scholarly journals Combating Fiscal Fraud and Empowering Regulators

2021 ◽  
Keyword(s):  
Money Laundering ◽  
Tax Evasion ◽  
Business Models ◽  
Rapid Change ◽  
Tax Avoidance ◽  
Profit Shifting ◽  
Tax System ◽  
New Business ◽  
International Tax ◽  
The Impact

This book showcases a multidisciplinary set of work on the impact of regulatory innovation on the scale and nature of tax evasion, tax avoidance, and money laundering. We consider the international tax environment an ecosystem undergoing a period of rapid change as shocks such as the financial crisis, new business forms, scandals and novel regulatory instruments impact upon it. This ecosystem evolves as jurisdictions, taxpayers, and experts react. Our analysis focuses mainly on Europe and five new regulations: Automatic Exchange of Information, which requires that accounts held by foreigners are reported to authorities in the account holder’s country of residence; the OECD’s Base Erosion and Profit Shifting initiative and Country by Country Reporting, which attempt to reduce the opportunity spaces in which corporations can limit tax payments and utilize low or no tax jurisdictions; the Legal Entity Identifier which provides a 20-digit identification code for all individual, corporate or government entities conducting financial transactions; and the Fourth and Fifth Anti-Money Laundering Directives, that criminalize tax crimes and prescribe that the Ultimate Beneficial Owner of a company is registered. Working from accounting, economic, political science, and legal perspectives, the analysis in this book provides an assessment of the reforms and policy recommendations that will reinforce the international tax system. The collection also flags the dangers posed by emerging tax loopholes provided by new business models and in the form of freeports and golden passports. Our central message is that inequality can and has to be reduced substantially, and we can achieve this through an improved international tax system.

scholarly journals Permanent establishment as a foreign direct investment in Poland: identification of tax barriers in the context of new tax development

2021 ◽  
Vol 57 (2) ◽  
pp. 177-193
Author(s):  
Marcin Jamroży ◽  
Magdalena Janiszewska
Keyword(s):  
Foreign Direct Investment ◽  
Economic Activity ◽  
Direct Investment ◽  
Business Models ◽  
Tax Avoidance ◽  
Tax Law ◽  
Profit Shifting ◽  
New Developments ◽  
Permanent Establishment ◽  
International Tax

Abstract The paper aims to identify the significant tax barriers to foreign direct investment (FDI) in Poland, in particular in the form of a permanent establishment (PE), in the context of new developments in international tax law. Due to the recommendations of the Base Erosion and Profit Shifting (BEPS) project, launched by Organisation for Economic Co-operation and Development (OECD) to prevent international tax avoidance, the understanding of PE has changed, which could lead to changes in business models. The purpose of the research is also to identify the significant tax barriers to economic activity in Poland, in particular in the form of PE, against the international tax law context. The study conducted by the authors relies on the most current tax rulings and judgments of administrative courts issued between 2017 and 2020. It is concluded that not so much the effective tax burdens but the regulatory ambiguity surrounding the tax obligations may contribute to the reduction of Poland's attractiveness as a location for FDI.

Addressing illicit financial flows in Africa

2016 ◽  
Vol 23 (4) ◽  
pp. 1074-1091 ◽  
Author(s):  
Bernd Otto Schlenther
Keyword(s):  
Money Laundering ◽  
Tax Evasion ◽  
Tax Avoidance ◽  
Medium Term ◽  
Profit Shifting ◽  
Financial Flows ◽  
Content Type ◽  
Priority Areas ◽  
Long Run ◽  
Illicit Financial Flows

Purpose This paper aims to identify the underlying key components of illicit financial flows (IFFs) and highlights the priority areas where government resources should be pooled under a whole of government approach to mitigate the risks posed by IFFs. These areas are tax avoidance and tax evasion (specifically intra-company profit shifting, investment and profit shifting within the extractive sector, fraud and beneficial ownership), anti-corruption measures, governance and accountability measures, anti-money laundering effectiveness and effectiveness in the detection of falsified customs declarations. Design/methodology/approach The concept of IFFs is emerging as an umbrella term for bringing together seemingly disconnected issues. The concept is ill-defined, but there are various identifiable components supporting the term IFF such as capital flight, corruption, money laundering, tax avoidance, tax havens and transfer pricing practices. The author identifies the key areas of concern through a literature review and recommends prioritization of short- to medium-term risk areas and long-term policy imperatives. Findings In the short- to medium-term, an effective “whole-of-government” approach should be based on uniform risk identification and prioritization between mandated government agencies and in the long run, it should be focused on building responsive and effective institutions through a process of good governance and effective taxation. Originality/value A large body of literature deals with “IFFs” and the “whole-of-government approach” as separate concepts. This paper draws on the existing literature and identifies priority areas for addressing IFFs, and, for these to be successful, they are entirely dependent on a whole-of-government approach – both in the short and long run.

