Tax Framework Research Articles

TAXATION SYSTEM IN KINGDOM OF SAUDI ARABIA WITH SPECIAL REFERENCE TO VALUE ADDED TAX: AN EMPIRICAL ANALYSIS

Theoretical framework: The Kingdom of Saudi Arabia (KSA) has acknowledged the limitations of relying exclusively on oil reserves as the predominant revenue stream, as this approach hinders the country's ability to attain sustained economic expansion owing to the unpredictable nature and fluctuations of global oil market prices. Objective: The acceptability of the taxation system on consumer products and services in Saudi Arabia has increased as a result of the simplicity of the Value Added Tax (VAT) system. Despite the limited number of studies conducted on Value Added Tax (VAT) inside the Gulf Cooperation Council (GCC), this particular study represents one of the pioneering efforts to identify and analyze its impact, taking into account the recent law revisions. Consequently, this study possesses contemporaneity and pertinence in terms of offering novel perspectives to governing bodies regarding the value-added tax (VAT) framework, its reception, and the ramifications of income, declining purchasing power, governmental strategic decision-making, and the execution of diverse tax structure modifications. Method: A total of 519 replies were obtained through the implementation of a judgment or purposive sample methodology. To accomplish Convergent and Discriminant Validity, evaluate model fitness, and carry out Structure Equation Modelling (SEM), Smart PLS 3 is used. The researcher used SPSS (specifically version 25) to implement appropriate statistical procedures and processes in service of the study's principal aims. Implication: Moreover, the results indicate that the implementation of Value Added Tax (VAT) has an impact on individuals' income, leading to a decrease in their purchasing power. Additionally, it influences the government's approach to VAT and tax reforms in relation to the Saudi population. Result and Conclusion: The adoption of VAT in Saudi Arabia is significantly influenced by income as a mediating factor. The function of purchasing power in mediating the implementation of Value Added Tax (VAT) in Saudi Arabia is of considerable importance. Originality: The burden of value-added tax (VAT) is frequently transferred to the end consumer through price increases implemented by producers and distributors. The implementation of the Value Added Tax (VAT) system allows the government to generate income through a less visible means.

Low carbon economic dispatch for virtual power plant considering energy storage

ABSTRACT Virtual power plant (VPP) amalgamates diverse distributed resources, thereby unlocking the full potential of distributed energy’s dispatch capabilities. Energy storage is an effective means to address the uncertainty of renewable energy and achieve energy complementarity. This study meticulously evaluates the finite nature of traditional energy within VPP, the unpredictability associated with renewable energy outputs, and the constraints faced by energy storage devices. It introduces strategic operational frameworks for VPP through cooperation between VPP operator and energy storage provider managing new type of electric energy storage systems. With the dual objectives of amplifying the economic gains for VPP operator and maximizing benefits for energy storage provider, this research formulates a VPP economic low-carbon dispatch model, guided by a carbon tax framework. The improved particle swarm optimization algorithm is used to solve the proposed dispatch model. The numerical results confirmed that the collaboration between the VPP operator and the energy storage provider mitigates the issues caused by the variability of renewable energy outputs on the VPP, resulting in a mutually beneficial scenario for both the operator and the storage provider. Additionally, carbon emissions have been drastically decreased in response to low carbon targets.

Nexus of Tax Law and Non-Profit Organizations: Incentives and challenges in compliance with tax laws by Public Benefit Organizations in South Africa: a scoping review

This study examines the tax incentives and challenges faced by Non-Profit Organisations (NPOs) in South Africa, with a focus on those registered as Public Benefit Organisations (PBOs). NPOs play a vital role in addressing socio-economic issues, and serving vulnerable communities. While these organizations operate for non-profit purposes, the tax incentives provided by the government are crucial for their financial sustainability. Therefore, establishing a supportive tax framework is essential to promote their growth and operational capacity. A scoping review methodology was employed, analyzing literature on tax incentives and compliance challenges faced by South African NPOs from 2010 to 2023. Key provisions include income tax exemptions under Section 10(1)(cN), capital gains tax exclusions, and Section 18A tax-deductible donations. The study also explored the legal framework governing tax-exempt status and trading activities. Findings show that while tax incentives provide significant benefits, NPOs face challenges in maintaining compliance, such as complex regulations, limited financial resources, and a lack of expertise. Many struggle with differentiating between exempt and taxable activities. Strategies to address these issues include simplifying tax processes, enhancing financial management education, and improving communication between SARS and NPOs. Introducing user-friendly tax reporting systems and tailored support could further boost compliance and ensure NPOs maximize available benefits. These insights are valuable for policymakers and tax authorities seeking to strengthen the regulatory framework and support the growth of NPOs in South Africa.

