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on Accounting and Auditing |
| By: | Starcea Dumitru (Constantin Brancusi University of Targu Jiu, Faculty of Economics, Romania) |
| Abstract: | Users of financial data have always spent significant amounts of money for data accuracy, in agreement with the actual operations of the respective entities. A question is naturally born. If both the accounting and the reports are according to generally approved standards, why is there still need for a financial audit meant to certify the accuracy of the data within the balance sheet and financial reports in connection with the entities’ operations. |
| Keywords: | financial audit, financial report, balance sheet, accounting, standards |
| JEL: | M41 M42 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:cbu:wpaper:23&r=acc |
| By: | Bunget, Ovidiu-Constantin; Farcane, Nicoleta; Popa, Adina |
| Abstract: | What we proposed ourselves through this work is to appreciate the impact of the foreign influences on the Romanian accounting system throughout the 20th century. In this sense we will further present an evolution of the accounting system during this period. Along the 20th century there are three major periods, characterized through a different evolution of the accounting system: the period between 1900-1950 is characterized through a maturity of the Romanian accounting thinking, when the first steps in Romanian accounting are defined, between 1950-1990, the accounting system is passing through a stagnation period caused by the soviet – socialism domination, after the 90’s Romanian accounting evolves, and not only new coordinates for an accounting system specific for a transition economy are defined, but also new coordinates ensuring the adjustment of the accounting system to the needs of the market economy in the context of Romania becoming member of the European Union. Based on the study of accounting literature and former studies related to the accounting evolution in Romania, we identified, during each of the mentioned periods the foreign influences on the Romanian accounting system and also the specific features of the Romanian Accounting School. |
| Keywords: | accounting history; accounting system |
| JEL: | M41 |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18282&r=acc |
| By: | Bunget, Ovidiu-Constantin; Dumitrescu, Alin-Constantin; Farcane, Nicoleta; Caciuc, Leonora; Popa, Adina |
| Abstract: | The accounting standardization process is in progress at international regional level, more and more countries have reached the same conclusion of enforcing high quality accounting standards like IAS/IFRS. At international level, on one hand it is thought to implement IASB's international standards and on the other hand, to converge American standards with IASB standards. There are various reasons for Romania adopting the IASB reference system, but most of them are subordinated to the central aim, respectively EU accession. There are also some secondary reasons required by the IAS/IFRS transition, which in our country is less present than in more economic developed countries. In our country accountancy is subordinated to the taxation system, financing still comes prevalent from banks and very few Romanian companies are listed on foreign capital markets. According to this, starting with 2006 the International Financial Reporting Standards (IFRS), as presented and published by the International Accounting Standards Board, shall be applied in Romania by the following categories of companies: trade companies applying OMF no. 94/2001, loan institutions, assurance and reassurance companies, institutions supervised by the National Commission for Movable Assets, independent public companies and other state owned companies, companies to be consolidated by a company applying IFRS standards, companies, which at the end of the previous year fulfilled two of the following three criteria: turnover exceeding EUR 7.3 Million, total assets over EUR 3.65 Million, average number of employees over 50, as well as other companies subject to the Finance Ministry’s approval. |
| Keywords: | romanian accounting rules; IAS/IFRS; romanian accounting normalization body; capital market |
| JEL: | M40 |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18279&r=acc |
| By: | Ecobici Nicolae; Merita Busan Gabriela (Constantin Brancusi University of Targu Jiu, Faclty of Economics, Romania) |
| Abstract: | New tax rules with effect from 1 May 2009 with a series of changes on the tax deductibility of the value added acquisitions related to transport and fuel use. The measure is very obvious nature of politics in order to bring the state budget amounts as required under the current government crisis in the financial world. The book focuses on not commenting policy modifications as required on the implications that they bring in on the accounting chargeback. Therefore, in the paper we will address the resolution of these legal provisions in the economic accounts. |
