scholarly journals Covid-19 and corporate tax avoidance: Measuring long-run tax burdens as an alternative bailout test

2021 ◽  
Vol 4 (3) ◽  
pp. 216-244
Author(s):  
Subagio Efendi
Keyword(s):  
Financial Aid ◽  
Income Tax ◽  
Tax Avoidance ◽  
Tax Compliance ◽  
Total Sample ◽  
Ordinary Least Squares ◽  
Corporate Tax ◽  
Long Run ◽  
Tax Returns ◽  
Avoidance Measures

This study fills the gap in the tax authority’s Covid-19 financial aid verifications by examining, and nominating, Long-run ETR (Dyreng et al., 2008) as the better corporate tax avoidance measure in excluding tax evader firms from the broad stimulus programs. Analysing confidential tax returns of 4,752 largest firms (32,120 firm-years) in Indonesia over 2009 to 2017 periods, this study found 18.12 percent of total sample firms is able to retain its Long-run ETR below 10 percent, which indicates continual tax avoidance activities by these firms during observation periods. Moreover, applying univariate and multivariate Ordinary Least Squares and Panel Data estimations, this study reveals, relative to other tax avoidance measures, Lagged Cash ETR (Lisowsky, 2010; Lisowsky et al., 2013) present the most consistent reliability in predicting long-run income tax burdens. Thus, this study asserts, in the conditions of computing Long-run ETR is costly and impractical (i.e. because of data unavailability), tax authority and policymakers can directly analyse firms’ Lagged Cash ETR to gauge their long-run income tax burdens and tax compliance behaviours prior the economic downturn. 

scholarly journals The Autonomous Taxation of Corporate Expenses in Portugal

2019 ◽  
Vol 0 (0) ◽  
Author(s):  
Ana Dinis ◽  
António Martins ◽  
Cidália Lopes
Keyword(s):  
Income Tax ◽  
Tax Compliance ◽  
Corporate Income Tax ◽  
Corporate Tax ◽  
Fiscal Management ◽  
Tax Management ◽  
Tax Returns ◽  
Fiscal Revenue ◽  
Key Dimensions ◽  
Chartered Accountants

Abstract Portuguese corporate income tax has a special feature rarely seen in other countries. Autonomous taxes are levied on an extensive set of corporate expenses, irrespective of corporate profitability. Fiscal revenue from the autonomous taxation of expenses comprises about 12 % of corporate income tax receipts, which illustrates its relevance for the tax authorities and the corporate world. As autonomous tax rules are usually interpreted and applied to certain corporate expenses by chartered accountants (CAs) when computing income tax liabilities and filling in tax returns, the purpose of this paper is to present an empirical study of the perceptions of Portuguese CAs regarding key dimensions of autonomous taxation of expenses (ATE), as these influence corporate tax management. Using a sample of 665 CAs surveyed, and applying factor analysis, the paper concludes that tax complexity, tax compliance and tax planning are the main dimensions of ATE perceived by respondents. Besides the corporate income tax impact on fiscal management, new layers of complexity, planning opportunities and compliance costs are perceived to be added by ATE. Additionally, by applying cluster analysis, the paper finds that sociodemographic characteristics of CAs (e. g. age, gender, professional environment, level of expertise) generate clusters of CAs with different perceptions of the role and consequences of ATE in the management of corporate tax affairs.

scholarly journals Corporate Taxation and the International Challenge

2014 ◽  
Vol 2014 (2) ◽  
pp. 113-131
Author(s):  
Peter Koerver Schmidt
Keyword(s):  
Income Tax ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Debt Financing ◽  
Tax Rates ◽  
Eu Law ◽  
Corporate Tax ◽  
Profit Shifting ◽  
Tax Rate ◽  
Avoidance Measures