What made base erosion and profit shifting project possible?

2018 ◽  
Vol 25 (3) ◽  
pp. 795-810
Author(s):  
Akira Matsuoka
Keyword(s):  
Historical Context ◽  
Tax Avoidance ◽  
International Taxation ◽  
Profit Shifting ◽  
Tax System ◽  
Content Type ◽  
Grass Roots ◽  
Legal Perspective ◽  
Before And After ◽  
International Tax

Purpose The purpose of this paper is to unveil the true background of the Base Erosion and Profit Shifting (BEPS) Project and to suggest crucial indexes for bringing a movement into a future ceiling causing a struggle of the international tax system. Design/methodology/approach This paper looks into the historical context of this project before and after Starbucks’ scandal, comparing to other contexts of the international tax system. Also, this paper partially reviews BEPS from a legal perspective. Findings The key factors for building momentum of reform of international taxation are a country having a government willing to embrace the cause of reform, unfairness felt toward entities using tax avoidance schemes which other comparable entities could not be use, grass-roots pressure for the reform, effective places to negotiate cooperation among major countries for the reform, solid cooperation among many countries in the world to implement standards and rhetoric of slogan with less opposition. Originality/value The momentum of the reform of international taxation was analyzed before. But the BEPS Project has involved some unique events as compared with the Organization for Economic Cooperation and Development’s project on harmful tax practices, such as initiation of NGOs and boycott by consumers. Additionally, this paper will discuss insights, which the former research did not do.

Two Major Gaps in Global Governance: International Tax Cooperation and Sovereign Debt Crisis Resolution

2018 ◽  
Vol 9 (2) ◽  
Author(s):  
José Antonio Alonso
Keyword(s):  
Tax Evasion ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Tax Avoidance ◽  
Necessary Condition ◽  
Sovereign Debt Crisis ◽  
Crisis Resolution ◽  
Profit Shifting ◽  
Funding Policies ◽  
International Tax

Abstract The paper focuses on two crucial issues that hinder the fiscal sovereignty of developing countries: the reduced level of international tax cooperation, and the lack of appropriate procedures for sovereign debt crisis resolution. The low level of international tax cooperation enables a “race to the bottom” in tax rates among countries, tax avoidance through profit-shifting activities by companies and tax evasion by individuals and companies, based on the existence of non-cooperative jurisdictions. In the last 5 years, the international community has made some improvements in this field, but the situation remains far from satisfactory. On the other hand, the current procedure for sovereign debt resolution, through negotiations at the Paris Club with the support of the IMF, is not only unfair, but also inefficient. The paper explores alternatives in both fields. Appropriate responses to these international problems would have to show benefits in terms of efficiency and welfare at the global level, and establish fundamentals for countries to take full advantage of their resources, which is a necessary condition for funding policies that will not leave (or push) any nation or social sector behind.

scholarly journals Contributions of the Base Erosion and Profit Shifting BEPS Project on Transfer Pricing and Tax Avoidance

2021 ◽  
Vol 5 (3) ◽  
Author(s):  
Anissa Ouelhadj ◽  
Mehdi Bouchetara
Keyword(s):  
Literature Review ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Multinational Companies ◽  
Qualitative Approach ◽  
Tax Administration ◽  
Short Term ◽  
Profit Shifting ◽  
Tax System ◽  
International Tax

Globalization and digitalization lead to flaws and asymmetries in tax rules which were used by multinational companies in their own benefit. Then, to face tax avoidance and tax losses which represents 100 to 240 billion dollars per year, Organization for Economic Co-operation and Development and G-20 implement, since 2012, the Base Erosion and Profit Shifting project, base erosion and profit shifting, which is the most important international reform that tax system has known. This paper aims to understand whether the Base Erosion and Profit Shifting project’s transfer pricing actions mitigate tax avoidance by multinationals through a literature review and a qualitative approach. We interview 05 international tax specialists working in Multinational Companies and Tax Administration. We found that the project’s transfer pricing reforms mitigate tax avoidance in short term. We confirm the first hypothesis, that the Base Erosion and Profit Shifting project’s transfer pricing inputs mitigate tax avoidance in the short term, and following the results obtained, we refute the second hypothesis that Base Erosion and Profit Shifting actions dealing with transfer pricing do not mitigate tax avoidance.

