Unfair Tax Research Articles

Observing systemic values in a tax avoidance environment: Using systems theory to examine the Ireland–Apple tax relationship

AbstractTax has been the site of many battles between ethical behaviour and formal compliance with tax law, particularly in an international context. This paper accepts the functional differentiation of society and explores the amorality of systems. The environmental noise about unfair tax competition by states and tax avoidance by multinational enterprises is extensive. The autopoietic legal system cannot be relied upon to deliver a concurring view, instead producing its self‐referential and sometimes contradictory communications. The empirical setting considers Ireland and Apple and the legal system's verdict on the legality of their tax relationship. This legal verdict changes as the case progresses from European Commission to one court after another, a contingent and uncertain outcome that may be prompted by systemic irritation but which is not co‐ordinated with moral commentary on Ireland or Apple. The absence of coordination by the legal system with environmental commentary on fairness means that, as the legal verdict changes from court to superior court, moral commentary is not a reliable predictor of legal outcome.

Limiting support for environmental policies: Unfairness is a more critical barrier than cost and ineffectiveness.

Costs and policy-specific beliefs, such as effectiveness and fairness, are central factors for supporting environmental taxes. Less is known about how much each of these factors is limiting support. Across four experiments, I investigate to which extent high costs, ineffectiveness, and unfairness constrain support for environmental taxes. Results consistently demonstrate that perceived unfairness poses a greater barrier to support than extensive costs or ineffectiveness. These findings were robust across three environmental taxes (meat tax, plastic tax, and carbon tax), across three cultures (USA, UK, and India), and were replicated using a representative US sample. Furthermore, delving deeper into the consequences of perceived unfairness, results showed that distributional unfairness was a stronger barrier to support than procedural unfairness. Beyond limiting support, being presented with an unfair tax proposal led participants to perceive the tax as less effective and to express lower trust in policymakers than when receiving a fairer tax proposal.

Use-Value, Exchange-Value, and the Empty Promise of Black Homeownership

Andrew Kahrl has gifted the field a forceful book that urges us to remember the property taxes. The Black Tax tells us, “The property tax is the most local of all taxes” (5). More than that, though, the property tax is the most literal way that state policy hits close to home. Kahrl thus studies local taxation to show how white people wielded state power to threaten Black Americans’ tenuous grip on property ownership—and generate handsome profits along the way. The ends—dispossession of Black-owned property and unfair tax burdens—will surprise few readers. But the means—tax-buying, fractional assessments, and other bureaucratic technicalities—will shock, frustrate, and anger most. This is the force of The Black Tax: Kahrl reminds us that, for Black people as with other racialized minorities, the barriers to homeownership do not end when the sale closes.

Мобілізація внутрішніх доходів держави в надзвичайних ситуаціях: протидія розмиванню податкової бази та виведенню прибутку з-під оподаткування

Introduction. Against the background of the post-covid recovery, destroyed by the strengthening phenomena of deglobalization, fragmentation, uncertainty, conflictogenicity, considerable efforts of the member states of the European Union (EU) are aimed at provision of increased financial resources for state needs through restriction of unfair tax practices. Problem Statement. Domestic Revenue Mobilization (DRM) directs the efforts of countries to increase their own incomes and resources of domestic economy by collecting taxes, duties and other revenues. The task must be completed without additional pressure on the business environment and does not aim to increase the tax burden on small and medium-sized enterprises that have been significantly negatively impacted by the COVID-19 epidemic, the main tools of impact should be focused on combating tax evasion by multinational companies and their beneficiaries and preventing tax base erosion in Ukraine in the post-pandemic and post-war recovery period. The purpose of the article is to substantiate the fact that for Ukraine, as a candidate for members of the EU, it is important not only to implement the experience of the EU member states in limiting the ability of multinational companies (MNCs) to apply hybrid instruments for tax base erosion using international structures, but also further systemic harmonization of domestic fiscal regulation in accordance with the best practices and modern rules for the prevention of profit shifting and base erosion (BEPS), which are constantly changing within the framework of supranational norms. Methods. The methods of system-structural analysis, retrospective analysis, analytical, systematization, comparative, dialectical and formal logic were used. Results. The crisis period of post-Covid recovery has become more complicated by the armed invasion of the Russian Federation on the territory of our country, which requires a search of internal revenue mobilization mechanisms to solve current state obligations, as well as for the formation of economic and epidemiological security of the state in the period of post-war recovery for the sake of preservation of socio-economic development and formation of reliable nation’s health care system. Conclusions. The introduction of reporting on controlled transactions, CIC, as well as tax payment by jurisdiction (Country by Country reports) is a progressive step in the direction of overcoming the asymmetry of tax information at the global level. For the effective implementation of all mentioned tools after the accession of the country to the Multilateral Agreement on Competent Authorities (MCAA CRS), it is necessary to focus efforts on the regulatory framework for the implementation of European directives, such as ATAD I and II, the implementation of the provisions of DAC7 for the control of digital activities and inclusion in the exchange information on income from intellectual property in the digital economy, as well as the formation of institutional conditions for the implementation of Pillar 1 and 2 at the national level.