Abstract It is argued th**at the higher degree of economic integration across borders and the international trend towards a reduction of corporate income tax rates have had a significant impact on the Danish corporate tax regime in recent years. Accordingly, during the last ten years the Danish statutory corporate tax rate has been lowered further, while several government actions at the same time have been taken in order to combat international tax avoidance and evasion. As a result, new anti-avoidance provisions have been introduced and some of the older anti-avoidance provisions have been tightened in order to prevent base erosion and profit shifting. Thus, to some extent Denmark has already tried to address a number of the key pressure areas mentioned in the recently published OECD BEPS report, such as international mismatches in entity and instrument characterization, the tax treatment of related party debt financing, transfer pricing and the effectiveness of anti-avoidance measures. However, the article concludes that these anti-avoidance provisions often suffer from being quite complex, very broad in scope and open to criticism from an EU law perspective.

scholarly journals Taxing Micro, Small and Medium Enterprises in Yogyakarta: Regulation and Compliance

BESTUUR ◽  
2021 ◽  
Vol 9 (1) ◽  
pp. 59
Author(s):  
Siti Rahma Novikasari ◽  
Duc Quang Ly ◽  
Kerry Gershaneck
Keyword(s):  
Tax Policy ◽  
Income Tax ◽  
Government Regulation ◽  
Small And Medium Enterprises ◽  
Tax Avoidance ◽  
Tax Compliance ◽  
Legal Compliance ◽  
The Government ◽  
Medium Enterprises ◽  
Compliance Constraints

<p>Government Regulation No. 46/2013 has not been optimal in providing legal compliance on taxation for Micro, Small, and Medium Enterprises (MSMEs), especially in Yogyakarta. This policy was evaluated and amended with Government Regulation No. 23/2018. The amendment in tax policy for MSME actors was this research background to examine: First, how does the final income tax policy impact MSME taxpayers' compliance in Yogyakarta? Second, what are the legal compliance constraints of MSME taxpayers? The method used in this research was a juridical empirical, supported with the statute and conceptual approach. The results showed that the amendment in the final income tax tariff policy from 1% to 0.5%, as well as provide legal certainty of the timeframe of taxation had a positive impact on increasing taxpayer compliance. There was an increase in the number of taxpayers to 41,000 in 2019, or an increase of 15.5% compared to the number of taxpayers in 2017. However, tariff reduction has not been the answer to taxpayer non-compliance, the Regional Office of the Directorate General of Taxes of the Special Region of Yogyakarta still found tax avoidance. Tax compliance constraints were also caused by taxpayers' distrust of the government, poor tax morale, and tax knowledge. The government needs to conduct a cooperative compliance approach in taxation policies based on trust and dialogue between taxpayers and the government to improve MSME taxpayer compliance.</p><p><strong>Keywords:</strong> Tax Compliance; Final Income Tax Regulation; Micro; Small; Medium Enterprises.</p>

Paying the State Use Tax

2016 ◽  
Vol 45 (2) ◽  
pp. 260-282 ◽  
Author(s):  
John E. Anderson
Keyword(s):  
Income Tax ◽  
Research Question ◽  
Tax Compliance ◽  
Behavioral Study ◽  
Reporting Behavior ◽  
Tax Returns ◽  
Use Tax ◽  
Rate Selection ◽  
Tax Reporting ◽  
Selection Of

To improve use tax compliance, twenty-seven states have added a line to their income tax returns where taxpayers can report taxable sales. This article reports results of a behavioral study of a postcard “nudge” sent to income tax filers in one of those states, Nebraska, to encourage self-reporting of liability. The research question is whether the informational nudge was sufficient to alter self-reporting behavior. Data indicate that the nudge more than doubled the likelihood of use tax reporting and nearly doubled the amount of revenue collected, but the rate of use tax reporting remains extremely low. Probit models reveal that use tax reporting rises with income at a decreasing rate. Selection models are also estimated because of positive selection bias in the selection of the treatment group. Taken together, the results indicate that an informational nudge is not likely to be sufficient to substantially change use tax reporting behavior.

