Tax Authorities Research Articles

Sustaining Prosperity: Exploring Fiscal and Financial Sustainability in the Context of Dynamic Fiscal Policy

Purpose: This study explores how fiscal policy and financial sustainability support sustainable economic prosperity amid global instability. It examines the impact of government taxation and spending decisions on economic outcomes, aggregate demand, employment, inflation, social welfare, infrastructure development, and income inequality. Financial sustainability is analyzed through prudent fiscal management and debt sustainability, focusing on long-term government finance viability and mitigating fiscal risks. Research Design and Methodology: The study employs a qualitative methodology, incorporating a comprehensive literature review of theoretical works, empirical studies, and policy analyses. Data is collected through systematic reviews of scholarly articles, books, policy reports, and official publications. Thematic analysis techniques, including coding and categorization, synthesize findings, with reflexivity to consider assumptions and biases. Findings and Discussion: The research underscores the importance of flexibility and adaptability in fiscal policy, highlighting automatic stabilizers and countercyclical policies for economic stabilization and sustainable growth. Prudent debt management, including debt restructuring and fiscal consolidation, is vital for mitigating fiscal risks and ensuring debt sustainability. The findings emphasize integrating fiscal sustainability with broader economic and social goals and the need for institutional reforms and international cooperation to enhance fiscal governance. Implications: The study provides insights for policymakers on the importance of fiscal prudence and sustainability. It advocates for a balanced approach that addresses short-term stabilization and long-term goals and calls for institutional reforms to improve fiscal discipline, transparency, and accountability. By integrating interdisciplinary perspectives, policymakers can develop resilient and sustainable fiscal policies that promote long-term prosperity and social equity.

FISCAL POLICY ON ECOLOGICAL FOOTPRINT IN NIGERIA: AN EMPIRICAL INVESTIGATION

In recent times, the challenges of government policy formulation to achieve desired objectives and maintaining a sustainable environment without inhibiting human well-being is still an issue of debate among scholars in the literature. Many factors have been identified as culpable of environmental humiliation, but the government policy as a factor is more often than not ignored. However, the government formulates policies most especially fiscal policy that involve the collection of revenue through taxation and expenditure on infrastructural facilities, industrialization, mechanization, urbanization, etc to achieve sustained economic growth without recur to the effect of the policy on ecological footprint and its effects on human well-being in the society. Thus, this study uses the ARDL econometric approach on annual time series data extending from 1981 to 2022 to investigate the effect of fiscal policy on the ecological footprint in Nigeria. The variables used in the study include ecological footprint proxied by comprehensive measures of environmental degradation (dependent variable), government tax revenue and expenditure (independent variable), population, and technological changes proxied by industrial activities are the control variables. The study's findings indicate that fiscal policy variables are both positively and negatively related to ecological footprint and are statically significant. Specifically, government tax revenue reduces ecological footprint while government expenditure escalates the environmental degradation in Nigeria during the period under review and they are all significant statistically at 1% and 5% respectively. Considering these results, the research concludes that fiscal policy formulation has a noteworthy effect in determining changes in the ecological footprint in Nigeria. Given the effect of tax and government spending policy on infrastructure and industrialization, the government should formulate policies that are environmentally friendly and increase budgetary allocation to control and manage environmental challenges that inhabit the well-being of the citizens. By implication, the economic growth policy which invariably leads to ecological footprint challenges should be properly looked at to reduce ecological footprint in Nigeria.

Competitive wages and tax evasion in a Cournot duopoly

In a Cournot duopoly with indirect tax evasion, this paper counter-intuitively shows that, in the presence of positive competitive wages, a higher indirect taxation may increase expected profits. This result is likely to occur if the market size (or alternatively, if the cost pressure exerted by wages) is adequately large and the detection probability is not too high, and it is equivalent irrespective of firms optimally choosing either the tax base to disclose to the tax authority or the amount of evasion tout-court.