International legal system for combating money laundering and unfair tax competition

Worldwide efforts to eliminate bank secrecy and foster transparency in international currency flows have accelerated significantly in recent years. The identification of tax havens and potentially harmful tax practices and regimes gives rise to a considerable potential for preventing distortions and violations that could undermine the benefits of enhanced capital mobility in today’s global economy. In the light of the aforementioned, the aim of this article is to detail: 1. efforts of the Organization for Economic Cooperation and Development (OECD) to eliminate «unfair tax competition»; 2. efforts of the Financial Action Task Force on Money Laundering (FATF) to reduce international money laundering; 3. steps being taken in the European Union (EU) to combat money laundering and tax evasion. The author analyzes the OECD's efforts to create a firm international platform for global tax information exchange. The Article also touches upon the FATF initiatives to combat money laundering: a) the FATF Forty Recommendations setting out a comprehensive and consistent framework of international standards which countries should implement in order to combat money laundering and terrorist financing; b) identification of jurisdictions which have the substantial and on-going money laundering and terrorist financing risks and strategic deficiencies; c) inclusion of certain anti-money laundering recommendations applicable to business and professions beyond the financial services industry; d) ongoing investigations of compliance with the Forty Recommendations by FATF members and by other states (mutual evaluations); e) helping national governments and financial institutions to ensure adequate and accurate information on the beneficial ownership. In the last part of the Article, the author analyses enforcement measures to combat money laundering adopted in the EU that go further beyond FATF recommendations.

SOLVING THE PROBLEM OF THE WHITENESS OF WEALTH

Peggy McIntosh details “white privilege” 1as including: being in the company of people of her own race; renting or purchasing affordable housing in a desirable area; having pleasant neighbors; shopping alone without being harassed or followed; and turning on the TV or opening the newspaper to see heavy representation of people of her own race. 2 The history of slavery is one major source of wealth disparity: four generations ago, African-Americans were a form of wealth as slaves and even before that, Africans in Africa were seen as primitive. The socioeconomic disadvantages to African-Americans and finding solutions to this problem, especially solutions through funding HBCU’s, targeted debt relief, and increased Black representation in the media, are the aims of this paper on the black-white wealth gap. The average per capita wealth of White Americans was $338,093 in 2019 but only $60,126 for Black Americans. 3 On average between 1950 and 2010, Black households held about 7 percent of their wealth in stock equity; among White households, it was 18 percent. According to the 2016 General Social Survey, a 55% majority of white Republicans agree with the statement that black Americans are worse off financially “because most just don’t have the motivation or willpower to pull themselves up out of poverty.” 4 42% of white Republicans thought black Americans were lazier than white Americans and 26% rated black Americans as less intelligent. 5 The history of the black-white wealth gap is entrenched in slavery and its after-effects. These effects include the Jim Crow rules, the sharecropping landownership system, discrimination, Congress passing unfair tax laws, the tenfold wealth gap, and attempts to fix it with affirmative action. One solution is the benefit of educating black students at historically black colleges and universities such as Howard, Morehouse, and Spelman: Wealthy philanthropists like Mackenzie Scott, the ex-wife of Jeff Bezos, making massive donations to HBCU’s so that Black universities can offer more scholarships to deserving Black students. Robert Smith, the wealthiest black man in the United States, promised to pay off the debts of the Morehouse College class of 2019. Therefore, enabling black students to afford college and allowing them to face fewer obstacles to graduating college are worthwhile, positive aspects of the HBCUs. The best solution to the black-white wealth gap is targeted debt relief, as opposed to blanket debt relief. Scholars argue for increasing Pell Grants so that they cover tuition, room, board and course materials to help more Blacks graduate debt-free. 6 Black students have less access to generational wealth and are the most likely to rely on debt to finance their educations. In this way, targeted debt relief would dramatically help Black students and college graduates. Another solution is more favorable representation of Blacks in the media. Stuart Hall argued that the solution to negative representations of Blacks were favorable portrayals of Blacks.