| Keywords: | tax rules, accounts, financial crisis, politics, government |
| JEL: | K20 M41 D84 H21 H23 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:cbu:wpaper:7&r=acc |
| By: | Giorgia Maffini (University of Oxford Centre for Business Taxation and University of Warwick.) |
| Abstract: | This paper investigates the effect of tax haven operations on the tax liabilities of corporate groups headquartered in 15 OECD countries. Using consolidated accounting data from ORBIS (2003-2007), this work finds that, at the mean, an additional tax haven subsidiary reduces tax liabilities over total assets by 7.4 per cent in the long run. At the mean, the marginal effective tax rate (ETR) of a corporate group with tax haven subsidiaries is one percentage point lower than it is for groups without low-tax offshore operations. The results also show that the marginal ETR of companies headquartered in countries with a territorial system is lower than that of companies headquartered in jurisdictions with a worldwide system of taxation on corporate profits. More specifically, corporate groups headquartered in the United States have the highest marginal ETR. |
| Keywords: | Corporate Income Tax; Multinationals; Profit shifting; Tax Havens |
| JEL: | F23 H25 H32 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0925&r=acc |
| By: | Harry Grubert (U.S. Treasury) |
| Abstract: | We address two issues: 1. Do dividends from foreign subsidiaries depend on the residual home country tax, and can this be reconciled with existing models? The evidence seems to be inconsistent with both the Hartman-Sinn ‘New View’ and the Weichenreider and Altshuler-Grubert repatriation avoidance models. 2. Does the huge inflow of dividends in response to the 2005 repatriation tax holiday suggest that the burden of the repatriation tax in a worldwide-credit system is very significant? We review the evidence on the negative relationship between dividends and repatriation taxes including new results for the relationship between total foreign dividends and average foreign tax rates at the parent level. The explanation for the negative impact of the repatriation tax seems to be that tax avoidance strategies are not costless, as was assumed by the earlier models, and that the marginal costs rise as the pool of accumulated financial assets grows relative to the subsidiary’s real assets. Subsidiaries in low-tax locations refrain from repatriating longer as the marginal cost of additional deferrals rises to equal the repatriation tax. A recent paper by Grubert and Altshuler suggests that the impact of tax differences on repatriations declines over time and disappears after 25 years. The ‘immature’ stage seems to last a long time. Analysis of 2004 repatriations at the subsidiary level indicates that the parent’s average foreign tax rate is most important to its decision, not the subsidiary’s own effective tax rate or the average effective tax rate in its country of incorporation. Tax planning has made the country of incorporation less significant. The burden of the repatriation tax is a particularly significant issue because it bears on the comparison of exemption versus worldwide credit systems. Past estimates of the burden, including both actual payments and the ‘implicit’ cost of avoiding repatriations, have been modest. Furthermore, it is difficult to identify any effect of the potential repatriation tax on companies’ investment decisions. But this insignificant importance of the repatriation tax has been called into question by the huge repatriations (of almost $400 billion) under the 2005 tax holiday in which companies could repatriate and pay a 5.25 percent tax net of a scaled down foreign tax credit. The paper therefore examines the Treasury company level data for companies’ participation in the tax holiday. There is, however, no necessary conceptual link between participation in the tax holiday and the burden of the dividend tax. The measure of the tax relevant for real investment decisions is the present value of the direct and implicit taxes relative to the returns. Even if that burden is low a mature company with large accumulations may well choose to pay the tax holiday price because of the rising costs of deferrals. Even in a Sinn steady state ‘new view’ equilibrium, a repatriation tax holiday would trigger asset liquidations and large repatriations. A company will repatriate to where the marginal cost of further accumulations is below the 5.25 percent tax price. The reason is the ‘fresh start’ which permits it to save costs on future deferrals. Some of the participants in the tax holiday had very low current repatriation avoidance costs as evidenced by the fact that many had substantial accumulations of ‘previously taxed income’ (PTI) under the CFC rules that they could have chosen to repatriate tax free. As expected, a company’s tax holiday repatriations are a positive function of its accumulated untaxed income and foreign profit margin, and a negative function of its average foreign tax rate, the ratio of its real capital to sales and its accumulated PTI. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0927&r=acc |