scholarly journals Is Neoliberalism Still Spreading? The Impact of International Cooperation on Capital Taxation

2020 ◽  
Author(s):  
Lukas Hakelberg ◽  
Thomas Rixen
Keyword(s):  
International Cooperation ◽  
Tax Evasion ◽  
Negative Impact ◽  
Tax Avoidance ◽  
Tax Rates ◽  
Capital Taxation ◽  
Profit Shifting ◽  
Tax Rate ◽  
Corporate Profits ◽  
The Impact

The downward trend in capital taxes since the 1980s has recently reversed for personal capital income. At the same time, it continued for corporate profits. Why have these tax rates di-verged after a long period of parallel decline? We argue that the answer lies in different levels of change in the fights against tax evasion and tax avoidance. The fight against evasion by households progressed significantly since 2009, culminating in the multilateral adoption of automatic exchange of information (AEI). In contrast, international efforts against base ero-sion and profit shifting (BEPS) failed to curb tax avoidance by corporations. We theorize that international cooperation is an intervening variable, countering the negative impact of tax competition on capital taxation by reducing the risk of capital flight. Under such conditions, domestic political pressures in favor of higher capital taxes can unfold. We confirm our argu-ment in a difference-in-difference analysis and through additional tests with data for up to 35 OECD countries from 2000-2017. Our central estimate suggests that the average tax rate on dividends in 2017 is 4.5 percentage points higher than it would have been absent international tax cooperation.

scholarly journals Monitoring the Impact of Tax Avoidance on the State Budget of Ukraine

2020 ◽  
Vol 23 (1) ◽  
pp. 89-94
Author(s):  
Natalia Lagodienko ◽  
◽  
Victoriia Palamarchuk ◽  
Vladyslav Hamaiun ◽  
◽  
...  
Keyword(s):  
Tax Evasion ◽  
Negative Impact ◽  
Tax Avoidance ◽  
The State ◽  
Economic Situation ◽  
State Budget ◽  
Tax System ◽  
Tax Revenues ◽  
Tax Legislation ◽  
The Impact

Introduction. Due to unstable economic situation in the country, the constant state budget deficit, the high level of the shadow economy in Ukraine and the crisis in the world, it is necessary to develop effective mechanisms to combat tax evasion, improve tax legislation and reform the tax system. The level of tax evasion in Ukraine tends to increase steadily. Therefore, there is a need to study the problem of tax evasion in Ukraine and its impact on the economy. Purpose. The main purpose of the study is to monitor the impact of tax evasion on the state budget of Ukraine. Results. The impact of tax evasion on the state budget of Ukraine in the conditions of unstable economic situation was monitored. The regulatory framework of Ukraine on tax evasion is indicated. Schematically presents the composition of a criminal offense – tax evasion. The dynamics of revenues of the state and consolidated budgets of Ukraine are presented. The dynamics of tax revenues to the state and consolidated budgets of Ukraine is analyzed. The average indicators of revenues of the state and consolidated budgets, the average indicators of the share of tax revenues in the total revenues of the state and consolidated budgets of Ukraine during the study period are calculated. The main schemes of tax evasion in Ukraine and conditional losses from them for the state budget are studied. The level of tax burden in the state is determined and its dynamics are presented. It has been proven that tax evasion has a negative impact on Ukraine’s economy. Conclusions. We are convinced that the introduction of effective mechanisms to combat tax evasion, adaptation to modern conditions of digitalization, improvement and updating of tax legislation, increasing trust between taxpayers and the state, combating bureaucracy and corruption, reforming the tax system – all this will help educate Ukrainian citizens. tax responsible population, minimize opportunities for tax evasion, reduce accounts payable and the impact of creditors on the economy and political situation in the country, improve economic performance in the country, increase the level of economic and national security of Ukraine.

scholarly journals A Study on Anti-Money Laundering: Principles And Perceptions in Context to India

2021 ◽  
pp. 127-137
Author(s):  
R. Harika ◽  
V. N. V. Sai Ramresh
Keyword(s):  
Money Laundering ◽  
Tax Evasion ◽  
Tax Avoidance ◽  
Combat Money Laundering

