scholarly journals Assessment of the international competitiveness of the corporate profit tax in Ukraine

2021 ◽  
Vol 2021 (1) ◽  
pp. 116-127
Author(s):  
Nataliia Frolova ◽  
◽  
Keyword(s):  
Methodological Approach ◽  
Weighted Average ◽  
International Competitiveness ◽  
Oecd Countries ◽  
Tax Rates ◽  
Tax Rate ◽  
Corporate Profit ◽  
Accelerated Depreciation ◽  
International Ranking ◽  
Main Components

The article is devoted to assessing the international competitiveness of the corporate profit tax system based on the approach of the US Tax Foundation, which develops International Tax Competitiveness Index of the corporate profit tax (ICI) and takes into account the level of profit tax rates, cost recovery, tax incentives and complexity of tax law. According to the analysis of the international ranking of OECD countries, Estonia, Latvia, Lithuania, and Hungary had the highest ICIs in 2019-2020. The main factors that have had a positive effect on their competitiveness are the low top marginal income tax rate, unlimited loss carryback and carryforward, no restrictions on the list of assets subject to depreciation, as well as the use of accelerated depreciation, which allows companies to compensate for a larger share of the initial value of assets, LIFO inventory or at least inventory by the weighted average cost method, no Patent Box; no tax credit for R&D, and low corporate profit tax complexity. The calculation of the ICI for Ukraine, based on the approbation of the methodological approach of the Tax Foundation, found that in 2019-2020 Ukraine with a total score of 55.07 took 24th place out of 35 OECD countries. The author characterizes the main components of Ukrainian corporate profit taxation in terms of their impact on international competitiveness; in addition, ways to increase ICI are substantiated.

scholarly journals Assessment of the international competitiveness of the corporate income tax of Ukraine

2021 ◽  
Vol 2021 (1) ◽  
pp. 145-159
Author(s):  
Natalia Frolova ◽  
◽  
Keyword(s):  
Income Tax ◽  
Methodological Approach ◽  
Weighted Average ◽  
International Competitiveness ◽  
Oecd Countries ◽  
Corporate Income Tax ◽  
Tax Rate ◽  
Corporate Income Taxation ◽  
Accelerated Depreciation ◽  
International Ranking

The article is devoted to assessing the international competitiveness of the corporate income tax system based on the approach of the US Tax Foundation, which develops International Tax Competitiveness Index of the corporate income tax (ICI) and takes into account the level of income tax rates, cost recovery, tax incentives and complexity of tax law. According to the analysis of the international ranking of OECD countries, Estonia, Latvia, Lithuania, and Hungary had the highest ICIs in 2019-2020. The main factors that have had a positive effect on their competitiveness are the low top marginal income tax rate, unlimited loss carryback and carryforward, no restrictions on the list of assets subject to depreciation, as well as the use of accelerated depreciation, which allows companies to compensate for a larger share of the initial value of assets, LIFO inventory or at least inventory by the weighted average cost method, no Patent Box; no tax credit for R&D, and low corporate income tax complexity. The calculation of the ICI for Ukraine, based on the approbation of the methodological approach of the Tax Foundation, found that in 2019-2020 Ukraine with a total score of 55.07 took 24th place out of 35 OECD countries. The author characterizes the main components of Ukrainian corporate income taxation in terms of their impact on international competitiveness; in addition, ways to increase ICI are substantiated.

scholarly journals The Effect of Corporate Taxation on Investment and Financial Policy: Evidence from the DPAD

2018 ◽  
Vol 10 (2) ◽  
pp. 272-301 ◽  
Author(s):  
Eric Ohrn
Keyword(s):  
The United States ◽  
Financial Policy ◽  
Tax Rates ◽  
Corporate Tax ◽  
Tax Rate ◽  
Investment Financing ◽  
Point Reduction ◽  
Accelerated Depreciation ◽  
Tax Expenditure ◽  
Quasi Experimental

