scholarly journals Deferred Tax Positions under the Prism of Financial Crisis and the Effects of a Corporate Tax Reform

2015 ◽  
Vol 2 (2) ◽  
pp. 21-58 ◽  
Author(s):  
Evangelos Chytis ◽  
Evangelos Koumanakos ◽  
Spiridon Goumas
Keyword(s):  
Financial Crisis ◽  
Policy Design ◽  
Economic Recession ◽  
Corporate Tax ◽  
Tax Reforms ◽  
Tax Rate ◽  
Deferred Tax Assets ◽  
Corporate Behavior ◽  
Short Run ◽  
Deferred Tax

The effects of corporate tax reforms in reported profits and firms' financial position have been extensively studied in the literature. However, only few studies disaggregate deferred tax items to jointly explore political implications and aspects of corporate behavior around such reforms. Greece's recent financial crisis and economic recession provides an intriguing setting for examining possible incentives and consequences of substantial tax rate changes, such as the 6% increase imposed by the Greek Government in year 2013. Results reveal a totally different picture between financial and non-financial firms, with the former being clearly favored, at least from this short-run effect. These findings seem to coincide with the view that tax policy design is usually shaped by taking into consideration powerful groups' interests. Regarding probable Determinants of Deferred Tax Assets for Tax Loss Carry forwards, the authors find that firms the audit firm may significantly affect recognized amounts due to firm specific internal guidelines and due to the overall quality of the audit.

scholarly journals Modelling the synergy between fiscal incentives and foreign direct investment in Ghana

2020 ◽  
Vol 22 (2) ◽  
pp. 325-334
Author(s):  
Adamu Braimah Abille ◽  
Desmond Mbe-Nyire Mpuure ◽  
Ibrahim Yahaya Wuni ◽  
Peter Dadzie
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Negative Impact ◽  
Corporate Tax ◽  
Test Technique ◽  
Fdi Inflows ◽  
Content Type ◽  
Tax Rate ◽  
Fiscal Incentives ◽  
Short Run

PurposeThe purpose of the paper was to investigate the role of fiscal incentives in driving foreign direct investment (FDI) inflows into the Ghanaian economy based on data from 1975 to 2017 with the Eclectic paradigm as the theoretical basis. FDI inflows was the dependent variable whiles trade openness, corporate tax rate, exchange rate and market size were the independent variables with corporate tax rate as the main explanatory variable of interest.Design/methodology/approachThe autoregressive distributed lag (ARDL) bounds test technique was employed to investigate Cointegration in the model. The results showed the presence of cointegration among the variables.FindingsThe results revealed that corporate tax rates have a significant negative impact on FDI inflows into the Ghanaian economy in the long run and significant positive impact on FDI inflows in the short run. In the context of Ghana, the positive short-run relationship observed is attributed to the lag effect of tax policy on FDI inflows.Research limitations/implicationsOne obvious limitation of the research is that, it does not identify the specific foreign businesses that are more deserving of a low corporate rate and to what extent can that boost FDI inflows in Ghana. Another limitation is that the data analyzed in the paper is exclusively for Ghana and the findings may not be generalized for other countries.Practical implicationsBased on the research findings, it is recommended that the Ghana Revenue Service (GRA) restructures the corporate tax regime in the country to deal with the policy lapses. It is also recommended that low corporate rates should be maintained especially in respect of foreign companies that are into the production of goods and services for which indigenous companies in Ghana have a comparative disadvantage in order to drive FDI into the Ghanaian economy.Originality/valueThis paper is unique for providing up to date and dynamic insights into the tax incentive and FDI nexus in the Ghanaian context.

scholarly journals Is NY's Supply-side Experiment Working? A Preliminary Analysis using County Unemployment Rates

2018 ◽  
Vol 10 (3) ◽  
pp. 245-266
Author(s):  
Lynn B. Snarr ◽  
Hal Snarr ◽  
Dan Friesner
Keyword(s):  
New York ◽  
The State ◽  
Tax Rates ◽  
Free Enterprise ◽  
Corporate Tax ◽  
Tax Reforms ◽  
Tax Rate ◽  
Start Up ◽  
Level Data ◽  
Business Tax

The State of New York recently enacted business tax reforms. The first legislative act launched the START-UP NY program in 2014. It created tax free enterprise zones throughout the state to incentivize business incubation within, or relocation of existing firms to, the State of New York. In that same year, the state lowered its corporate tax rate state-wide from 7.1% to 6.5% in 2016. We use a difference-in-differences (DID) methodology, evaluated using county-level data, to empirically test whether New York’s recent business tax reforms significantly reduce unemployment, beyond what would exist in the absence of the reforms. We fail to find significant evidence that START-UP NY affects unemployment during the period studied, 2014-2017.  We do, however, find evidence suggesting that New York lowering its corporate tax rates in 2016 is associated with a large reduction in unemployment (by approximately 90,000 jobs) in 2016 and a smaller reduction (by approximately 25,000 jobs) in 2017.

