Measuring Financial Impacts of the Renewable Energy Based Fiscal Policy in Colombia under Electricity Price Uncertainty

This paper analyses the financial implications, from the point of view of an investor in renewable energy, which sells the energy for an uncertain price of electricity and decides to take advantage of the Colombian tax policy over the renewable energy. The policy, known as Investment Tax Allowance (ITA), encourages installation of renewable projects in a country traditionally dominated by hydro power. Price is modeled as a non-stationary autoregressive stochastic process with normally distributed error terms. Costs, and uncertain revenue and taxes are considered to assess the financial impact on a solar project when the policy is implemented. Since impact varies according to project ownership, two cases are evaluated: a generation company (GENCO-1) that only owns the solar project; and, an existent generation company (GENCO-2) that owns a portfolio of projects. Results indicate that if ITA is applied, it is likely that the GENCO-1 cannot take the full advantage of the incentive, as opposed to the GENCO-2. Although this policy might not satisfy planner objectives since it does not guarantee the construction of significantly high capacity of new renewable energy projects, it definitely represents an attractive mechanism to decrease tax obligations at the GENCO-2 level. Finally, a theoretical analysis shows that investment cost affects the mean of the present value; whereas tax rates impacts both its mean and standard deviation.

Bessere Steueranreize für Banken

ZusammenfassungEigenkapital ist teuer. Daher haben die Banken einen Anreiz, beim Eigenkapital zu sparen, und finanzieren sich lieber mit Spareinlagen und anderem Fremdkapital. Mit geringeren Finanzierungskosten ist es leichter, den Kunden im Wettbewerb bessere Konditionen anbieten zu können. Die Besteuerung fördert die Verschuldung der Banken zusätzlich. Mit dem Zinsabzug wird das Fremdkapital steuerlich entlastet, das risikotragende Eigenkapital jedoch nicht. Das fördert die Verschuldung der Banken und Unternehmen und trägt zur Krisenanfälligkeit bei. Die Bankenregulierung will mit höheren Kapitalstandards die Eigenkapitalausstattung und damit die Krisenrobustheit des Bankensektors stärken. Da macht es wenig Sinn, wenn der Staat mit dem steuerlichen Schuldenanreiz das genaue Gegenteil tut.Martin-Flores, Jose und Christophe Moussu (2018), Is Bank Capital Sensitive to a Tax Allowance on Marginal Equity? Erscheint in: European Financial Management, doi:10.1111/eufm.12163.

Community Money COMMON. The Alternative to Universal Basic Income

The paper outlines the institutional innovation of ›Community Money‹ COMMON, a securitized claim on a monthly income transfer that can also be used as a tax allowance in an up to 100 percent inheritance tax. It can be accumulated on a special citizens’ account and is a substitute for all other kinds of public income transfers such as pensions and unemployment benefits. COMMON can also be voluntarily earned in community work. COMMON liberates citizens from the compulsory participation in the capitalist market economy.

The Effect of Tax Incentives Practices on Sustainability of Micro, Small and Medium Enterprises in Ethiopia During the Outbreak of Corona Virus Pandemic

Purpose: The aim of this study was to identify the effect of tax incentive practise on sustainability of MSMEs during outbreak of corona virus pandemic in Ethiopia. Design/methodology/approach: In order to achieve this objective, the researchers have employed quantitative research approach with explanatory research design in which six hypotheses have been tested. The primary data was collected from 300 respondents using structured questionnaires. Multiple regression model was employed to identify the effect of tax incentives on sustainability of MSMEs in Ethiopia. Findings: According to the regression analysis, this study revealed that tax holiday, tax allowance, reduction in tax rate, accelerated depreciation, loss carry forward and tax exemption have positive and statistically significant effect on the sustainability of the MSMEs. Based on the finding of the study was concluded that the existence of tax incentive practice has positive contribution to sustainability of the micro, small and medium sized enterprise.Research limitations/implications: The current study was geographically focus on Ethiopia by considering the micro, small and medium sized enterprises sector. The subject wise was focused on the effect of the tax incentives:(tax holiday, tax allowance, tax exemption, and accelerated depreciation, reduction in tax rate, and loss carry forward) and on the sustainability of MSMEs. The study used primary data which is limited to a year of 2020. It might be improved in the future if other researchers incorporate large firms in the country and uses secondary data for analysis. Practical implications: To survive, micro, small and medium scale enterprises need the support from the government in the form of tax incentives. The role of tax incentives in enhancing the growth of micro, small and medium sized enterprises is very significant on the sustainability of MSMEs as well as the economy as a whole. Hence, the findings and recommendations of the current study might serve as an ingredient and be informative to the policy makers on MSMEs sector. It might also give a general insight to the policy makers, academician and professional groups of society and the public at large with regard to the role of effect of tax incentives on the sustainability and growth of MSMEs during outbreak of coronavirus.Originality/value: This study contributes to empirical evidence about the effect of tax incentives practices on sustainability of micro, small and medium enterprises in Ethiopia by considering tax incentive practice in terms of tax holiday, tax allowance, reduction in tax rate, accelerated depreciation, loss carry forward and tax exemption. As tax incentives theories supported the findings of this study, we have concluded that tax incentive practices provided by government have positive contribution for the sustainability and growth of micro, small and medium sized enterprises in Ethiopia