This study estimates the investment, financing, and payout responses to variation in a firm's effective corporate income tax rate in the United States. I exploit quasi-experimental variation created by the Domestic Production Activities Deduction, a corporate tax expenditure created in 2005. A 1 percentage point reduction in tax rates increases investment by 4.7 percent of installed capital, increases payouts by 0.3 percent of sales, and decreases debt by 5.3 percent of total assets. These estimates suggest that lower corporate tax rates and faster accelerated depreciation each stimulate a similar increase in investment, per dollar in lost revenue. (JEL D22, D25, G31, G32, H25, H32)

scholarly journals The estimation of reaction functions under tax competition

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Raffaele Miniaci ◽  
Paolo M. Panteghini ◽  
Giulia Rivolta
Keyword(s):  
Tax Competition ◽  
A Priori ◽  
Weighted Average ◽  
Real Data ◽  
Policy Implications ◽  
Empirical Literature ◽  
Tax Rates ◽  
Vector Autoregressive ◽  
Tax Rate ◽  
Reaction Functions

Abstract Most of the empirical literature on tax competition has been using panel models in which each country’s tax rate responds to a weighted average of other countries’ tax rates, where weights are given. This approach imposes the reaction functions to be such that all tax rates are either strategic complements or strategic substitutes for all the countries. Moreover, it also requires that the intensity of the reactions of the countries to be proportional to the same set of given weights. Since no theoretical model relies on such restrictive assumptions, we regain flexibility in the empirical analysis by using Vector Autoregressive (VAR) models, where the sign and intensity of countries’ reactions may be heterogeneous. Using a Monte Carlo exercise, we show that if the objects of interest are the reactions to shocks in the tax rates of the other countries and there is no a priori knowledge of the structure of the economy, it can be convenient to opt for a VAR rather than a panel setup. A Bayesian VAR model on real data shows that strategic complementarity between some countries may co-exist with strategic substitutability between other countries, a finding with potential policy implications on the debate on tax competition.

scholarly journals The Effect of Corporate Profit Tax on Attracting Foreign Direct Investment in Albania

2017 ◽  
Vol 8 (2) ◽  
pp. 186
Author(s):  
Shpresa Cela
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Foreign Direct Investments ◽  
Tax Rates ◽  
Corporate Tax ◽  
Macroeconomic Factors ◽  
Fdi Inflows ◽  
Tax Rate ◽  
Corporate Profit ◽  
Legal Infrastructure

The aim of this study is to analyze the major cause of the instability of foreign direct investments in Albania these last years, their lowest level of FDI when compared with other countries in the region, and the importance of these investments in developing countries like Albania. The size of FDI has a significant effect on the financial and macroeconomic factors, government and infrastructure factors, and the factors by fiscal nature. In this study, we disengage fiscal factors and in particular, the corporate profit tax rate. The aim of this study was to prove that in countries with weak legal infrastructure, this factor is statistically significant in attracting Foreign Direct Investment. Thus, should Albania be considered as a country with weak legal infrastructure? Due to this question, we took into consideration specific indicators measured in recent years by various world organizations by comparing them with various countries of the region. Also, we built an econometric model through multiple regression by collecting data on the tax rate applied in Albania from 1992- 2016, and the level of FDI for this period. This is in a bid to ascertain the effect or impact that profit taxes has on FDI inflows in Albania. In conclusion, Corporate Tax Rates is a factor that has a very significant impact on the size of FDI in Albania.

scholarly journals Policy Forum: Is Accelerated Depreciation Good or Misguided Tax Policy?

