Turnover Tax Research Articles

Overview of General Turnover Taxes and Tax Rates

Almost all countries levy a general turnover tax, i.e. a tax on essentially all goods and services supplied by manufacturers, traders and service providers. Those turnover taxes are mostly levied under a VAT type of tax system and, in a decreasing number of cases, as a multi or single-stage (retail) sales tax. This annex presents an overview of those general turnover taxes and the tax rates applicable on 1 January 2016.

Tax Arrangement and Regional Industrial Restructuring: Evidence from Panel Data in China

Regional industrial restructuring has been one of the major items in the transformation of economic development mode. An exploration was made into the influence of tax arrangement on the regional industrial structure by setting up a panel data econometric model based on the evaluation and analysis of the regional industrial structure in China. It was shown that tax arrangement influenced the regional industrial restructuring in terms of three aspects. Microlevel: the turnover tax and income tax appeared with a U-path of influence on upgrading of the industrial structure while appearing with an inverted U-path of influence on rationalization of the industrial structure. In addition, the levy of resource tax had a negative impact on both upgrading and rationalization of the industrial structure. Mesolevel: taxation in the secondary and tertiary industries appeared with a U-path of influence on upgrading of the industrial structure. An increase of taxation in the secondary industry had a negative impact on rationalization of the industrial structure. The taxation in the tertiary industry appeared with an inverted U-path of influence on rationalization of the industrial structure. Macrolevel: the macrotax burden had a U-path of influence on both upgrading and rationalization of the industrial structure.

Niektoré aspekty historického vývoja nepriamych daní s akcentom na daň z pridanej hodnoty na Slovensku

The author tried to point at the historical aspects of development of value added tax in Slo-vakia. Her aim was to analyze the formation and subsequent changes of turnover tax as the most important consumption-based tax. The historical development was accomplished by the present legal regulation of value added tax.

Presumptive Tax System and its Influence on the Ways Informal Entrepreneurs Behave in Tanzania

The paper provides an analysis of how the presumptive tax system in Tanzania influenced the ways in which informal entrepreneurs behave. The established presumptive income tax system is based on solid sector and fiscal policies, and effective legal and institutional systems. Whereas the absolute increases in presumptive tax revenues and SME behaviour changes have partly been contributed by improvement of the presumptive scheme system, the study suggests that overall government reforms, tax surveys and patrols, tax severance and tax audits: all have their contributions to these achievements. However, the relative contribution of presumptive tax to total tax has been low and insignificant despite the presumptive tax reforms. Many SME firms are still outside the TRA tax net, suggesting the existence of weaknesses in the existing presumptive tax system. There is a need to intensify effective presumptive taxation reforms for SME entrepreneurs through rationalizing turnover tax regime, monitoring and controlling factors influencing behavioural patterns of SMEs, promoting segments focused on education and service to drive voluntary compliance, and improving operational efficiency.

‘Hybrid’ forms of taxing consumption: A viable alternative to EU VAT?

In the last decades, VAT/GST systems have proliferated across the globe and have usually replaced any eventual cumulative turnover taxes or retail sales taxes (RST) previously operated in the respective country of adoption. However, the input VAT credit inherent to a VAT/GST facilitates some particular types of tax fraud which are absent in a turnover tax or RST system, especially because the entitlement of the business customer to the tax credit is normally not contingent upon the prior payment of the corresponding VAT/GST liability by the supplier. The ensuing ‘VAT gap’ has fueled the debate in the EU whether VAT should be transformed into a so-called ‘general reverse charge regime’ that would be equivalent to a RST while maintaining the invoice and audit trail of a VAT system . The reform project has gained momentum recently due to a proposal by the Commission which would allow the temporary application of a generalised reverse charge mechanism by Member States that so desire. This article discusses the pros and cons of such a hybrid system.