Corporate Tax Cuts and Fiscal Slippage

2020 ◽  
Vol 68 (2) ◽  
pp. 281-289
Author(s):  
Rajat Deb
Keyword(s):  
Fiscal Deficit ◽  
Level Playing Field ◽  
Corporate Tax ◽  
Tax Rate ◽  
Playing Field ◽  
Finance Minister ◽  
Doing Business ◽  
Short Run ◽  
The Government ◽  
Stimulus Package

The Union Finance Minister on 20 September 2019 announced the highest corporate tax rate cuts in the last 28 years as a level-playing field for both the existing and green-field firms for turning around the sluggish economy. The stimulus package, notwithstanding, has likely to accelerate the demand in the short run, but to increase the fiscal deficit inasmuch, the government would increase its spending through borrowings, which could lead to fiscal slippage. Instead of excessive dependence on the fiscal measures, the government should initiate economic and judicial reforms for accelerating the growth and improving doing business in the country.

scholarly journals The Effect of Tax Planning and Temporary Difference to Earnings Management

2021 ◽  
Vol 6 (2) ◽  
pp. 183-195
Author(s):  
Cindy Lystia Tartono ◽  
Athalia Ariati Hidayat ◽  
Luciana Haryono
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Fixed Effect Model ◽  
Tax Planning ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
Deferred Tax Assets ◽  
Independent Variables ◽  
Deferred Tax ◽  
Temporary Difference

This study aims to analyze tax planning (tax planning is estimated using effective tax rate) motivations that push management (agent) to manage earnings and the ability of temporary difference accounts (measured by deferred tax assets, liabilities and expenses) to detect earnings management. Earnings management is estimated using the modified jones model. This study uses three independent variables to measure temporary difference, analyzes the effect of the independent variables towards the direction of earnings management and analyzes more than one industry so the results Samples used in this study are 377 non-financial public firms that are listed in the Indonesia Stock Exchange from 2015 until 2019, with a total of 1,832 observations. The data panel is processed using multiple linear regression using fixed effect model. The results of the study found only deferred tax liabilities has significant impact to earnings management and is able to detect earnings management upwards. Tax planning only effects absolute earnings management without specific direction. Deferred tax assets do not have a significant impact to detect earnings management downwards and deferred tax expense has no significant impact to earnings management but can potentially detect earnings management upwards in extreme cases.Deferred Tax Asset

The Information Content of Tax Loss Carryforwards Before and During the Global Financial Crisis

2018 ◽  
pp. 91-107
Author(s):  
Chytis Evangelos ◽  
Filos Ioannis ◽  
Gkouma Olympia
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Telecommunications Industry ◽  
Deferred Tax Assets ◽  
Before And After ◽  
Tax Payments ◽  
Deferred Tax ◽  
The Global Financial Crisis ◽  
Tax Loss

Tax loss carryforwards are a valuable asset because they usually reduce a company's future tax payments. This chapter investigates the importance of deferred tax assets from tax loss carryforwards (DTA_TLC) by sector and index (FTSE/ASE) for the period before and after the outbreak of the financial crisis (2005-2012). In the non-banking industry, the DTA_TLC cover on average half (1/2) of the total deferred tax assets (DTAs) and one-fifth (1/5) of income before taxes (IBT). The telecommunications industry accounts for the largest DTA_TLC components, while the chemicals sector for the smallest. On average, the companies listed in the FTSE/ASE 20 report DTA_TLC five times larger than those of the FTSE/ASE 40. In the banking sector, until 2009 DTA_TLC constituted a small part of total assets and IBT. In contrast, after 2010, DTAs include significant components of DTA_TLC, as a consequence of the private sector involvement (PSI) and the financial crisis.

The Financial Crisis and the Value-relevance of Recognised Deferred Tax Assets

2016 ◽  
Vol 26 (3) ◽  
pp. 291-300 ◽  
Author(s):  
Wessel M. Badenhorst ◽  
Petri H. Ferreira
Keyword(s):  
Financial Crisis ◽  
Value Relevance ◽  
Deferred Tax Assets ◽  
Deferred Tax

scholarly journals The Relationship Between Corporate Tax Rate and Economic Growth During the Global Financial Crisis: Evidence from a Panel VAR

2019 ◽  
Vol 8 (2) ◽  
pp. 189-202
Author(s):  
Gamze Öz Yalaman
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Panel Var ◽  
Corporate Tax ◽  
Causality Test ◽  
Tax Rate ◽  
Crisis Period ◽  
Dynamic Relationship ◽  
Recent Financial Crisis

This paper compares dynamic relationship between economic growth and corporate tax rate during the recent financial crisis and the non–crisis period using a panel VAR for 29 OECD countries over the period 1998-2016. The results show that corporate tax rate has a significantly negative effect on economic growth. Moreover, the recent financial crisis has had a significant effect on the endogenous interaction between corporate tax rate and economic growth. According to Granger causality test, there is only one-way causality from corporate tax rate to economic growth during the non-crisis period. Interestingly, there are not any causal relationships between corporate tax rate and economic growth during the crisis period. The results show that the recent crisis has had a significant effect on the endogenous interaction between corporate tax rate and economic growth.

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