2019 ◽  
Vol 67 (1) ◽  
pp. 41-55
Author(s):  
Philip Bazel ◽  
Jack Mintz
Keyword(s):  
United States ◽  
Tax Reform ◽  
The United States ◽  
Tax Rates ◽  
Corporate Tax ◽  
Tax Base ◽  
Tax Rate ◽  
Accelerated Depreciation ◽  
The Government ◽  
Jobs Act

The authors examine the implications of Canada's response to the 2017 US tax reform. Canada's focus on accelerated tax depreciation will achieve lower marginal effective tax rates on capital for taxpaying companies, well below the US levels achieved with the Tax Cuts and Jobs Act that came into effect on January 1, 2018. By ignoring neutrality, the government offsets some of the potential gains by reducing the tax burden on capital, thereby failing to maximize efficiency gains from a better corporate tax system. Further, Canada's approach fails to respond to competitiveness effects of US reforms on corporate tax base erosion in Canada as companies shift profits to the United States. The low US tax rate on intangible income will draw certain functions to the United States. A more comprehensive approach to corporate tax reform, including some reduction in corporate income tax rates, would have been a preferable response.

scholarly journals Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance

2009 ◽  
Vol 1 (2) ◽  
pp. 31-52 ◽  
Author(s):  
Raj Chetty
Keyword(s):  
Income Elasticity ◽  
Weighted Average ◽  
Deadweight Loss ◽  
Tax Rates ◽  
Tax Rate ◽  
Taxable Income ◽  
Income Elasticities ◽  
Highly Sensitive ◽  
Efficiency Cost ◽  
Resource Cost

Martin Feldstein's (1999) widely used taxable income formula for deadweight loss assumes the marginal social cost of evasion and avoidance equals the tax rate. This condition is likely to be violated in practice for two reasons. First, some of the costs of evasion and avoidance are transfers to other agents. Second, some individuals overestimate the costs of evasion and avoidance. In such situations, excess burden depends on a weighted average of the taxable income and total earned income elasticities, with the weight determined by the resource cost of sheltering income from taxation. This generalized formula implies the efficiency cost of taxing high income individuals is not necessarily large despite evidence that their reported incomes are highly sensitive to marginal tax rates. (JEL H21, H24, H26)

Multi-component complex ores: Special aspects of using ad valorem and specific mineral extraction tax rates

2020 ◽  
Vol 26 (6) ◽  
pp. 1297-1314
Author(s):  
T.A. Loginova
Keyword(s):  
Krasnoyarsk Krai ◽  
Tax Rates ◽  
Russian Regions ◽  
Rent Extraction ◽  
Effective Tax Rate ◽  
Mineral Extraction ◽  
Tax Rate ◽  
Significant Differentiation ◽  
The Russian Federation ◽  
Ad Valorem

Subject. This article discusses the issues related to the taxation for multi-component complex ores and commercial components using ad valorem and specific mineral extraction tax (MET) rates. Objectives. The article aims to assess some results of the application of specific MET rates in the Krasnoyarsk Krai and ad valorem rates in other subjects of the Russian Federation, taking into account the specifics of the current taxation procedure for multi-component complex ores and their commercial components. Methods. For the study, I used a comparative analysis, synthesis, and the method of extrapolation. Results. The article shows that the change in the type of MET rate for multi-component complex ores and commercial components has led to a significant increase in the effective tax rate. This led to an increase in the corresponding MET revenues in the Krasnoyarsk Krai. The article also substantiates that the introduction of specific rates in other Russian regions requires a significant differentiation of specific MET rates. However, this is risk-bearing concerning unfair distribution of the tax burden and the complexity of tax administration. Conclusions. The issue of identifying multi-component complex ores and their commercial components is controversial. Extending specific MET rates to other regions may complicate the mechanism of rent extraction.