Belated VAT Gains in Indian States : Right Time to Switchover to Goods and Services Tax

Background/Objectives: 1. To study the impact of State VATs in Indian States. In the past, many attempts have been made. In all the studies, Sales Tax revenues collected from states have been used to assess the impact and found that impact is almost zero. In reality, the State Sales-tax revenues consist of revenues from VAT commodities, non VAT commodities, Surcharges, Turnover taxes and Central Sales Tax. Hence, an attempt is made in this paper to study the impact of State VATs after isolating revenues due to VAT commodities from the sales-tax revenues of the states after deducting the revenues from non VAT commodities for the period from 1995-96 to 2014-15 for 22 major states of India as many of these States have been collecting substantial and huge revenues from Non-VAT commodities. 2. Also, it is proposed to estimate the expected revenues and the Revenue Neutral Rate (RNR) under Goods and Services Tax (GST). Statistical Analysis: Basic statistical tools Viz. Annual Average Growth Rate (AAGR), Buoyancy Co-efficient and Co-efficient of Variation (C.V.) have been calculated for both the pre and post VAT periods separately for 22 major states of India Findings: The performance of VAT in most of the States is highly impressive and during the last five years from 2011-12 to 2014-15, these States have posted an excellent growth of 21%. This successful gain in performance of State VATs may be taken as a green signal for the transition to the Introduction of Goods and Services Tax (GST) and an attempt is made in this paper to estimate the expected revenues and the Revenue Neutral Rate (RNR) under GST. A RNR of 8% is found to be sufficient for revenue generation for States.

Overview of General Turnover Taxes and Tax Rates

Almost all countries levy a general turnover tax, i.e. a tax on essentially all goods and services supplied by manufacturers, traders and service providers. Those turnover taxes are mostly levied under a VAT type of tax system and, in a decreasing number of cases, as a multi or single-stage (retail) sales taxes. This annex presents an overview of those general turnover taxes and the tax rates applicable on 1 January 2015.

Tax Contribution and Income Gap between Urban and Rural Areas in China

This article analyses the relationship of tax contribution and income gap between urban and rural areas. First of all, we comb their relationship from theoretical knowledge. Secondly, we use 2000- 2014 panel data of 29 provinces and cities in our country (except Tibet) to establish the fixed effects model for analysis. Results show that the improvement of tax contribution will expand the income gap between urban and rural areas. This is due to that turnover tax contribution is the most important part in the tax contribution. From the structural analysis, improvement of turnover tax and income tax contribution are not conducive to narrow the income gap between urban and rural areas. The improvement of property tax contribution is conducive to narrow the income gap between urban and rural areas. Finally, from the empirical results, we can give the policy suggestion of structural tax cuts and others.

Impact of the Chinese VAT pilot on the international freight forwarding industry and the international shipping industry

Arguably the biggest change in China’s tax law in recent years is the reform of its turnover tax regime (‘VAT Pilot’), which will result in the merging of value-added tax (‘VAT’) and business tax (‘BT’) into a single VAT. With the advent of this VAT Pilot there are hot issues facing China, such as the integrity of the supply chain, the place of supply of services and financial leasing. Among these issues, VAT on services in the field of international freight forwarding and international shipping is worthy of close attention.In this article, the authors will share their insights into how the VAT Pilot impacts the international freight forwarding industry and the international shipping industry in China.

Dutch Turnover Tax or EU VAT? On the Permeation of EU VAT Rules in the Dutch Turnover Tax Practise

In this article, the author describes the permeation of EU law in the Dutch turnover tax practice. In the Netherlands, the EU VAT directives have been implemented in the Turnover Tax Act 1968. Through the years, the relevance of these national provisions and their national legislative history seems to have diminished while the case law of the European Court of Justice (ECJ) has become more and more decisive in settling matters of turnover tax.

Research of microenterprises in Latvia in the context of resolving unemployment

Based on the data of the Register of Enterprises of the Republic of Latvia, the State Revenue Service, Report on the Development of the National Economy of Latvia and publications in periodicals, the author examines the place and role of microbusiness on the labor market of Latvia. According to Eurostat, in mid-2014 the unemployment rate in Latvia was by 11.4% higher than in neighboring Estonia and Lithuania. And this despite the deterioration of the demographic situation and the continuing outflow of economically active population to Western countries. Over the past 10 years, the population of Latvia has decreased by 13%, from 2.319 million people in 2004 to 1,995 million people in mid-2014. Microenterprises started to be established in Latvia in 2010 in the midst of the economic crisis as one of the measures to overcome unemployment, which exceeded 20%. Today, the share of microenterprises is 85.5% of all enterprises. Herewith, the turnover of all the microenterprises is 1% of the total turnover of all enterprises in the country. Mass registration of microenterprises with the facilitated taxation has led to a reduction in unemployment. However, not having got the expected effect of the tax collection from microenterprises, fiscal authorities have decided to increase the turnover tax from 9 to 15% for them starting from 2015. This decision has led to a sharp reduction in the registration of new microenterprises in the current year and, thus, to an increase in unemployment. According to the author, in view of the Latvia's economy structure, it is necessary to create conditions for the more efficient activity of microenterprises and bringing them out of the shadows, for which the turnover tax should be reduced rather than increased. The question of increasing the turnover tax can be placed after the microenterprises will operate at a profit.