Organization and Implementation of Public Tax Control in Russia: Modern Problems and Ways to Solve Them

Annotation. This scientific research addresses the issues of the functioning and development of public tax control, which is the most important component in the system of guarantees of both the system of constitutional principles (especially democracy and the participation of Russian citizens in the functioning of the public administration system), and the system of rights, freedoms, legitimate interests of individuals and legal entities in Russia. The necessity of incorporating the institution of public tax control into the Russian legal system is substantiated. The article examines various approaches to defining the concept of public tax control and substantiates its author's definition. The work analyzes modern problems that hinder the development of public tax control in Russia, including: the lack of enshrinement of this institution of civil society in the Constitution; not developing specific forms, methods and types of public tax control measures in the Russian scientific legal doctrine; the lack of real powers among subjects of public control to exercise effective public tax control; lack of specialized subjects of public control in this area; poor use of modern information and communication technologies by these entities in their activities; insufficient funding for their activities from state and municipal budgets; weak use of foreign positive experience in organizing and functioning of control of civil society in this area; the absence of specific measures of responsibility for counteracting the legitimate activities of representatives of subjects of public control in criminal and administrative legislation. The article develops and substantiates a system of measures to resolve these problems by: incorporating public tax control into the Constitution of Russia; its details in Russian legislation; expanding the powers of subjects of public control; creation of special entities in the field of public tax control, independent of tax authorities; using in their activities positive foreign experience in exercising public control in the field of tax legal relations; developing a system of federal programs to develop the organizational, technical and financial base of subjects of public control, increasing their use of modern digital technologies; tightening measures of criminal and administrative liability for opposing the legitimate activities of subjects of public tax control.

Public Preferences Over Changes to the Composition of Government Tax Revenue

Abstract How governments raise tax revenue is at the core of domestic political conflict. Public opinion towards taxation is measured generally and qualitatively by many surveys, but previous research has not closely linked public preferences to the budget problem faced by governments regarding how best to raise or cut a marginal quantity of revenue. We present results from a novel tax preference experiment in which UK respondents are given choices over different tax ‘levers’ that are expected to raise or cut equal revenue. We find that while different tax levers vary substantially in their popularity, there is a ‘hidden consensus’ regarding different tax levers across income levels and partisanship of the respondents.

Conceptualizing the MNEs Transfer Pricing Behavior: Indonesian Tax Authority Perspective

Indonesian tax authorities currently encounter a lack of cooperative compliance among companies engaged in transfer pricing practices with their affiliated entities across borders. Transfer pricing is commonly associated with tax purposes, such as tax planning or avoidance, which is considered standard practice for business entities. Hence, there is a significant necessity to assess and evaluate the prevalence of tax planning or avoidance through transfer pricing in multinational enterprises operating in Indonesia. To gauge the extent of transfer pricing used for tax avoidance purposes, this study examines the perspective of tax authorities on companies' transfer pricing optimization behavior. Employing a qualitative approach, the study aims to comprehend the utilization of transfer pricing and its implications. The findings provide insights into transfer pricing behavior within companies over time. According to tax authorities, companies are motivated by the benefits of transfer pricing, including revenue optimization, corporate profit allocation, and cost optimization. However, these practices are influenced by various factors that facilitate or constrain transfer pricing activities. Multinational enterprises demonstrate limited awareness of normative beliefs regarding international and domestic transfer pricing regulations. Notably, companies affiliated with large multinational enterprises, possessing a strong understanding of transfer pricing, exhibit a high potential for tax planning or avoidance through transfer pricing arrangements with related parties. These findings contribute to the existing body of research on transfer pricing practices from the perspective of tax authorities as part of the Indonesian government.

Forest Protection Tax Policy in the Context of Portuguese Societies

This article aims to study the fiscal incentives for forest protection in Portugal. Understanding the reality of this fiscal policy is fundamental in the context of sustainable forest management. After reviewing the literature focused on the importance of the forest as an essential asset to meet human needs, the Portuguese tax regime in this area is analysed. This is followed by a study of tax incentives for Forest Intervention Areas (FIA) and Forest Management Plans (FMP) in the Portuguese business context in the period 2015-2020. The main results of the research show that companies connected to the sector have become more aware of the importance of adopting more sustainable practices, by adhering to these tax benefits over time, showing the role of environmental tax policy in the sustainable growth of the economic tissue. The results show that the number of beneficiary companies is reduced compared to the total number of companies operating in the forestry sector in Portugal, also verifying that most of these companies are concentrated in a small number of municipalities, some of which have no ZIF. Ther is still important work to be done with a view to greater dissemination of the tax benefits under study.

A Decade of VAT Reforms in Honduras: A Legislative Fixation on Exemptions

In this article, the author examines the evolution of a decade (2013-2023) of VAT reforms in Honduras, focusing on legislative tendencies towards increasing VAT exemptions. This trend is analysed in contrast to the country’s considerable tax expenditures, suggesting a lack of strategic coherence in VAT reform efforts. He also identifies gaps in the VAT system, including the absence of comprehensive regulations for the digital economy, the need for an electronic invoicing framework and inadequate definitions regarding the taxation of services and intangible goods, as well as the issue of tax compliance among businesses in the informal economy, proposing a re-evaluation of the simplified tax regime.