| By: | Johannes Becker (Max Planck Institute for Intellectual Property, Competition and Tax Law); Clemens Fuest (Oxford University Centre for Business Taxation) |
| Abstract: | This note provides a novel argument why countries may have incentives to allow for some profit shifting to low-tax jurisdictions. The reason is that a tightening of transfer pricing policies by high tax countries leads to more agressive tax rate competition by low tax countries. |
| Keywords: | Corporate Taxation, Profit Shifting, Tax Competition |
| JEL: | H25 F23 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0930&r=acc |
| By: | Tom Karkinsky (Oxford University Centre for Business Taxation); Nadine Riedel (Oxford University Centre for Business Taxation, CESifo Munich) |
| Abstract: | Corporate patents are perceived to be the key profit-drivers in many multinational enterprises (MNEs). Moreover, as the transfer pricing process for royalty payments is often highly intransparent, they also constitute a major source of profit shifting opportunities between multinational entities. For both reasons, MNEs have an incentive to locate their patents at affiliates with a relatively small corporate tax rate. Our paper empirically tests for this relationship by exploiting a unique dataset which links information on patent applications to micro panel data for European MNEs. Our results suggest that the corporate tax rate (differential to other group members) indeed exerts a negative effect on the number of patents filed by a subsidiary. The effect is quantitatively large and robust against controlling for affiliate size. The findings prevail if we additionally account for royalty withholding taxes. Moreover, binding `Controlled Foreign Company' rules tend to decrease the number of patent applications. |
| Keywords: | corporate taxation, multinational enterprise, profit shifting |
| JEL: | H25 F23 H26 C33 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0931&r=acc |
| By: | Rita de la Feria (Oxford University Centre for Business Taxation) |
| Abstract: | From the outset, turnover taxes have played a fundamental role in the European integration process. Harmonisation of these taxes was perceived an integral part of achieving a common market, and for this reason it was given priority. Over forty years since the introduction of a common VAT system, VAT is usually regarded as a broadly harmonised tax. Paradoxically, however, it is precisely this high level of harmonisation which seems to have allowed the preservation of some aspects of VAT law which constitute an obstacle to the establishment of the EC internal market. The aim of this paper is to highlight the shortcomings of harmonisation within the VAT area, and namely how harmonisation has prevented the European Court of Justice (ECJ) from applying the EC Treaty provisions to the field of VAT, resulting in the maintenance of laws which could arguably be regarded as contrary to the EC internal market and as restrictions to the fundamental freedoms. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0929&r=acc |
| By: | Tatiana Damjanovic (University of St. Andrews St Salvator’s College); David Ulph (University of St. Andrews St Salvator’s College, Oxford University Centre for Business Taxation) |
| Abstract: | This article examines the determinants of tax non-compliance when we recognise the existence of an imperfectly competitive "tax advice" industry supplying schemes which help taxpayers reduce their tax liability. We apply a traditional industrial organisation framework to model the behaviour of this industry. This tells us that an important factor determining the equilibrium price and hence, the level of noncompliance, is the convexity of the demand schedule. We show that in this context, this convexity is affected by the distribution of pre-tax income, the progressivity of the tax-schedule and the way in which monitoring and penalties vary with income. It is shown that lower pre-tax income inequality as well as a less progressive tax code may cause more tax minimisation activities. Therefore, the frequently advocated policy of reducing the highest tax rate may fail as a policy directed at improving tax discipline. One way of offsetting the possible harm to tax compliance from a less progressive tax could be an adjustment of the penalty and monitoring functions. |
| Keywords: | tax compliance, tax administration, inequality, tax progressivity, tax monitoring, penalty function |
| JEL: | H21 H23 H26 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0928&r=acc |