Tax incentives for renovation of fixed assets in the context of ensuring economic security

Subject. The article considers tax instruments for calculating depreciation within the framework of corporate income tax. Objectives. The purpose is to assess demand for existing tax incentives for the renovation of fixed assets, based on the analysis of depreciation data. Methods. The study rests on general scientific research methods. Results. The threat of a lack of investment in the real sector of the economy leads to an increase in the depreciation of fixed assets. In 2005–2023, depreciation indicators deviated significantly from the permissible threshold values. Depreciation is growing at a moderate pace, but its share in private investment is declining. In the current procedure for calculating depreciation for corporate income tax assessment, there is no direct connection between instruments and the level of depreciation of fixed assets. Conclusions. The demand for tax instruments for accelerated depreciation within the framework of corporate income tax is decreasing. This is manifested in the decreased number of taxpayers using them, and specific indicators for a number of reasons.

Reconfiguring the Kazakhstan Pension System: How Can Canadian and OECD Experience Be Helpful?

This study examines the current state of Kazakhstan’s public pension system, comparing its performance and asset structure to OECD countries. It highlights structural and regulatory issues within the national pension market that hinder adequate retirement savings for the population. A key concern is the low real rate of return by the national pension fund, potentially jeopardizing its ability to meet future retirement needs amidst rising inflation. The study analyzes the Canadian pension system as a model, showcasing a three-layer structure that fosters diverse sources of pension benefits, ensuring sustainable income for retirees. It recommends considering group (employer-based) and private (individual) registered pension programs, common in developed countries, to generate additional pension income. Supportive legal and tax frameworks are crucial to encourage participation in these programs. Drawing on Canadian and OECD experiences, the study offers suggestions for reconfiguring Kazakhstan’s pension system to enhance its performance and sustainability, ultimately leading to higher pension payouts for future retirees.

Article: Income Tax Considerations Pertaining to Decentralized Autonomous Organizations (DAOs)

Over the last couple of years, an increasing number of organizations have arisen that are native to blockchain technology. Recent data shows that these decentralized autonomous organizations (DAOs) that are essentially ‘living on the blockchain’ are becoming increasingly popular. They are attracting substantial amounts of funds, operating both in the Web3 space and off-chain, and creating a significant source of novel tax issues. The existing tax academic research on DAOs is often limited to US domestic tax issues following from the DAO’s legal treatment. This article outlines (part of) the existing income tax landscape for the DAOs and some of the arising income tax challenges. The focus is on the general principles of domestic and international income tax systems. The authors argue that the DAOs create fundamental and practical tax issues potentially leading to income taxed ‘nowhere’. Existing tax frameworks cannot fully embed the DAOs and allow them to maintain their distinguishing features. The incorporation of DAOs does not necessarily solve the tax issues and even exacerbates them in certain cases. The authors call upon domestic and international legislators and policymakers to aim for more tax certainty for shareholders and further tax research of the DAOs.

Tax incentives for investments within the framework of the Corporate Income Tax: Effects and prospects of reform

Subject. The article addresses the tax expenditure of the State in the framework of the corporate income tax, aimed at encouragement of investments. Objectives. The purpose of the study is to assess the impact of stimulating tax expenses for corporate income tax on the volume and structure of investments in fixed capital within the framework of the current legislation and in the context of the ongoing tax reform in the Russian Federation. Methods. The study employed general scientific research methods, methods of economic analysis, correlation and regression analysis. Results. The paper analyzes State tax expenditures for 2016–2023 and the forecast period for 2024–2026 under the current legislation. It assesses the planned changes in the corporate income tax as part of the ongoing tax reform, presents a regression model to reflect the impact of stimulating tax expenditures of the State on corporate income tax for investments in fixed assets. Conclusions. Higher corporate income tax rates (up to 25%) may reduce investment activity of businesses that do not have access to investment tax benefits. There will be increased interest in applying reduced tax rates in both legal and illegal ways. Therefore, the federal investment tax deduction should be provided to a wide category of taxpayers, and the availability of borrowed funds for the implementation of priority investment projects should be ensured.