A Study of Perceived Ethicality of Low Corporate Effective Tax Rates

2017 ◽  
Vol 32 (1) ◽  
pp. 87-104 ◽  
Author(s):  
F. Todd DeZoort ◽  
Troy J. Pollard ◽  
Edward J. Schnee
Keyword(s):  
Mediation Analysis ◽  
General Public ◽  
Tax Avoidance ◽  
Tax Rates ◽  
Perceived Fairness ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Policy Practice ◽  
Participant Group

SYNOPSIS U.S. corporations have the ability to avoid paying domestic taxes to achieve an effective tax rate that is much lower than the statutory federal tax rate. This study evaluates the extent that individuals differ in their attitudes about the ethicality of corporations avoiding domestic taxes to achieve low effective tax rates. We also examine the extent to which the specific tax avoidance method used by corporations to access a low effective tax rate affects perceived ethicality. Eighty-two members of the general public and 112 accountants participated in an experiment with two participant groups and three tax avoidance methods manipulated randomly between subjects. The results indicate a significant interaction between participant group and tax avoidance method, with the general public considering shifting profits out of the country to achieve a low effective tax rate to be highly unethical, while the accountants find tax avoidance from carrying forward prior operating losses to be highly ethical. Further, mediation analysis indicates that perceived fairness and legality mediate the effects of participant type on perceived ethicality. Mediation analysis also reveals that sense of fairness and legality mediate the link between tax avoidance method and perceived ethicality. We conclude by considering the study's policy, practice, and research implications.

A Model of Multinational Income Shifting and an Application to Tax Planning with E-Commerce

2014 ◽  
Vol 36 (2) ◽  
pp. 27-53 ◽  
Author(s):  
Kenneth J. Klassen ◽  
Stacie K. Laplante ◽  
Carla Carnaghan
Keyword(s):  
Tax Planning ◽  
Investment Model ◽  
Income Shifting ◽  
Tax Rates ◽  
Foreign Investments ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Foreign Earnings ◽  
Joint Consideration ◽  
The U.S

ABSTRACT: This manuscript develops an investment model that incorporates the joint consideration of income shifting by multinational parents to or from a foreign subsidiary and the decision to repatriate or reinvest foreign earnings. The model demonstrates that, while there is always an incentive to shift income into the U.S. from high-foreign-tax-rate subsidiaries, income shifting out of the U.S. to low-tax-rate countries occurs only under certain conditions. The model explicitly shows how the firms' required rate of return for foreign investments affects both repatriation and income shifting decisions. We show how the model can be used to refine extant research. We then apply it to a novel setting—using e-commerce for tax planning. We find firms in manufacturing industries with high levels of e-commerce have economically significant lower cash effective tax rates. This effect is magnified for firms that are less likely to have taxable repatriations. JEL Classifications: G38, H25, H32, M41.

scholarly journals Horizontal interactions in local personal income taxes

2021 ◽  
Author(s):  
Johan Lundberg
Keyword(s):  
Population Size ◽  
Political Representation ◽  
Large Data ◽  
Personal Income ◽  
Set Covering ◽  
Tax Rates ◽  
Data Set ◽  
Relative Population ◽  
Tax Rate ◽  
Local Council

AbstractTheories of inter-jurisdictional tax and yardstick competition assume that the tax decisions of one jurisdiction will influence the tax decisions of other jurisdictions. This paper empirically addresses the issue of horizontal dependence in local personal income tax rates across jurisdictions. Based on a large data set covering Swedish municipalities over a period of 14 years, we test for interactions across municipalities that share a common border, across municipalities within a distance of 100 km of each other, and across municipalities with similar political representation in the local council. We also test the hypothesis that the tax rate of relatively larger municipalities has a greater influence on their neighbors' tax rate compared to the influence of their smaller neighbors. Our results suggest that when lagged tax rates are controlled for, the horizontal correlation across municipalities that share a common border or are within a distance of 100 km from each other becomes insignificant. This result is of importance as it suggests that lagged tax rates should be included or at least tested for when testing for horizontal interactions or mimicking in local tax rates. However, our results support the hypothesis of horizontal interactions across municipalities that share a common border when the influence of neighboring municipalities is also weighted by their relative population size, i.e. relatively larger neighbors tend to have a greater impact on their neighbor's tax rates than their relatively smaller neighbors. This is of importance as it suggests that distance or proximity matters, although only in combination with the relative population size. We also find some evidence of horizontal dependence across municipalities with similar political preferences.

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