When the agency wants too much: Experimental evidence on unfair audits and tax compliance

This research investigates how unfairness in tax enforcement affects tax compliance. We study how unfair audits that overestimate a taxpayer's true income affect the aggregate compliance level and the post-audit tax compliance of audited taxpayers. Using an online experiment with a representative sample of UK taxpayers, we find that introducing unfair audits has a positive effect on the aggregate compliance level. However, increasing the amount by which audits overestimate true income has no effect. Moreover, we find that the experience of unfairness in tax enforcement reduces post-audit tax compliance in the subsequent tax declaration by at least 7 percentage points. Our findings suggest that threatening taxpayers with unfair audits increases compliance in the aggregate, but behavioral responses to experiencing unfair audits undermine this effect.

Legal characteristics of aggressive tax planning

The article studies the problems of legal characteristics of tax planning. It is emphasized that there is no single approach to determining the balance of private and public interests in the field of taxation. This especially concerns situations where taxpayers try to optimize tax payments in a way that does not involve a direct violation of the law, but has signs of abuse of the right, which is characteristic of an aggressive tax planning. It is argued that the solution to this problem is important, since abuse of rights by taxpayers, using the imperfections of legislation, manipulation of differences in tax regulations of different states, as well as active use of low-tax jurisdictions in business schemes leads to huge losses in the budgets of many countries. It is pointed out that aggressive tax planning is not direct violation of the law, otherwise such actions would be qualified as tax offense. The positions of scientists regarding the definition of such a category as “aggressive tax planning” are presented in the article, as well as the author's position on this issue is highlighted. It is noted that the widest toolkit of tax optimization can be used in the implementation of international tax planning. In the past, one of the main, most common and effective methods of aggressive tax planning was the use of low-tax jurisdictions. However, the influence of this factor has been efficiently reduced by modern trends to counteract this phenomenon, in particular, the widespread introduction of anti-BEPS measures and automatic exchange of tax information. Other common tools of aggressive tax planning are listed, including transfer pricing. The negative consequences of aggressive tax planning for the state are described, related to the reduction of tax revenues to the budget, as well as the creation of an anti-competitive environment due to receiving unfair tax advantages. The main methods of combating aggressive tax planning both at the international and domestic level are disclosed. The main signs of aggressive tax planning are identified and the conclusion is drawn that in each specific case, the behavior of the taxpayer, which has signs of aggressive tax planning, should be evaluated for the presence of abuse of the law, which will allow the application of appropriate legal consequences for the purpose of protecting state and public interests.

Promising trends to improve the deoffshorization policy: world and Russian practice

The purpose of this article is to identify current trends and development proposals in the field of economy deoffshorization. In the modern world, deoffshorization is an important direction of activity for both various international institutions and countries. The need to implement a deoffshorization policy is due to the necessity to combat negative consequences of offshore jurisdictions functioning: the existing unfair tax competition, as well as promotion of money laundering and financing of terrorism. Based on the analysis of current trends in anti-offshore policy, the author proposes topical measures to deoffshorize the national economy, some of which could potentially be distributed on a global scale. Key trends of the deoffshorization policy modernization are related to increased transparency and interstate cooperation on deoffshorization issues. The methods of logical and statistical analysis are used in the study.