Formal vs. Informal Voluntary Disclosure Policies

Abstract Tax administrations have long grappled with the question of how noncompliant taxpayers should be allowed to correct their tax affairs voluntarily. While many jurisdictions have adopted various voluntary disclosure programs, several countries—including some of the world’s largest economies—have not done so. This Article examines the voluntary disclosure practices in twenty-five countries that do not have voluntary disclosure programs. It finds that the tax authorities in these jurisdictions frequently follow informal voluntary disclosure practices that operate as de facto substitutes for formal policies. In some countries, informal voluntary disclosure practices coexist alongside formal schemes. In light of these findings, this Article explores the tax policy considerations concerning the choice between formal and informal voluntary disclosure policies, and shows that formal schemes have several advantages over informal practices.

Analysis of Administrative Penalty for Late Issuing Tax Invoices in Indonesia: A Comparative Study from Vietnam

This study analyzes and compares the administrative penalty for late issuing tax invoices between Indonesia and Vietnam. The existence of a penalty has not been a driving factor for taxpayers to fulfill their tax obligations. Article 14 paragraph (4) General Provisions and Tax Procedures Law regulates the tax penalty for late issuing tax invoices, the same as for those who do not issue invoices. The administrative penalty needs to be analyzed more and compared with other countries' practices. VAT penalty cannot necessarily increase the compliance of taxable entrepreneurs. This research uses primary and secondary data sources for the qualitative method. The results of this study indicate that tax penalties should be designed by looking at the level of taxpayer error. Vietnam has no administrative penalty for the late issue of tax invoices but differentiates more penalties for tax invoices according to the level of violation. Tax penalties in Indonesia should be designed by considering the level of taxpayer violation, as Vietnam regulates. Administrative penalties for late tax invoices should not be the same as those imposed on taxpayers who did not issue tax invoices. The study recommends that tax authorities re-design the administrative penalties policy regarding tax invoice violations.

Determinants of financial statement fraud: the perspective of pentagon fraud theory (evidence on Islamic banking companies in Indonesia)

Purpose The purpose of this study was to determine the determinants of financial statement fraud: the perspective of pentagon fraud theory. Design/methodology/approach This study used quantitative methods with an explanatory research design by applying secondary data on Islamic banking companies listed on the Indonesia Stock Exchange (IDX). Findings External pressure affects financial statement fraud, ineffective monitoring affects financial statement fraud, external auditor quality affects financial statement fraud, change in auditor affects financial statement fraud, frequent number of CEO’s picture affects financial statement fraud, external pressure affects firm size, ineffective monitoring affects firm size, external auditor quality affects firm size, change in auditor affects firm size, frequent number of CEO’s picture affects firm size, firm size affects financial statement fraud, firm size mediates the relationship between external pressure on financial statement fraud, firm size mediates the relationship between ineffective monitoring on financial statement fraud, firm size mediates the relationship between external auditor quality and financial statement fraud, firm size mediates the relationship between change in auditor and financial statement fraud, firm size mediates the relationship between frequent number of CEO’s picture and financial statement fraud. Research limitations/implications The limitations of this research were found during the research process and can be used as input for further research and related parties in conducting the research to obtain better research results. The limitations of this study are as follows: this study only focused on Islamic banking, so it cannot be generalized to other sectors. Besides, this study only tested five independent variables, one dependent variable and one mediating variable. Practical implications For external auditors, financial statement fraud by management might be caused by many factors and is a social as well as an economic problem that must be addressed immediately. Therefore, in carrying out the duties and roles as an external auditor, they must have an attitude of independence (not taking sides) in the mental attitude that must be maintained by the auditor related to the assignment. Auditors must have sufficient technical expertise and training as auditors. In carrying out the audit, the auditor should use their professional skills in responding carefully and thoroughly. Moreover, in carrying out audit work, the auditor must have a plan, must know adequate internal control and obtain sufficiently competent audit evidence. Originality/value To the best of the authors’ knowledge, very few studies in Indonesia have applied the Beneish model. There is only one study that implemented the Beneish model, and the study examined only a few companies listed on the IDX. The findings of the present study have important implications not only for banks but also for users of financial statement accounts in Indonesia, especially for investors, auditors, regulators, taxation and other state authorities.