Recuperation mechanism of direct taxation to control post covid economic contraction: India’s new tax reform with crypto tax

This study explores the impact of the progressive tax structure on income equality, emphasizing the significance of direct taxes in promoting economic and social equality. It also examines the challenges faced by the Indian government in meeting its revenue targets due to the decline in corporation tax and personal income tax revenues. The present study assesses the role of the newly implemented tax by the Indian Finance Ministry on capital gains from the sale or purchase of cryptocurrencies and its impact on economic growth. A qualitative approach has been adopted, utilizing secondary information sources for characterization and analysis. The study relies on Time Series Data from the Income Tax Department for the financial years 2000-01 to 2018-19 and global estimates of total tax revenues published by the International Centre for Tax and Development (ICTD). The findings indicate that the substantial decline in direct tax revenues necessitated a search for alternative sources of income. The separate taxation system for cryptocurrencies has legitimized digital assets and enabled the government to monitor transactions and capital gains. The introduction of the "Digital Rupee" aims to enhance the digital economy through efficient currency management. This research highlights the need for policymakers to develop a well-defined regulatory framework for cryptocurrency taxation. Clear regulations on cryptocurrency taxation and the "Digital Rupee" could help India boost its digital economy while ensuring better monitoring of crypto transactions and revenues.

Налоговый мониторинг в контексте правоприменительной практики

The article reveals the specifics of the functioning of tax monitoring as a form of tax control designed to improve the quality of interaction between taxpayers and tax authorities, replace traditional audits and reduce the administrative burden on business. Law enforcement practice is scrutinised, the study of which proves that tax monitoring, although having its advantages, contains some drawbacks, weaknesses and gaps. On the whole, they prevent the making of a predictable and stable tax framework for business activities.

The Effect of Law Number 7 of 2021 on Harmonization of Tax Regulations on Fiscal Justice in Indonesia

Law No. 7 of 2021 on Harmonisation of Tax Regulations is a landmark reform in Indonesia aimed at enhancing tax compliance, promoting fiscal justice, and aligning the country’s tax framework with international standards. This study provides a jurisdictional analysis of the law, examining its key provisions, impact on tax compliance, revenue collection, and socio-economic implications. The results show that the law has significantly broadened the tax base, improved tax transparency, and introduced progressive measures to promote equity, including a carbon tax and revised income tax brackets. However, challenges remain in ensuring that the benefits are distributed equitably across all income groups and sectors. The study concludes that while Law No. 7 of 2021 represents a significant step toward achieving fiscal justice, further refinement and support for smaller enterprises are required to fully realize its potential.

Environmental Policies and Tax Incentives in the Pillar Two Era: A Comparison of the EU and US Approaches

This article explores the interaction between global corporate taxes, specifically under the OECD’s Pillar Two, as implemented by the EU Minimum Taxation Directive (2022/2523) in the European Union and by the Corporate Minimum Tax (CAMT) in the United States, and fiscal incentives supporting environmental tax policies under the European Union’s Green Deal and the US Inflation Reduction Act (IRA). The article compares the EU and US approaches and reveals the impact on the investment strategies of MNEs, with a focus on the location of intangibles related to renewable energy technologies, as well as State aid considerations. The article proposes that, instead of marginalizing the green tax credits, they should be reshaped and made subject to a benchmark that supports sustainable innovation within the global tax framework.

Designing Net Asset-Based Income-Splitting Rules under Dual Income Tax

Abstract This article revisits the income-splitting regulations within the Nordic dual income tax framework. These regulations were introduced to counteract the inclination to transfer income between labor and capital income tax bases. They involve imputing a return on equity, considered as capital income, and taxing the residual portion at rates similar to those imposed on labor income. There are primarily two methods for computing imputed capital income. One method involves imputing a return based on the shares’ acquisition price (implemented in Sweden and Norway), while the other calculates a return using the net book assets of the company (utilized in Finland). This study examines the economic implications of the net asset-based splitting approach, an area not extensively explored in earlier literature. Our findings suggest that with appropriate selection of tax-parameter values, the net asset-based splitting system embodies the fundamental characteristics of a neutral corporate tax system akin to the ACE corporation tax. Consequently, our analysis indicates that the issues regarding incentive concerns in the Finnish taxation of closely held companies, highlighted in previous studies, stem more from erroneous parameter values rather than flawed underlying principles.