Theoretical approach to tax compliance

Purpose- The aim of this study is to emphasize the importance of efficiency in tax compliance and to reveal the factors that increase tax compliance. Methodology- The factors that are effective in tax compliance are explained within the framework of domestic and foreign literature. Findings- Tax compliance is high in countries characterized by high economic freedom, significant capital markets, effective competition laws and low rates of serious crime. In a secure environment that improves their quality of life, where individuals can exercise their economic rights in terms of significant capital markets and effective competition laws, they tend to view tax compliance as less of a burden and more of a civic duty. Tax compliance is high where tax morale is high. When trust in authorities is high, taxpayers will pay their taxes voluntarily. Paying taxes is a civic duty, while tax evasion is immoral. Tax awareness increases if individuals feel the tax obligation in their conscience, if they have a sense of the need to pay taxes, if the level of education and culture is high, if government services are transparent and if the government imposes sanctions on those who do not pay taxes. High tax rates and an unfair tax system are associated with low compliance. Conclusion- The results of this study provide insights for researchers on the factors affecting tax compliance. Keywords: Tax compliance, tax, government, taxpayer, tax authorities. JEL Codes: H20, H21

Reasons for Reluctance of Tax Payers in Paying Tax: The Tax System Used in Mbeya City- Tanzania

The study explores on the reasons why persons (individuals, corporations) avoid to pay tax and economic impacts of unfair tax system. Three objectives were formulated to reveal the reality which was to (i) examine the features of tax systems to be not complied voluntarily (ii) the factors for resistance towards paying tax and (iii) economic effects of unfair tax imposed. The facts from the above formulated objectives were obtained by employing a case study research design. The study was carried in Mbeya City in which tax payers and tax collectors were researched by applying simple random and judgmental sampling techniques. More over primary and secondary data collections were used to gather the facts. The collected facts were analyzed descriptively and by using Pearson’s’ correlation coefficient and the results were most of tax systems are unfair, uneconomical, uncertain and non-convenient. Further results showed that persons resist paying tax voluntarily because of hurt (unfair) tax imposed and lack of frequent education provided on the importance of paying tax. Lastly it was found that unfair tax system lead into increase in cost of production, ceasing of business operations, less tax collection, illegal businesses, rampat tax evasion and avoidance.

The development of a multidimensional meaning of tax: From unfair tax to fair

Historically, companies have communicated taxes as a burden, as the benefits provided by governments are not perceived to be in proportion to their payments. With sustainable development becoming central in many policy areas, new discourses including ‘fair’ or ‘sustainable’ tax have become omnipresent in public talk on taxes. This paper analyzes tax discourses in corporate annual reports within this changing context to examine the use of language in the construction of the meaning of tax. By analyzing tax reporting by a state-owned multinational company over two decades, we observe that the communication of taxes increased in both number and types of discourses. Importantly, this highlights the shift in tax discourses from one dominated by codified accounting discourse reinforcing the monolithic representation of tax as an unfair expense, to one where tax is given a multidimensional meaning within a broader discursive context, where tax is a meaningful corporate responsibility to society.

Unfair tax competition and offshore jurisdictions: categories in international tax law

The article analyzes tax competition, in particular, its subspecies — unfair tax competition, as a problem that the international community, primarily the OECD, has paid attention to. The author compared the signs of unfair tax competition and offshore jurisdiction, which affect the assessment of the tax policy of a state or territory in terms of international taxation. In addition, the article presents an analysis of the state-legal status of offshore jurisdictions, which can help in further scientific research on this issue.

Forms of international cooperation in the field of taxation and Russian tax legislation

The article gives the author’s definition of modern forms of international cooperation in the field of taxation. These include: international tax administration; delimitation of the tax jurisdiction of states and the fight against unfair tax competition among states; convergence of the tax systems of states. In relation to each form of international cooperation, the international legal principles underlying them are noted: international tax transparency, tax sovereignty of the state and its tax jurisdiction; prohibition of unfair tax competition. Particular attention is paid to the implementation of these international forms of tax cooperation in Russian legislation.

International Exchange of Information in the Field of Direct Taxation

In connection with continually widening public budget deficits and related attempts of States to remove (or at least to eliminate) unfair tax practices, issues regarding the exchange of information, which is necessary for the proper performance of provisions of conventions for the avoidance of double taxation and/or national laws, have become topical. The purpose of this paper which includes starting points for subsequent analyses is to describe and assess the existing situation in the area of enshrinement of the concept of exchange of information in current conventions for avoidance of double taxation concluded by the Czech Republic according to the state valid on 1 January 2013. Having regard to this objective defined, the authors ignore other aspects such as the existence of memoranda of mutual cooperation concerning the exchange of information, existence of tax information exchange agreements concluded by the Czech Republic and Euroepan Union law in the given area and their contents. They briefly refer to these and other aspects in the chapter called “Discussion” where they point to other research possibilities in this area.

