scholarly journals Tax Incentives: An Effective Mechanism to Achieve EU Harmonization?

2020 ◽  
Vol 2 (2) ◽  
pp. 1
Author(s):  
Elisabeth Bustos-Contell ◽  
Salvador Climent-Serrano ◽  
Gregorio Labatut-Serer
Keyword(s):  
Tax Incentives ◽  
Tax Burden ◽  
Tax Rates ◽  
Incentive Structure ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Member States ◽  
Tax Rate ◽  
Tax Harmonization ◽  
Statutory Tax Rate

For decades, European Union (EU) wide corporate tax harmonization has been sought to eradicate business relocation for tax reasons. It is hoped that this harmonization will ensure that companies pay taxes in the countries where they operate. One mechanism that countries use to achieve this harmonization is tax incentives. Yet each country establishes its own incentive structure, according to its statutory tax rate. This study analyzes the effective tax burden in the initial 15 EU member states between 2006 and 2014 to identify significant differences that prevent tax harmonization across these countries. The statutory and effective tax rates are used to evaluate the tax burden. The net tax incentives and disincentives are also considered. The analysis shows that between 2006 and 2014, these 15 member states used tax incentives to close the gaps among these countries’ tax burdens. Countries with above-average effective tax rates offered greater tax incentives than countries with below-average effective tax rates. However, though these tax policies reduced the gap in the tax burden, harmonization of the effective tax rate was not achieved during the study period.

An Investigation of the Firm Size—Effective Tax Rate Relation in the 1980s

1993 ◽  
Vol 8 (2) ◽  
pp. 167-182 ◽  
Author(s):  
Thomas C. Omer ◽  
Karen H. Molloy ◽  
David A. Ziebart
Keyword(s):  
Firm Size ◽  
Tax Burden ◽  
Tax Rates ◽  
Corporate Tax ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Policy Makers ◽  
Tax Rate ◽  
Sample Composition ◽  
Rate Relation

Given the recent emphasis on effective tax rates by policy makers and accounting researchers, this study investigates the relation between firm size and corporate tax burdens on a yearly and an industry basis. The analysis is conducted using five effective tax measures employed in previous studies in order to determine the degree to which inferences between size and tax burden are robust across these different effective tax measures. The results indicate that the relation is fairly robust across measures and, in instances in which the relation is not upheld by our analysis, sample composition explains differences in the observed relation between firm size and corporate tax burden.

scholarly journals Company Taxation in the European Union

2012 ◽  
Vol 14 (3) ◽  
pp. 119-136 ◽  
Author(s):  
Dorota Wawrzyniak
Keyword(s):  
Tax Burden ◽  
Tax Rates ◽  
The European Union ◽  
Corporate Tax ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Advantages And Disadvantages ◽  
Company Taxation ◽  
Statutory Tax Rate ◽  
The Eu

This paper investigates different measures of corporate tax burden ranging from the most basic ones such as the statutory tax rate to the effective tax rates. Each of these measures has advantages and disadvantages and they may lead to different rankings of countries. One of the reasons lies the fact that they measure different things. The comparison of the statutory tax rates to the effective ones for the EU-27 during the period of 1998-2009 sometimes reveals very significant differences between these indicators. Taking this into consideration, the paper suggests that corporate tax burden analysis should not be limited to the most basic and readily available measure in the form of the statutory tax rate. Different measures are tailored to answer different research questions. Moreover, the article presents changes of company taxation for the EU-27 within 1998-2009.

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.

Taxation in a mixed economy: the case of China

2017 ◽  
Vol 34 (1) ◽  
pp. 49-61 ◽  
Author(s):  
Davidson Sinclair ◽  
Larry Li
Keyword(s):  
Income Tax ◽  
Central Government ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Government Ownership ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

Strategic Choice of Presentation Format: The Case of ETR Reconciliations

2021 ◽  
Author(s):  
Roman Chychyla ◽  
Diana Falsetta ◽  
Sundaresh Ramnath
Keyword(s):  
Income Tax ◽  
Strategic Choice ◽  
Presentation Format ◽  
Tax Rates ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Explicit Mention ◽  
Disclosure Strategy ◽  
Minimize Costs