Dampak Kebijakan Pajak terhadap Preferensi Pertukaran Mata Uang Kripto: Analisis Kualitas dalam Konteks Regulasi yang Berkembang

This qualitative literature review examines the impact of tax policies on cryptocurrency exchange preferences within the context of evolving regulations. With the rapid growth of the cryptocurrency market, understanding the relationship between tax regulations and user behavior has become crucial. This study synthesizes findings from various research articles, highlighting how clear and transparent tax policies can influence user engagement and compliance in cryptocurrency trading. The review reveals that uncertainty regarding tax obligations often leads to user avoidance of cryptocurrency exchanges, while a better understanding of tax responsibilities correlates with more proactive investment management. Furthermore, the analysis indicates that cryptocurrency platforms demonstrating transparency in tax handling are preferred by users. The findings emphasize the necessity for governments to develop supportive tax frameworks and educational initiatives to facilitate healthy growth in the cryptocurrency sector. Overall, the research underscores the importance of regulatory clarity in fostering user trust and participation in cryptocurrency exchanges, ultimately contributing to a more robust and sustainable market.

THE ISSUE THAT BORDERS COULD NOT SOLVE: THE DISPUTE OVER NATIONALITY BETWEEN THE OTTOMAN EMPIRE AND MONTENEGRO

The independence of Balkan states is considered to be the partition of the Ottoman Empire in Turkish historiography. However, as can be seen in the example of Montenegro, Balkan states established an administration separate from the Ottoman Empire and defined their people as Montenegrins. On the other hand, Ottomans considered the Montenegrins, who were not the subject of any dispute, as Ottoman citizens; they did not restrain their property rights or prevent them from working. This situation continued until the Treaty of Berlin which was signed in 1878. The official independence of Montenegro after the Treaty of Berlin changed the lives of Montenegrins and the Ottomans living in Montenegro. The nationality of which state would the people whose lands were on the other side of the border prefer? How would they decide about their nationality? Would their choice of nationality lead to denial of their property rights? Or was it an obligation to choose nationality? In the face of these questions to which the public sought answers, both states' rulers prioritized protecting their sovereignty and did not want to behave unjustly towards their citizens. For this reason, they sometimes ignored border violations. Just as the Ottomans refrained from interfering with the Montenegrins in areas such as property, taxation, and work-life unless there were extraordinary situations, Montenegrins also did not interfere with the Ottoman subjects living in their lands. This article focuses on the issues of nationality between the two states in the period from the independence of Montenegro with the Treaty of Berlin in 1878 until the end of World War I. The article shows that in a period when people mostly preferred nationality within the framework of religious affiliations, property, taxation, and economic conditions were also effective in choosing nationality.

Cross-Border Tax Ramifications of Swiss Blockchain Foundations: How Can a Rock Dam the Sea?

In this article, the authors explore some international tax concerns revolving around Swiss blockchain foundations, with a focus on the risk of triggering a permanent establishment where the resources working for such organizations are located and the need to determine an appropriate remuneration, in compliance with articles 5 and 7 of the OECD Model. In doing so, the authors envisage the need for revisiting the applicable tax framework, more in line with decentralized ways of working.

The Fate of Investment Entities under the Global Minimum Taxation Framework with a Focus on Italy

This article addresses the implementation of global minimum taxation in Italy and provides an initial assessment of its anticipated impact on investment entity structures and, more broadly, on the asset management industry. In particular, the article delves into the GloBE rules governing investment entities, providing insights on the relationship between the definition of investment entities provided by the Model Rules and those employed for accounting purposes by IFRS 10. Examples of the application of the GloBE rules to investment entity structures are provided, along with considerations on the possible operational and business consequences.

Unveiling the Variation in Corporate Tax Base Distribution Under the Formulary Apportionment

Abstract This paper reflects the tabled novel framework for corporate taxation in the European Union, founded on the Formulary Apportionment methodology and envisaged inclusion of intangible assets in the allocation formula. The objective is to simulate the variation between the currently used Separate Accounting and tabled Formulary Apportionment distribution of corporate tax base of companies active in the European Union. This paper exploits secondary microeconomic panel data obtained from the Orbis database for 77,087 subsidiaries affiliated with 2,283 parent companies observed from 2011 to 2019. The results reveal that the most significant relative declines of over 15% in the corporate tax base would be faced by Luxembourg, Malta, Cyprus, the Netherlands, and Ireland. In contrast, the biggest relative gains were accounted for Greece, Romania, Hungary, Estonia, and Latvia. If cross-border consolidation of losses is incorporated in the envisaged corporate tax framework, the EU-wide aggregate tax base reduces by 15, 67% over the examined years.

