nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2014‒11‒12
ten papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Ranking the Stars: Network Analysis of Bilateral Tax Treaties By Maarten van 't Riet; Arjan Lejour
  2. A Comparative Analysis of Tax Administration in Asia and the Pacific By Asian Development Bank (ADB); ; ;
  3. Petroleum taxation and investment behaviour By Osmundsen, Petter; Emhjellen, Magne; Johnsen, Thore; Kemp, Alexander; Riis, Christian
  4. Dividend Taxation and the Cost of New Share Issues By Lindhe, Tobias; Södersten, Jan
  5. Vertical Integration and Valuation of International Oil Companies By Misund, Bard; Osmundsen, Petter; Sikveland, Marius
  6. Revisiting the Classical View of Benefits-Based Taxation By Matthew Weinzierl
  7. Full Cost, Profit and Competition By Jael, Paul
  8. Competition Policy and Intellectual Property: Insights from Developed Country Experience By Scherer, F. M.; Watal, Jayashree
  9. Portugal: Fiscal Transparency Evaluation By International Monetary Fund. Fiscal Affairs Dept.
  10. A System of Regionalized Public Accounts For Spain Methodology and Results for 2005 By Angel de la Fuente; Ramón Barberan; Ezequiel Uriel

  1. By: Maarten van 't Riet; Arjan Lejour
    Abstract: With a novel approach this paper sheds light on the international tax planning possibilities of multinationals. The international corporate tax system is considered a network, just like for transportation, and ‘shortest’ paths are computed, minimizing tax payments for the multinationals when repatriating profits. Read the accompanying press release and� background document . The network consists of 108 jurisdictions, and the ‘shortest’ paths are constructed from the rates of corporate income taxes, withholding taxes on dividends and the double taxation relief methods. Double taxation treaties typically lower bilateral withholding taxes. The possibility to funnel investments through a third country to take advantage of treaty provisions, treaty shopping, is found to lead to an average potential reduction of the combined effective tax rate of more than 6 percent. On average, multinationals need only pay taxes of 6 percent, after the corporate income tax in the host country. Moreover, the network approach identifies the countries which are most likely to perform the role of conduits. The United Kingdom heads the rankings of three out of four network centrality measures. The tax revenues on dividends for the conduit countries are less than a half percent of the worldwide flows. Finally, a crackdown on tax havens is simulated. The impact is found to be modest, both on the tax reduction and on network centrality. The result illustrates the strong dampening effect treaty shopping has on the remaining double tax rates.
    JEL: F23 H25 H26 H87
    Date: 2014–10
  2. By: Asian Development Bank (ADB); (Regional and Sustainable Development Department, ADB); ;
    Abstract: A robust and sustainable tax system requires good tax administration. This report compares the administrative frameworks, functions, and performances of tax administration bodies in 22 jurisdictions in Asia and the Pacific. The descriptive analysis is based on surveys of tax administration conducted in 2012 and 2013. The surveys attempt to provide internationally comparable data on aspects of the sample jurisdictions’ tax systems and their administration. Tentative conclusions emerge from the descriptive and comparative analysis.
    Keywords: tax system, tax administration, tax revenue, tax collection, nontax function, taxpayer, tax administration expenditure, tax expenditure, Electronic Tax Filing Systems, Electronic Tax Payment, Tax Debt Management, Administrative Review System, Gross Domestic Product, Internal Revenue Commission, taxation, fiscal resources, revenue bodies
    Date: 2014–04
  3. By: Osmundsen, Petter (UiS); Emhjellen, Magne (Petoro); Johnsen, Thore (NHH); Kemp, Alexander (University of Aberdeen); Riis, Christian (BI)
    Abstract: Petroleum administration can be regarded as a principal-agent problem. The government allocates exploration and production rights to petroleum companies on behalf of the population. The government is the principal and the companies are agents. With the aim of capturing revenue for the state, the government devises a petroleum tax system which takes account of the investment decisions made by the companies, while acknowledging for the fact that the companies may report strategically to the government. An important issue is how tax deductions are to be treated in investment analysis. A discrepancy arises here between assumptions made in some areas of tax theory and the actual investment analyses conducted by the companies. Tax theory has given rise to discussion and controversial tax proposals for the petroleum sector in Norway, Denmark and Australia. It led, for example, to reductions in tax-related depreciation for the Norwegian petroleum industry in May 2013. The article reviews this tax debate and analyses the implications of basing tax design on counter-factual investment behaviour.
    Keywords: petroleum taxation; tax design; valuation; corporate behaviour
    JEL: F21 G02 H21 H25 H32 L71 M21
    Date: 2014–10–09
  4. By: Lindhe, Tobias (Uppsala Center for Fiscal Studies); Södersten, Jan (Uppsala Center for Fiscal Studies)
    Abstract: This paper examines how the effects of dividend taxation on the cost of new equity funds depend on whether or not shareholders can recover their original equity injections without being subject to the dividend tax. We point out the alternative assumptions in the literature on this, and we compare two different tax regimes, one where it is impossible for the firm to pay cash to its shareholders that is not taxed as dividends, the other where the shareholders are allowed a tax-free return of the original capital contributed through new issues. We conclude that any model, which explicitly or implicitly assumes that the shareholders cannot recover their original equity injections without being subject to the dividend tax, exaggerates the distortive effects of the tax.