To minimize costs related to unfavorable perceptions of their tax-related activities, firms with low effective tax rates (ETR) could avoid, where possible, explicit mentions of their effective tax rates. Using this reputational cost perspective we study an item of required disclosure in the income tax footnote of the 10-K, the ETR reconciliation table, where firms can choose a presentation format that reveals the tax rate (the percentage format) or one that avoids explicit mention of the effective tax rate (the dollar format). We find that firms with low ETRs are 24 percent more likely to use the dollar format, and are also less likely to mention their tax rates elsewhere in their disclosures, consistent with the choice of dollar format reflecting a firm's overall tax disclosure strategy. Analysts' tax expense forecasts are less accurate for dollar format firms, suggesting higher processing costs associated with tax-related disclosures for these firms.

scholarly journals Agressividade fiscal e evidenciação tributária: Um estudo das companhias brasileiras de capital aberto

2021 ◽  
Vol 19 ◽  
pp. 197-216
Author(s):  
Gabriela Silva de Castro Moraes ◽  
Eduardo Mendes Nascimento ◽  
Sandro Vieira Soares ◽  
Bernardo Fernandes Lott Prímola
Keyword(s):  
Tax Rates ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate

O objetivo deste estudo consiste em analisar o efeito da agressividade fiscal sobre a transparência corporativa nas companhias brasileiras de capital aberto. A pesquisa partiu de uma amostra de 256 empresas não financeiras, listadas na B3 do período de 2010 a 2018. Foi desenvolvido um índice de disclosure a partir do CPC 32 para, então, proceder a um painel com as medidas de agressividade fiscal (Effective Tax Rates – ETR, Cash Effective Tax Rate – CashETR e Book-Tax-Differences – BTD) como variáveis explicativas. Os achados revelaram que agressividade fiscal influencia negativamente a transparência corporativa; e que os setores de indústria e comércio, o tamanho da companhia, o nível de alavancagem e a rentabilidade influenciam positivamente a divulgação informacional.

scholarly journals Public Administration in EU: Harmonization of Income Taxes

2019 ◽  
pp. 280-291
Author(s):  
J. Korecko ◽  
R. Bacik ◽  
I. Voznakova
Keyword(s):  
European Union ◽  
Cluster Analysis ◽  
Income Taxes ◽  
Tax Burden ◽  
Tax Rates ◽  
Member States ◽  
Advantages And Disadvantages ◽  
Significant Difference ◽  
Tax Harmonization ◽  
The Eu

In the European communities, the need for tax harmonization has begun to commence since the beginning of integration efforts in the 1960s. The first attitudes to tax harmonization were very ambitious. The plan was not only structural harmonization but also harmonization of tax rates. The paper examines the nature and course of the direct tax harmonization process, describes its advantages and disadvantages as well as the positive and negative effects of tax competition. The paper aims to examine the development and volume of selected income taxes collected in the Member States of the European Union. It tells whether the harmonization of income taxes is still a stagnant process. Cluster analysis deals with looking for similarities of multidimensional objects. Two clustering methods were used – hierarchical agglomeration clustering and non-hierarchical clustering. Cluster analysis aimed to achieve groups of states that would have some homogeneity. Cluster analysis sorted the data into sets with the highest possible similarity within the group and the most significant difference between the groups. Analysis of tax burden and income tax rates confirmed significant differences in these indicators across the EU. On the other hand, cluster analysis revealed similar developments in tax systems in terms of their geographical location in Europe. Cluster analysis can be used to suggest possible steps to co-operate in harmonizing Member State taxes in the future. The authors of this article propose the possibility of harmonizing taxes and cooperating gradually within clusters rather than trying to apply uniform rules in all EU Member States at the same time. The conclusion of the article raises problems in the field of harmonization of direct taxes in the EU. The possibility of preserving autonomy in deciding on tax burden in the country is left to the many Member States because they see that autonomy as a competitive advantage, particularly in the field of investment. Keywords: tax, harmonization, income, European Union, cluster analysis.

scholarly journals Earnings Management, Effective Tax Rate (ETR) and Book-Tax Gap (BTG)