Development of proactive mode of providing tax deductions for personal income tax

The paper studies discussion issues of the simplified procedure for obtaining tax deductions for personal income tax (hereinafter referred to as PIT). The objectives of the study are the following: to review the changes in tax legislation from January 1, 2024 in the field of proactive mode of granting tax deductions for PIT, to justify the increasing role of this interaction between individuals and tax authorities, to identify current problems and to search for ways of solving them. The authors analysed the practice of application of the simplified procedure for obtaining property and investment tax deductions; statistical data of the Federal Tax Service of Russia on the provision of tax deductions in a simplified manner (1-DDK statistical form “On the declaration of personal income”). The analysis of key changes in the provision of deductions entering into force on January 1, 20124 was also conducted. The main problems that individuals may have when receiving deductions or that tax authorities may face in the course of tax control are highlighted, and possible ways to solve them are identified. The authors concluded, firstly, that it is necessary to form prefilled applications not only while receiving tax deductions, but also when paying PIT, for example, when a person sells real estate, cars. Secondly, it is required to enshrine in tax legislation the order of priority of providing tax deductions if a taxpayer has the right for several types of them. The obtained results can be used in developing solutions to taxation of personal income and provision of tax deductions, in legislative drafting on improvement of provisions of the state tax policy.

IMPACT OF GST ON INDIAN BUSINESSES

The Goods and Services Tax (GST) regime in India, implemented in July 2017, represents a transformative overhaul of the country's indirect tax system. This research paper extensively analyzes the multifaceted impact of GST on Indian businesses across various sectors. By harmonizing numerous central and state levies into a unified tax structure, GST aims to simplify compliance, boost economic growth, and cultivate a common national market. The study delves into the intricate aspects of GST, encompassing its objectives, statutory framework, and implementation challenges. It evaluates the profound implications for diverse business entities, ranging from large corporations to micro, small, and medium enterprises (MSMEs). Key areas of focus include supply chain optimization, pricing strategies, working capital management, and transitional complexities. Furthermore, the paper scrutinizes sector-specific ramifications, shedding light on industries experiencing seismic shifts due to GST, such as manufacturing, services, e-commerce, and real estate. It also examines the role of technology in facilitating GST compliance and the digital transformation catalyzed by this tax reform. Through empirical analysis and case studies, the research paper assesses the extent to which GST has achieved its intended objectives, identifying areas of success and ongoing challenges. It provides valuable insights for policymakers, industry stakeholders, and academics, contributing to the discourse on optimizing the GST framework for enhanced economic competitiveness and ease of doing business in India. Keywords: GST, Indian Businesses, Tax Reform, Supply Chain, Compliance, Digital Transformation, Sectoral Impact, Economic Growth, Policy Implications.

Executive Compensation, Executive Character, Tax Avoidance: Does Independent Commissioner Matter?

This study looks at the impact of executive compensation and character on tax avoidance. This study also looks at the moderating influence of the proportion of independent commissioners in this connection. This study uses secondary data from financial statements from consumer products businesses listed on the Indonesia Stock Exchange between 2017 and 2021, retrieved from www.idx.co.id. The overall sample size for this study was 85 observations, as determined via purposive sampling. Multiple linear regression was used to evaluate panel data. This research concludes that executive compensation is positively related to tax avoidance, while executive character does not affect tax avoidance. Furthermore, the proportion of independent commissioners succeeded in reducing the positive influence of executive compensation on tax avoidance, while the role of independent commissioners did not have a role in reducing the positive influence of executive character on tax avoidance. This research is expected to be a means for the Indonesian Tax Authority to create policies for profiling company compensation characteristics for executives as an initial indicator of tax avoidance activities carried out by companies.

THE GIG ECONOMY: CHALLENGES FOR TAX SYSTEM

Tax system in this modern day is inherently complex and dynamic in nature coupled with the fact that it is being influenced by a variety of factor. The main objective of this study is to evaluate tax compliance in the gig economy: the need for transparency and accountability. Using the Saunders’ Research Onion layers, the study employed the use of quantitative data and qualitative data. Structured questionnaire and interview were used as data instrument. Data collated werecoded and then subjected to analysis.Theresultof the findingsshows that 66.6 % of the respondentsstronglyagreedto tax compliance. The findings of the study also shows that 33.3% strongly agreed, agreed, disagreed and strongly disagreed that tax system does not take gig economy inti consideration while designing it. Theresultalsoshows that challengesbeing faced by gig workers in reluctanceto tax paymentincludepoor communication from tax authority, platform not doing enough and social norms. Conclusively, tax systems did not put gig economy into consideration when been designed.