A Proposed Carbon Tax Framework for Malaysia and The Challenges of Implementation in the COVID-19 Economic Recovery Plan

A Proposed Carbon Tax Framework for Malaysia and The Challenges of Implementation in the COVID-19 Economic Recovery Plan

Optimization of business processes: commercialization of ideas, taxation, business ethics

Introduction. This paper explores the critical role of entrepreneurship in Ukraine's economy, particularly under the strain of ongoing military conflicts and the vulnerability of micro and small enterprises. The purpose of the paper is to thoroughly investigate the current challenges facing micro and small businesses in Ukraine, with a specific focus on optimizing entrepreneurial processes to withstand economic instability. The study seeks to develop a comprehensive framework that incorporates effective business strategies, ethical communication practices, and a streamlined taxation system to enhance the operational efficiency and profitability of these enterprises. By addressing these key aspects, the paper intends to contribute valuable insights into the stabilization and growth of businesses during times of crisis. Results. The research highlights several innovative findings crucial for the sustainability and competitiveness of micro and small businesses in Ukraine. First, the study identifies the necessity of continuous process optimization, including the elimination of inefficiencies and the enhancement of team collaboration. It emphasizes the importance of strategic business communications tailored to the needs and expectations of specific target audiences, ensuring clarity and engagement. The paper also explores the integration of ethical practices in business operations, advocating for transparency and honesty in dealings with clients and regulatory bodies. Furthermore, the analysis underlines the significant impact of a reformed taxation framework that supports business growth while ensuring compliance with legal standards. These findings underscore the interconnectedness of these factors and their collective impact on business resilience and market positioning. Conclusion. The study concludes that a multifaceted approach encompassing process optimization, ethical business practices, and strategic tax planning is essential for the survival and growth of micro and small enterprises in Ukraine's challenging economic landscape.

Tax Evasion Determinants and Effect in Urban Ghana: The Case of Ledzokuku Municipal Assembly

The purpose of this inquiry is to empirically investigate tax evasion’s influence on the Ghanaian economy, focusing on the Ledzokuku Municipal Assembly-(LMA), one of Ghana’s 261 Metropolitan, Municipal and District Assemblies-(MMDAs). The research methods used include a quantitative research approach-(specifically, cross-sectional design), performing descriptive statistics, principal component analyses-(PCA), exploratory factor analyses-(EFA), reliability/validity analyses, PLS-SEM analyses via first-order confirmatory factor analysis-(CFA) for testing the hypothesis. Data was purely primary, utilizing convenience sampling to select 300 respondents, who responded to 285 self-answered close-end/standardized questionnaires, yielding a survey response rate of 95%. Findings/Results revealed that all four tax evasion constituents acting as explanatory variables, namely, return filling-(RET), income disclosure-(DSC), tax liabilities computation-(DSC), and tax due payment-(PM) significantly exerted a negative impact on the Ghanaian economy, with DSC exhibiting the most potent predictor of tax evasion. Recommendations include initiating tax awareness campaigns via media channels to educate taxpayers, implementing penalties against tax evaders, incorporating thorough review/assessment procedures into the tax framework, conducting tax audits in specific areas, establishing an inspection division to issue tax clearance certificates, offering incentives for timely tax payments, reducing the informal economy, decreasing tax rates, and addressing inadequacies in penalties are advised to mitigate tax evasion and foster socioeconomic progress in Ghana. This research enriches the existing literature by providing detailed, context-specific insights into the determinants and effects of tax evasion in urban Ghana, a lower-middle-income West African emerging economy. Its novel approach offers valuable empirical evidence and practical recommendations for policymakers and researchers addressing tax evasion in similar urban contexts. The study’s conceptual framework, while specific to Ghana, can be replicated in other emerging market economies, thus contributing methodologically, conceptually, and theoretically to the broader discourse on tax evasion and fiscal policy.