Excise Duties and Smuggling. The Need of Joint Solutions to a Global Threat

The founding fathers of the European Economic Community agreed that competition should be the mechanism for efficiently allocating economic resources in Europe. In order to achieve this goal, they prescribed the harmonisation of cumulative turnover taxes and excise duties, which could be used for protectionist purposes. The value-added tax (VAT) was adopted in 1977. Softer harmonisation proposals for the excise duties came later. The failure of EU full harmonisation excise-duty regimes has resulted in tensions between transnational policies and national sovereignties and favours the emergence of criminal entrepreneurs willing to exploit these global market ambiguities. For that reason, illegal cross-border shopping, large-scale smuggling and the bulked-level counterfeiting of brand-named cigarettes have become a serious concern in several Member states because of the revenue loss produced, estimated to amount to more than €10 billion a year. Being harmonized high taxes a necessity, the solution lies in better governance: countries should strengthen tax administration and customs enforcement capacity, exercising an appropriate internal control but also increasing controls both on internal consumption and on smuggling from their neighbours. The European Commission is firmly decided to tackle this problem and its action plan to fight against smuggling of cigarettes and alcohol is the way forward. It suggests a stronger tax harmonisation but also proposes a wide variety of measures.

Overview of General Turnover Taxes and Tax Rates

Almost all countries levy a general turnover tax, i.e. a tax on essentially all goods and services supplied by manufacturers, traders and service providers. Those turnover taxes are mostly levied under a VAT type of tax system and, in a decreasing number of cases, as a multi or single-stage (retail) sales taxes. This annex presents an overview of those general turnover taxes and the tax rates applicable on 1 January 2014.

Radykalne uproszczenie prawa podatkowego w ujęciu Paula Kirchhofa

Artykuł dotyczy koncepcji Paula Kirchhofa uproszczenia prawa podatkowego. Została ona przedstawiona w projekcie Bundessteuergesetzbuch: Ein Reformentwurf zur Erneuerung des Steuerrechts (Federalny kodeks podatkowy: projekt reformy dla odnowienia prawa podatkowego [2011]). Projekt uproszczenia prawa podatkowego Kirchhofa jest próbą odpowiedzi na dobrze rozpoznane słabości współczesnych systemów podatkowych i powtarzające się wezwania do ich reformy. Choć kodeks został stworzony z myślą o Niemczech, nieukrywane ambicje heidelberskiego profesora są większe. Zgodnie z nimi jego koncepcja uproszczenia prawa podatkowego może być zastosowana w innych państwach, a częściowo także w regulacjach podatkowych w prawie Unii Europejskiej. Celem artykułu jest zapoznanie czytelnika z motywacjami Kirchhofa, przyjętymi przez niego założeniami, a także podstawowymi regulacjami projektu. W miejsce ponad 30 podatków występujących w prawie niemieckim projekt pozostawia jedynie cztery: podatek dochodowy, podatek od spadków i darowizn, podatek obrotowy oraz podatek akcyzowy. Znacznie ograniczona została liczba wyjątków, zwolnień i regulacji szczególnych. W efekcie zamiast ponad 50 000 paragrafów obowiązującego prawa podatkowego proponowana regulacja zawiera tylko 237 paragrafów. Jest to pierwsze omówienie koncepcji Kirchhofa w polskiej doktrynie prawa. Zdaniem autora artykułu przedstawiony przez Kirchhofa kodeks zasługuje na pozytywną ocenę, może być wzorem dla nadaktywnego ustawodawcy oraz inspiracją dla reform systemów podatkowych we współczesnym świecie. Autor artykułu dostrzega jednak problem uzyskania przez tego rodzaju projekt trwałej akceptacji doktryny prawa, partii politycznych i opinii publicznej.