A Study on the Introduction of Cash Accounting Scheme in Tax Invoice for Small Businesses

사업자는 재화 또는 용역을 공급하고 공급시기에 세금계산서를 발급한다. 그러나 그 공급시기가 언제인지 모호하여 적법한 시기에 세금계산서를 발급하기 위해서는 납세협력비용이 발생된다. 만일 잘못된 시기에 세금계산서를 발급할 경우 가산세와 매입세액 불공제 등 과도한 세법상 제재를 받게 된다. 공급자가 외상으로 거래하는 경우 공급자는 부가가치세를 거래징수하지 못한 상태에서 자기부담으로 먼저 부가가치세를 납부하여야 하므로 자금부담이 발생한다. 또한 공급자는 공급받는 자의 파산 등으로 거래징수할 부가가치세의 회수가 불가능한 경우에는 대손세액공제를 받아야 하는데 그 적용요건이 엄격하여 대손세액공제 신청에 있어 납세협력비용이 발생함은 물론 이를 적용받지 못할 경우 장기적인 자금 압박으로 이어지게 된다. 아울러 과세관청 입장에서도 대손세액공제 제도의 운영으로 막대한 행정력이 소요되어 사회적 비용이 크다. 이러한 외상거래에 따른 경제적 부담들은 소규모 사업자에게 발생할 가능성이 상대적으로 높다. 따라서 독일과 영국의 예와 같이 소규모 사업자의 경우 세금계산서를 공급시기가 아닌 공급대가를 현금으로 지급받는 시점에 발급하도록 하는 현금회계제도를 도입함이 타당하다. 세금계산서 현금회계제도는 소규모 사업자의 납세협력비용을 절감하고 자금부담을 해소하며 세금계산서 발급시기의 오류를 줄임으로써 과도한 세법상 제재를 회피할 수 있게 한다. 다만 세금계산서 현금회계제도를 도입할 경우 납세자가 현금 지급시기를 조정하여 납세의무의 발생시기를 조정할 우려가 있다는 지적이 있으나 이는 현행 제도에서도 공급시기를 조정하여 나타날 수 있는 문제로 보인다.A businessman shall supply goods or services and issue tax invoices at the time of supply. However, tax cooperation costs are incurred to issue a tax invoice at a legitimate time because the timing of the supply is unclear. If a tax invoice is issued at a wrong time, it will be subject to excessive tax laws such as additional taxes and unfair purchase tax. When a supplier transacts on credit, the supplier must first pay the value-added tax at its own expense without collecting the value-added tax, which results in a financial burden. In addition, suppliers must receive a tax deduction if they cannot collect VAT due to bankruptcy of the supplier, and the application requirements are strict, resulting in tax cooperation costs in applying for the tax credit. In addition, from the perspective of the tax office, the operation of the loan-loss tax deduction system requires a huge amount of administrative power, which is a huge social cost. The economic burden of these credit transactions is relatively likely to occur for small businesses. Therefore, it is reasonable to introduce a cash accounting system for small businesses, such as Germany and the United Kingdom, to issue tax invoices at the time of payment of supply considerations rather than supply periods. The tax invoice cash accounting system allows small businesses to avoid sanctions under excessive tax laws by reducing the cost of tax cooperation, eliminating the burden of funds, and reducing errors in issuing tax invoices. However, some point out that if the tax invoice cash accounting system is introduced, taxpayers may adjust the timing of the tax obligation by adjusting the cash payment period, but this seems to be a problem that can be caused by adjusting the supply period in the current system.

Rethinking of Inheritance Taxation in Russia

This article analyses theoretical and practical implications of inheritance tax as the most debatable tax from legal and ethical viewpoints. Some countries have refused taxing inheritance. Others have applied inheritance taxation from national to local levels. The majority of developed countries tax wealth transfers. The primary purpose of inheritance taxation is the allocation of wealth within society and the mitigation of social inequality. Currently, Russia has neither an inheritance tax, nor any other wealth or wealth transfer taxes. This indicates an unfair tax system. The study is based on the analysis of the history of inheritance taxation in Russia and abroad, and the contemporary legal framework and practices in foreign countries. The authors highlight current advantages and disadvantages of inheritance taxation, the functions of the tax, and state considerations related to the potential design of inheritance tax in Russia. The main conclusion is that inheritance tax should be imposed in Russia as a social-oriented mechanism and levied on only the top-wealth societal cluster.