scholarly journals Towards Enhanced Tax Compliance in Kenya

2018 ◽  
Vol 10 (1) ◽  
Author(s):  
SAN LIO ◽  
JOHN MIRICHII
Keyword(s):  
Income Tax ◽  
Tax Compliance ◽  
Governance Structure ◽  
Tax Revenue ◽  
New Governance ◽  
Bottom Line ◽  
County Governments ◽  
Tax Returns ◽  
Research Findings ◽  
The Cost

Tax is the bottom line source of revenue for the world’s governments. Taxation is the only known realistic means of collecting resources to finance public expenditure. This study aims at unraveling efficient mechanisms to be employed in Kenya to enhance income tax compliance to boost tax revenue for the current and future governments. With the new governance structure of forty seven county governments in place following the promulgation of the new constitution 2010, this exercise is timely. The study will make use of both secondary and primary sources of data in eliciting the required information necessary for the research findings.  The sample size will be made up of twenty companies drawn from different sectors of the Kenyan economy operating within the Nairobi County.The Statistical Package for the Social Sciences (SPSS) version 20is used in the data analysis and presentation of findings.  The overall finding is that a tax system should be simple, withstraightforward rules for lay citizens to understand and at the same time guarantee that the cost of tax collection and administration is not higher than the actual tax revenue raised.The research findings lead to a conclusion that multiple rates of income tax, varied dates of making tax returns and a bulky legal tax framework make income tax compliance unforeseeable in Kenya.

The Role of Auditors, Non-Auditors, and Internal Tax Departments in Corporate Tax Aggressiveness

2015 ◽  
Vol 91 (1) ◽  
pp. 179-205 ◽  
Author(s):  
Kenneth J. Klassen ◽  
Petro Lisowsky ◽  
Devan Mescall
Keyword(s):  
Tax Compliance ◽  
Tax Planning ◽  
Internal Revenue Service ◽  
Corporate Tax ◽  
Tax Aggressiveness ◽  
Big 4 ◽  
Confidential Data ◽  
Tax Preparer ◽  
Tax Returns

ABSTRACT Using confidential data from the Internal Revenue Service on who signs a corporation's tax return, we investigate whether the party primarily responsible for the tax compliance function of the firm—the auditor, an external non-auditor, or the internal tax department—is related to the corporation's tax aggressiveness. We report three key findings: (1) firms preparing their own tax returns or hiring a non-auditor claim more aggressive tax positions than firms using their auditor as the tax preparer; (2) auditor-provided tax services are related to tax aggressiveness even after considering tax preparer identity, which supports and extends prior research using tax fees as a proxy for tax planning; and (3) Big 4 tax preparers, in particular, are linked to less tax aggressiveness when they are the auditor than when they are not the auditor. Our findings help policymakers and researchers better understand an important feature of tax compliance intermediaries; particularly, how the dual role via audits is related to observable corporate tax outcomes.

scholarly journals The Effect of Corporate Tax Avoidance on the Cost of Equity

2016 ◽  
Vol 91 (6) ◽  
pp. 1647-1670 ◽  
Author(s):  
Beng Wee Goh ◽  
Jimmy Lee ◽  
Chee Yeow Lim ◽  
Terry Shevlin
Keyword(s):  
Information Quality ◽  
Tax Avoidance ◽  
Cash Flows ◽  
Equity Capital ◽  
Testable Hypothesis ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Corporate Tax ◽  
Long Run ◽  
The Cost

ABSTRACT Based on Lambert, Leuz, and Verrecchia's (2007) derivation of the cost of equity capital in terms of expected cash flows, we generate a testable hypothesis that relates tax avoidance to a firm's cost of equity capital. Using three broad measures of tax avoidance—book-tax differences, permanent book-tax differences, and long-run cash effective tax rates—to test our hypothesis, we find that the cost of equity is lower for tax-avoiding firms. This effect is stronger for firms with better outside monitoring, firms that likely realize higher marginal benefits from tax savings, and firms with higher information quality. Overall, our results suggest that equity investors generally require a lower expected rate of return due to the positive cash flow effects of corporate tax avoidance. JEL Classifications: G32; H26; M41.