INCOME TAX GROUPING AS TAX MANAGEMENT TOOL: LESSONS FROM EU WITH FOCUS ON POLAND

The paper discusses the availability tax grouping among EU countries as well as benefits and costs of this tax incentive. Article focuses on Poland, where real usage of this tax management tool is analysed. Grounds for its (low) popularity are investigated. Analysis was made primarily based on observation of values and time trends build on data published by Polish Ministry of Finance, Statistical Yearbooks, PwC reports and Eurostat. Although tax grouping for corporate income tax purposes is offered by half of EU Member States, Poland is the only CEE country that offers this tax allowance. However, Polish corporations rarely use it in practice. Reasons include elevated entry requirements, lack of VAT grouping, low corporate income tax rate, lack of additional withholding tax benefits, no possibility of tax losses utilization, profitability requirements or retroactive duties in case of losing a status of a tax group. Those obstacles seem to outweigh the benefits of higher net return on capital, decreased transfer pricing requirements, higher liquidity and limited tax compliance burden. Those limited gains are prized primarily by biggest Polish entities, which indeed use tax grouping. The novelty and value of this paper lies in analysis of important topic from practical perspective, which was not thoroughly verified before both in Poland but also in other jurisdictions. It may also serve as a hint for managers considering entrance in a tax group and policymakers, while amending tax law regulations.

Disaster Response in Indonesia: Initiating Income Tax Policy Pro Disaster Mitigation

As a country with high potential for natural disaster, Indonesia can suffer from economic disruptions arising from significant decline in gross domestic income (GDP) due to financing losses caused by natural disaster. To reduce the risk of loss caused by natural disasters, the government has issued disaster mitigation policies in the form of structural and non-structural policies. In 2018, the government initiated a disaster mitigation policy in the form of natural disaster insurance prioritized to protect state assets. It does not exclude the possibility that this insurance shall be given to civil society, yet an issue arises regarding the source of funding for the insurance. Tax instruments are expected to be a policy innovation to overcome the issue of financing insurance. The purpose of this study is to explore the potential and role of fiscal policy through tax instruments in the context of disaster management in Indonesia. This study applied a qualitative approach and collected data through field studies and in-depth interviews. The findings of this study indicate that the natural disaster insurance policy may adopt the concept of tax allowance on donation and zakat as stipulated in Law No. 36 of 2008 on Income Tax. This incentive provides a tax facility in the form of tax allowance on income for calculating Income Tax. The policy is expected to attract the community to participate in natural disaster insurance amid the general lack of participation in insurance in Indonesia. On the other hand, the government obtains a source of revenue to finance disaster mitigation without disrupting the economy of the country.

TAXATION SYSTEM: A COMPARISON BETWEEN THAILAND AND THE PHILIPPINES

The purpose of this research to study of taxation system, taxpayers, taxation agencies, tax rates, penalties, term and conditions of tax privileges and comparative analysis of taxation systems between Thailand and Philippines. The findings of tax system comparison were the difference of tax collection organization between Thailand and Philippines, however, both countries have the same tax system that are tax baskets, tax regulations, tax benefits. From these findings can be concluded that taxpayers or entity in Thailand has more advantage than Philippines’s in tax allowance regulations, personal tax income allowance favoured to taxpayers for lower tax rate. Moreover, the tax rate in Thailand is lower than in Philippines resulting to proprietors or investors could bring these proceeds to expand their business or investment, finally, it will generate economic growth.