    Keywords: dividend taxation; return of capital; share repurchases; equity trap; cost of capital; nucleus theory; growth path
    JEL: H24 H25 H32
    Date: 2014–09–23
  5. By: Misund, Bard (UiS); Osmundsen, Petter (UiS); Sikveland, Marius (UiS)
    Abstract: This paper studies financial statement information from the 50 largest international oil and gas companies during 1992 to 2011 and evaluates their relation to market values. In particular, we examine how this relationship is affected by accounting method choice (successful efforts versus full cost accounting) and vertical integration. We find that net income is more value relevant for full cost companies compared to companies that use the successful efforts accounting method. Furthermore, the value relevance of oil and gas reserves is different among successful efforts and full cost companies. Larger reserves among successful efforts companies are awarded a premium by stock markets. The value relevance of book value is significantly lower for integrated companies than for pure upstream companies. We also find that the value relevance of oil and gas reserves is different for upstream and integrated companies.
    Keywords: Company Valuation; Value-relevance; Financial Analysis; Oil and Gas Industry
    JEL: F23 G00 L71 M41
    Date: 2014–10–09
  6. By: Matthew Weinzierl (Harvard Business School)
    Abstract: Commentary and political rhetoric on taxes in the United States have long included appeals to Smith's (1776) "classical" logic of benefit based taxation in which an individual's benefit from the state is tied to his or her income-earning ability. Modern optimal tax theory, in contrast, largely ignores the principle of benefit based taxation. This paper shows that the classical logic of benefit based taxation can be readily incorporated into the formal structure of modern theory. Moreover, by applying Lindahl's well-known methods, optimal policy according to that principle can be characterized analytically as depending on a few potentially estimable statistics. An objective for policy that gives weight to both this principle and the familiar utilitarian criterion can explain a variety of features of existing policy that are difficult to reconcile in standard theory, consistent with its apparent role in real-world normative reasoning over tax design.
    Date: 2014
  7. By: Jael, Paul
    Abstract: During the marginalist controversy, full costers failed to convince economists of the superiority of full cost pricing over marginal theory of imperfect competition. The controversy was closed prematurely; various contributions published immediately thereafter in the fifties did not renew the debate despite their relevance. Topics included entry prevention, target rate of profit and the emergence of the market price The present paper shows that the full cost pricing is not so justified by the need for a rule of thumb than as a rational behaviour aiming at long term profit maximisation, especially in the case of highly competitive markets with few suppliers. The paper focuses also on the relationship between full cost pricing and changes in demand (mostly cyclical). It is also shown that the race for performance deserves a central position in the analysis of competition; it is too often neglected in favour of the sole competition on margins.
    Keywords: pricing; competition; market structure; full cost
    JEL: D22 D40 D49
    Date: 2014–10–31
  8. By: Scherer, F. M. (Harvard University); Watal, Jayashree (World Trade Organization)
    Abstract: This paper, written for a World Trade Organization compendium, investigates the possibilities open to developing nations for controlling the abuse of intellectual property rights, and in particular patents, under Articles 31 and 40 of the Uruguay Round TRIPS (trade-related aspects of intellectual property) treaty. Article 40 authorizes nations to use their competition policy laws to combat abuses of intellectual property rights, among other things, by invoking the compulsory licensing provisions of Article 31. This paper reviews historically the experience of competition policy authorities in dealing with patent and other intellectual property abuses in the United States, the European Community, Japan, Canada, South Africa, and other jurisdictions and reviews the known consequences of compulsory licensing orders inter alia for companies' continuing efforts to advance technology. Currently controversial fields such as pharmaceuticals and information technology are accorded special attention.
    Date: 2014–02
  9. By: International Monetary Fund. Fiscal Affairs Dept.
    Abstract: EXECUTIVE SUMMARY Portugal’s practices meet most of the principles of the revised Fiscal Transparency Code at good or advanced levels. A number of areas still present practices at a basic level, but in most of these cases this reflects reforms that have recently been launched and have not yet been fully implemented so as to affect current practices. Indeed, if measured against the practices observed prior to the recent financial crisis, there has been remarkable progress. The challenge is to press ahead with the reform agenda so that all fiscal transparency practices meet good or advanced levels, thus strengthening even further the management of public finances and the associated risks. The key findings of the present Fiscal Transparency Evaluation are: • Fiscal reporting is in line with good or advanced practices, particularly in compliance with EU requirements and ESA 95 standards, but still lacks a sound conceptual accounting framework based on internationally accepted standards. • Fiscal forecasting and budgeting have improved over the last three years, although investment evaluation only meets the basic standard of the Code. • Reporting of fiscal risks is in its infancy and in spite of numerous initiatives undertaken in the last few years, such as the publication of a fiscal risk statement, remains fragmented. The large amount and good quality of information available allows a very preliminary and partial estimate of the public sector net worth and total risk exposure. An estimated negative net worth position of 140 percent of GDP (including the liabilities of the main defined-benefits employment-related pension scheme) and a sizeable exposure to various contingent liabilities, although some of these have a low probability of crystallizing, are reminders of the still fragile status of Portugal’s public finances.
    Keywords: Fiscal transparency;Fiscal policy;Budgets;Budgeting;Fiscal risk;Risk management;Technical Assistance;Portugal;
    Date: 2014–10–06
  10. By: Angel de la Fuente; Ramón Barberan; Ezequiel Uriel
    Abstract: This paper develops a methodology for the construction of a System of Regionalized Public Accounts (SRPA) using a burden-benefit approach and applies this methodology to the year 2005. The SRPA provides a detailed picture of the regional distribution of the tax burden and of the benefits arising from public expenditure and can be used to make homogeneous comparisons across regions in terms of many budgetary aggregates. This new statistical tool allows a much richer analysis of the regional incidence of public sector activity than the standard approach based on the calculation of regional net fiscal balances that has been used in many previous studies.
    Keywords: Spain, regional fiscal balances, regionalized public accounts
    JEL: H10 H60
    Date: 2014–08

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