Revenue and welfare effects of financial sector VAT exemption

This paper provides an analysis of revenue and welfare effects associated with a VAT exemption of financial services, which is common among OECD countries. We follow a general equilibrium approach that considers effects of repealing the VAT exemption not only on consumer demand and intermediate-input demand for financial services, but takes account also of the VAT distortion of labor supply. We derive formal expressions for revenue and welfare effects, which can be quantified with a minimum of information about behavioral effects. Using VAT statistics as well as national accounts, we provide quantitative estimates of the effects of repealing the VAT exemption in Germany. Our baseline estimate indicates that tax revenues would increase by some €1.7 billion or 1.3 % of VAT revenues (excluding import turnover tax). Provided these revenue gains are used to finance a reduction in the VAT rate or in other distortive labor taxes our results indicate a modest welfare gain of about €1 billion, or 0.04 % of GDP.

Female Suffrage and Government Spending: Evidence from Swiss Ballots

Does the enfranchisement of women lead to an increase in public support for government spending? By utilizing a natural experiment from Switzerland, I test this hypothesis empirically. I analyze the voting outcomes of two very similar referendum ballots concerning the federal government’s competency to levy income, capital and turnover taxes. The rst ballot has

Accounting for Secrets

The Soviet dictatorship used secrecy to shield its processes from external scrutiny. A system of accounting for classified documentation assured the protection of secrets. The associated procedures resemble a turnover tax applied to government transactions. There is evidence of both compliance and evasion. The burden of secrecy was multiplied because the system was also secret and so had to account for itself. Unique documentation of a small regional bureaucracy, the Lithuania KGB, is exploited to yield an estimate of the burden. Measured against available benchmarks, the burden looks surprisingly heavy.

Local fiscal distress and investment efficiency of local SOEs

In this paper, we use A-share listed firms between 2002 and 2010 to investigate the relationship between local fiscal distress and the investment efficiency of local SOEs, along with the effect of corporate tax payments on this relationship. We find a positive relationship between the extent of local SOEs’ overinvestment and the fiscal distress of the corresponding local government where the enterprise and this relationship become stronger for firms that pay fewer taxes. The pattern of underinvestment among local SOEs was in contrast, and these relationships do not exist for non-SOEs or central SOEs. Moreover, we find that expanding a firm’s investment scale leads to an increase in total taxes paid, including income and turnover taxes, which further result in more local fiscal revenue. Overall, we conclude that local governments have an incentive to increase fiscal revenue when faced with fiscal distress by raising the investment scale of local SOEs and that the incentives and effects of such interventions appear to be stronger among firms that contribute less to local fiscal revenue.

Production versus Revenue Efficiency with Limited Tax Capacity: Theory and Evidence from Pakistan

To fight evasion, many developing countries use production-inefficient tax policies. This includes minimum tax schemes whereby firms are taxed on either profits or turnover, depending on which tax liability is larger. Such schemes create nonstandard kink points, which allow for eliciting evasion responses to switches between profit and turnover taxes using a bunching approach. Using administrative data on corporations in Pakistan, we estimate that turnover taxes reduce evasion by up to 60–70 percent of corporate income. Incorporating this in a calibrated optimal tax model, we find that switching from profit to turnover taxation increases revenue by 74 percent without reducing aggregate profits.

VAT and the EC Internal Market: The Shortcomings of Harmonisation

From the outset, turnover taxes have played a fundamental role in the European integration process. Harmonisation of these taxes was perceived an integral part of achieving a common market, and for this reason it was given priority. Over forty years since the introduction of a common VAT system, VAT is usually regarded as a broadly harmonised tax. Paradoxically, however, it is precisely this high level of harmonisation which seems to have allowed the preservation of some aspects of VAT law which constitute an obstacle to the establishment of the EC internal market. The aim of this paper is to highlight the shortcomings of harmonisation within the VAT area, and namely how harmonisation has prevented the European Court of Justice (ECJ) from applying the EC Treaty provisions to the field of VAT, resulting in the maintenance of laws which could arguably be regarded as contrary to the EC internal market and as restrictions to the fundamental freedoms.