The Concept of General Rules against Tax Evasion in Russian Tax Legislation

In conditions of unfair tax competition between states and increasing commitment of taxpayers to reducing the tax burden, countering tax evasion becomes an urgent problem. The implementation of general rules against tax evasion constitutes one of the most effective mechanisms to counter the erosion of the taxable base and the withdrawal of profits from taxation. The paper explores the theoretical foundations of general rules against tax evasion, highlights the experience of the European Union in terms of formation of the concept and legal design of general rules against tax evasion, and discloses the nature, purpose and cases of their use. Based on the analysis of the jurisprudence of the Court of Justice of the European Union, as well as the directives of the European Union containing provisions concerning general rules against tax evasion, the author draws a conclusion on structural elements inherent in general rules against tax evasion. The paper provides for an analysis of the experience of the Russian Federation in this area, proposes promising ways to improve the legislation enshrining general rules against tax evasion in Russia. The author researches judicial doctrines applied in the Russian Federation to recognize the tax benefit received by the taxpayer unjustified, analyzes the provisions of Art. 54.1 of the Tax Code of the Russian Federation. The author concludes that there is a problem of uniform application of the provisions of Art. 54.1 of the Tax Code of the Russian Federation, which violates the stability and predictability of tax practices necessary for enterprises’ business activities. The author also concludes that it is necessary to carry out substantial reviewing of the general rules against tax evasion in Russia in order to improve their application and consolidate additional guarantees of taxpayers’ rights.

Transfer Pricing Pada Adaro Energy: Pendekatan Analisis Fungsional

This research examines the funtional analysis in the case of Adaro Indonesia and Coaltrade as reported by Global Witness in order to explain the practicality of functional analysis and its relation to the fairness aspect of transfer pricing. This research was perpetrated using a descriptive qualitative method and utilised secondary data obtained from Global Witness’ report and combined with other data from Adaro Energy’s annual report in order to reduce bias in the analysis. In making the analysis, this research used secondary data analysis strategy and grounded theory approach in order to make a valid reasoning. In practice, functional analysis involved some process and identification including identification of entity involved, identification of perspective in the analysis, identification of relevant business process in terms of asset usage and business risk, and the classification of business models. The results show that the transfer pricing scheme in which Coaltrade served as full risk distributor indicated unfairness in the compensation since Coaltrade was able to earn more profit than Adaro Indonesia despite the low risk nature of the business. In that sense, functional analysis is related to the fairness aspect of transfer pricing in some way in regards that functional analysis enables analyst to get the big picture on the compensation earned by each entity invovled. An indication of unfair transfer pricing and tax evasion may arise in the case that a lower risk entity earns more than the higher risk one.

Unfair tax competition influence on the development of the sustainable economy and international economic relations

The gist of this article boils down to the impact of unfair tax competition on the current state and further development of a sustainable economy and international economic relations. With the development of the world economy and international economic relations, the world community is faced with such an economic category as unfair tax competition or tax dumping. International tax competition or tax dumping is one of the most negative phenomena associated with the tax policy of states. To stimulate the inflow of investment in a particular country or region, governments of different jurisdictions resort to a special type of tax policy characterized by strong tax cuts. It is obvious that unfair tax competition consists of not only tax dumping, but also other advantages provided by the state. The most obvious of these benefits is high confidentiality for investors. The activities of offshore jurisdictions can not only cause significant damage to the economies of countries that are not able to apply tax dumping, but also provoke serious economic crises. Tax evasion is primarily due to the fact that economic agents prefer to register in offshore countries and pay taxes there. In this regard, offshore countries are quite rightly called the “dependents” of the world economy, since they are the ones who unreasonably use the public goods created by the onshore states. The article examines the impact of unfair tax competition on the current state and further development of the world economy and international economic relations. The policy of offshore countries is analyzed, the reasons, problems and prospects for the development of the international struggle against unfair tax competition are studied. Final positioning is formulated in the paper.