Ending the Tax Haven Scandals

2009 ◽  
Vol 9 (3) ◽  
pp. 1850175 ◽  
Author(s):  
Robert T. Kudrle
Keyword(s):  
Tax Evasion ◽  
Income Tax ◽  
Tax Avoidance ◽  
Personal Income Tax ◽  
Corporate Tax ◽  
Formula Apportionment ◽  
Automatic Information ◽  
Tax Haven ◽  
The World ◽  
Taking Action

States around the world appear more determined than ever to end tax haven abuse. The new U.S. administration, for example, is taking action against both major tax haven problems: corporation income tax avoidance and personal income tax evasion. Some progress may be made. This essay argues, however, that only radically new policy will likely suffice either to shore up corporate tax revenues or to sharply diminish evasion. Global formula apportionment is needed if the corporate income tax is to be preserved, and only a combination of automatic information sharing among governments and source withholding can stamp out evasion. As in most areas of international economic policy, U.S. leadership is essential.

scholarly journals Firms` Participation in Tax Amnesty Program Engaged in Financial Reporting Manipulation: An Empirical Evidence from Listed Companies in Indonesia

The Winners ◽  
2019 ◽  
Vol 20 (2) ◽  
pp. 85 ◽  
Author(s):  
Gatot Soepriyanto ◽  
Yanto Indra ◽  
Olivia The ◽  
Arfian Zudana
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Financial Statements ◽  
Corporate Tax ◽  
Dummy Variable ◽  
Tax Amnesty ◽  
Avoidance Measures ◽  
Score Model ◽  
Amnesty Programs

The research investigated the relation between firms participated in tax amnesty programs and their tendency to manipulate financial statements. The research explored some unique research settings during Indonesia’s tax amnesty period in 2016-2017. To examine the association, the researchers employed Beneish’s M-Score model to categorize the firm’s tendency to manipulate its financial statements. As the test variable, it classified the firm’s participation in the tax amnesty program with a dummy variable, 1 if the firm participated, and 0 otherwise. To control the variations in financial statements manipulation, it also included firm size, leverage, and profitability in our empirical model. Based on the sample of 796 firm-year observations in the Indonesian Stock Exchange (IDX) from the 2012-2017 period, it is found some evidence that firms participate in tax amnesty programs do not engage in financial statements manipulation. Further analysis of the corporate tax avoidance measures shows that those firms do not engage in tax avoidance activities either. The results suggest that firms participate in the tax amnesty programs are not necessary ‘bad firms’, and they just participate as a ‘symbolic’ gesture to get some indirect benefits of the program.

scholarly journals Tax Literacy: A Canadian Perspective

2021 ◽  
Vol 68 (4) ◽  
pp. 987-1007
Author(s):  
Anthony Pham ◽  
Antoine Genest-Grégoire ◽  
Luc Godbout ◽  
Jean-Herman Guay
Keyword(s):  
Income Tax ◽  
Measurement Instrument ◽  
Tax Compliance ◽  
Complex Structures ◽  
Personal Saving ◽  
Canadian Perspective ◽  
Tax Returns ◽  
Level Of Knowledge ◽  
High Level ◽  
The Way

Tax systems are complex structures that can be difficult for individuals to navigate. Understanding the way taxes are calculated and liabilities are assessed matters a lot when personal saving for retirement and education, and much of the government's social policy apparatus, are closely integrated with the tax system. This study uses a survey to measure individuals' knowledge about basic elements of the personal income tax, their perception of their own tax knowledge, and their tax-filing behaviour. One would hope that tax-literate Canadians would have a high level of knowledge of the way taxes work, and a realistic appreciation of the limits of their knowledge, and thus that they could make informed decisions, for example, when filing their tax returns. The survey data show that Canadians have good knowledge of basic tax facts but struggle when asked more complex questions regarding the progressivity of the income tax. Results were generally consistent across provinces with the notable exception of respondents in Quebec, who had higher marks on the authors' tax quiz but lower self-assessed tax knowledge. The measurement instrument employed in the study will allow for a refinement of research exploring the drivers of tax compliance as well as political attitudes toward taxes and redistribution.

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