On Promoting the Quality Improvement of Tax Services by "Managing Taxation with Numbers" by Grassroots Tax Authorities under the Background of "Smart Taxation"

Chinese path to modernization is a modernization that conforms to the development of the information age and the digital process. Digital technology is fully integrated into all fields and the whole process of economic society and ecological civilization construction, which has brought extensive and profound impact on human production and life. This article conducts an actual visit to grassroots tax authorities in Bengbu City, and based on a questionnaire survey, adopts a literature research approach and statistical analysis method to explore the implementation effect of this problem. It objectively sorts out and balances the impact of "digital tax governance" on improving the quality of tax services provided by current tax authorities, attempts to identify and identify some unreasonable links and problems in the current tax service process under the background of smart taxation, and analyzes the causes and mechanisms of these problems. Finally, based on the combination of theory and practice, it summarizes and explores targeted improvement strategies that can be used for further improving the quality of digital tax services.

The impact of fiscal shocks on economic growth and income inequality in Ghana: is there a trade-off?

PurposeThe study examines the impact of fiscal policy shocks on economic growth and income inequality in Ghana. This has become necessary because of the interdependence between growth and income inequality and the role fiscal policy plays in this relationship in the development process of a country. Thus, a study that investigates how government expenditure shock and tax revenue shock influence the relationship between economic growth and income inequality could assist policymakers to adopt the best policy mix to ensure income equity and sustained economic growth in Ghana.Design/methodology/approachIt employs sacrifice ratio from structural VAR model using quarterly time series data from 1996 to 2019 on Ghana.FindingsOur results show that government expenditure shock impacts economic growth, exchange rate and education positively and significantly in the long run. Also, tax revenue shock has a positive impact on income inequality, economic growth and education. The findings further show that there exists a trade-off between economic growth and income inequality in the long run.Originality/valueThe relationships between fiscal policy shocks, economic growth and income inequality have been extensively discussed among scholars. Understanding how these three macroeconomic variables are determined and their interrelationships are crucial for policymakers. This is because fiscal policy aids in both economic growth and income inequality. In the empirical literature, the emphasis has been on independently estimating the growth effects of fiscal policy or the distribution effects of fiscal policy, leaving out the existence of possible trade-off between economic growth and income inequality following a fiscal shock. To the best of our knowledge, no empirical study has been done on Ghana to empirically examine the trade-off between economic growth and income inequality as we do in this paper.

Recent Case Law on the Application of the Profit Split Method

Is it possible for MNEs to achieve tax certainty when using the profit split method? Recent case law demonstrates a growing controversy surrounding the profit split method application, with tax authorities becoming more proficient at challenging its use.

Exploring explainable AI in the tax domain

AbstractThis paper analyses whether current explainable AI (XAI) techniques can help to address taxpayer concerns about the use of AI in taxation. As tax authorities around the world increase their use of AI-based techniques, taxpayers are increasingly at a loss about whether and how the ensuing decisions follow the procedures required by law and respect their substantive rights. The use of XAI has been proposed as a response to this issue, but it is still an open question whether current XAI techniques are enough to meet existing legal requirements. The paper approaches this question in the context of a case study: a prototype tax fraud detector trained on an anonymized dataset of real-world cases handled by the Buenos Aires (Argentina) tax authority. The decisions produced by this detector are explained through the use of various classification methods, and the outputs of these explanation models are evaluated on their explanatory power and on their compliance with the legal obligation that tax authorities provide the rationale behind their decision-making. We conclude the paper by suggesting technical and legal approaches for designing explanation mechanisms that meet the needs of legal explanation in the tax domain.

Tax legislation and its impact on the development of the formal operations of aquaculture companies

Peru is a country open to the world economy and to national and foreign investments; therefore, economic activities of an industrial, commercial and service nature in general are developed. It also has a wide variety of natural resources, which is why the state has chosen to apply differentiated treatment in the tax field to certain types of business activities by granting certain “benefits” and “incentives”. However, due to a lack of knowledge about tax legislation, they are not used adequately. In this context, the objective was to analyze the level of knowledge of the legislation, tax and its impact on the development of their operations in formal business aquaculture in the ring circumlacustrine of the region in 2021. It was developed under a descriptive correlational design with a sample of 80 circumlacustrine ring aquaculture companies. The results indicated that there is a low level of knowledge about tax legislation on the part of the owners of aquaculture companies, which negatively affects the development of their formal operations in the circumlacustrine ring of the Puno region. As a consequence, it has a negative impact on the formalization of companies since they do not know about the benefits and tax incentives and even less about the tax regimes to which they are subject as taxpayers; therefore, aquaculture companies are in the informality category in a high percentage.