2018 ◽  
Vol 3 (1) ◽  
pp. 33-43
Author(s):  
Jasrial Jasrial ◽  
Susy Puspitasari ◽  
Ali Muktiyanto
Keyword(s):  
Earnings Management ◽  
Behavior Management ◽  
Banking Sector ◽  
Capital Intensity ◽  
Jel Classification ◽  
Tax Rates ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Tax Gap

Objective - This research examines the effect of company size, changes in out-cash flow, return on assets, conservatism, and profit levelling on earnings management. Methodology/Technique - The results of this research show that banking capital structure, capital intensity, intensity of inventory, and intensity of R & D have a significant impact on effective tax rates. Further, the results also show that, with respect to the non-banking sector, R & D expenditure contributes significantly to effective tax rates. Simultaneously, earnings management and effective tax rates, as well as other factors, also have an effect on book tax gap. Findings - This study shows that profit management has a significantly positive effect on book tax gap, and effective tax rates has a significant negative effects o book tax gap. In terms of the non-banking sector, earnings management and effective tax rate have no effect on book tax gap. Deferred tax expenses have a lower capability to detect earnings management than accrual, in both the banking and non-banking sector. Novelty - The study of management capabilities optimizes the role of book tax gap and effective tax rate for earning management. Both tax management and earnings management are closely related to behavior management in managing a company based on the agency theory. Furthermore, the study identifies a relationship between earnings management and book tax gap. Type of Paper: Empirical Keywords: Book Tax Gap; Effective Tax Rate; Earnings Management; Accrual Total; Indonesia. JEL Classification: H26, H29.

scholarly journals Investors´ decision on the context of the effective taxation of agricultural companies

10.5219/1223 ◽  
2019 ◽  
Vol 13 (1) ◽  
pp. 1040-1050
Author(s):  
Alena Andrejovská ◽  
Veronika Konečná
Keyword(s):  
Agricultural Production ◽  
Intangible Assets ◽  
Tax Rates ◽  
Equity Financing ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Tangible Assets ◽  
Marginal Tax Rates ◽  
External Sources ◽  
Statutory Tax Rate

The analysis of the effective taxation combines two different effective tax rates which are crucial for placement and monitoring of the investment amount in the particular country. Both of these tax rates are important for investors who make a decision on the benefits, as well as the risks of corporate taxation in the country. The contribution deals with the problem of the effective taxation through effective average tax rates (EATR) and effective marginal tax rates (EMTR). Especially, it focuses on agricultural production companies. The effectivity of taxation was observed for selected intangible and tangible assets for a period of 2004 and 2018. Our analysis evaluated the influence of the change in the statutory tax rates (and the other taxes and indicators, as well) on the change in effective average tax rates on capital in the agricultural companies. Based on the results, the lowest EATR, ranging from 20.79% to 25.25%, reported agricultural lands in both reference periods and for both ways of financing. Analyzing EMTR we found out that the lowest value reported investments in intangible assets that have crucial significance for investors. Our results definitely made it clear that in the EATR ↔ EMTR relationship, a form of financing investments is decisive. This relationship is used when an investor decides between several mutually exclusive locations or types of investment in a given country. In equity financing, the most effective capital is investing in intangible assets, and when we consider financing from external sources it is investment into stocks. An increase in the statutory tax rate of 2% resulted in a 12% increase in effective average tax rates.

scholarly journals Will Problems Arise When Banks are Exempted from Thin Capitalization Regulation?

2018 ◽  
Vol 14 (3) ◽  
pp. 157-167
Author(s):  
Arfah Habib Saragih
Keyword(s):  
Fixed Effects ◽  
Quantitative Method ◽  
Tax Avoidance ◽  
Tax Rates ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Negative Effect ◽  
Thin Capitalization ◽  
Unbalanced Panel Data

This research was intended to provide empirical evidences that the exemption of banks from Minister of Finance Decree Number 169/PMK.010/2015 did not raise any significant problem on banks tax avoidance which was measured by effective tax rates. Quantitative method was used in this study by conducting regression-fixed effects method on unbalanced panel data. This study found that thin capitalization in banks did not impact effective tax rates significantly. Present research also found that the banks size and profitability were other determinants of the level of tax avoidance in the banks sample. Bank size and profitability had a significant and negative effect on effective tax rate.

Sign in / Sign up

Export Citation Format

Share Document