insurance policies yielded relatively small MVPFs, and child treatment scored the largest MVPF among health insurance programs. Keywords: public policy, policy evaluation, welfare analysis JEL : H21, H41, H50, I38

The Impact of Water Resource Tax Reform on Green Technology Innovation: Evidence from Chinese A-Share Listed Enterprises

The Impact of Water Resource Tax Reform on Green Technology Innovation: Evidence from Chinese A-Share Listed Enterprises

Perfection of the tax system and its impact on macroeconomic policy in Georgia

In determining the macroeconomic policy of the state, in order to fulfill its goals and objectives, taxes and perfecting the tax system play a key role and represent one of the main instruments of the economic and financial policy of the state and can be considered as the leader of the country's macroeconomic policy. The aim of the paper is to discuss and analyze the role of the tax system and its subsequent reformation in the macroeconomic policy of the country, and in particular in the part of the fiscal policy, because through the tax and fiscal policy, the government of the country makes decisions in which direction it wants to develop the country's development strategy and define the macroeconomic policy. In terms of the sustainable development of Georgia and the implementation of the country's macroeconomic policy, the concept of economic development and the implementation of correct tax reforms in this regard, in the direction of perfecting the tax system, are important in the short and long term. Based on this, issues related to reforming and perfecting the tax system are one of the most important challenges of the country's economic policy and macroeconomic policy.