Tax evasion is the focal turn of numerous genuine offenses. Hacking frameworks or laundering cash has become an extraordinary calling of individuals where they exploit distinctive monetary and general sets of laws of various nations. AML is needed to make the country less appealing for the launderers, in this manner shielding the monetary area from functional and reputational hazards. To have a thorough paper, the paper is partitioned into four sections. Part I opens up with clarifying the ideas and cycles of tax evasion calling attention to the causes and methods of illegal tax avoidance. Part II moves with rules and guidelines/control instruments to manage the issue of illegal tax avoidance. Considering the previously mentioned conversation Part III continues in expounding the ideas to have a decent enemy of tax evasion system. The paper is the principal endeavor to move toward AML Bill 2008 to combat money laundering.

scholarly journals Assessing impact of base erosion and profit shifting on performance of subsidiaries of multinational corporations in Baltic countries

Equilibrium ◽  
2019 ◽  
Vol 14 (2) ◽  
pp. 277-293
Author(s):  
Egidijus Kundelis ◽  
Renata Legenzova
Keyword(s):  
Multinational Corporations ◽  
Empirical Research ◽  
Tax Avoidance ◽  
Empirical Literature ◽  
Company Performance ◽  
Tax Rates ◽  
Profit Shifting ◽  
Baltic Countries ◽  
The Baltic ◽  
The Impact

Research background: The problem of base erosion and profit shifting by multi-national corporations has been debated from different perspectives because of its multiple impact on the key actors in the economy. Studies refer to its positive impact on companies via corporate taxes saved, but its negative impact on governments via reduced tax collection. A number of empirical studies conducted in different countries support the substantial BEPS impact on company performance, but report differences in its magnitude. Other authors claim that, despite a wide range of tax avoidance opportunities available, tax avoidance is limited due to institutional measures imposed (tax audits, penalties for non-compliance) and high implementation costs. A majority of the previous empirical research covered large countries (USA, Germany) or regions (e.g. Europe), but there is a gap in the re-search assessing the BEPS impact on multinational corporations’ subsidiaries’ performance in countries with lower corporate income tax rates such as the Baltic countries. Purpose of the article: To assess the impact of base erosion and profit shifting on multinational corporations’ subsidiaries’ performance in the Baltic countries. Methods: Empirical research is conducted based on the framework employed by Hines and Rice (1994) to measure BEPS impact on company performance. Regression analysis with fixed effects was applied to a sample of 3,422 Latvian, Lithuanian and Estonian subsidiaries of multinational corporations, which are characterized by low corporate tax rates.  The data for the period of 2007–2015 was retrieved from the Amadeus database. Findings & Value added: The research revealed that Baltic countries’ tax differentials between multinational corporations’ parent and subsidiary countries might have a significant impact on the subsidiary’s financial performance. When the tax rate differences between Baltic and the foreign countries decrease by 1%, reported profits in Baltic countries increase by 2.3%, indicating profit-shifting behaviour. This is in line with the empirical literature and practices applied by multinational corporations. It is also in favour of anti-tax avoidance measures introduced by the EC to be adopted by Baltic and other EU countries.

scholarly journals Does the Tax System Reduce Tax Evasion in Light of the Governance Mechanisms? Evidence From Jordan

2021 ◽  
Vol 12 (2) ◽  
pp. 99
Author(s):  
Ashraf Bataineh
Keyword(s):  
Tax Evasion ◽  
Income Tax ◽  
Social Impact ◽  
Positive Impact ◽  
Governance Mechanisms ◽  
Official Statistics ◽  
Tax System ◽  
Study Results ◽  
The Impact ◽  
Awareness Level

This study aims to measure the impact of tax system elements on reducing the tax evasion, in light of the governance mechanisms in Jordan. The study sample consists of (140) tax auditors at the Jordanian Income tax and sales department, and to achieve the study objectives the researcher designed a questionnaire and distributed it on the study sample members. Study results show that elements of the tax system (tax legislations, tax administration, and Taxpayer) have a positive impact on reducing the tax evasion, in light of governance mechanisms. study recommends the need to raise the tax awareness level among members of the Taxpayer, work to reduce the continuation of making adjustments on tax laws and legislation, and give a sufficient period of time to ensure that desired economic and social impact being achieved from these adjustments, with the need to announce the official statistics of tax evasion’s figures and ratios, because the unofficial statistics on tax evasion have been tarnished by some exaggeration where work should concentrate on increasing penalties of tax evaders.

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