nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2016‒04‒09
four papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Taxing away M&A: The effect of corporate capital gains taxes on acquisition activity By Feld, Lars P.; Ruf, Martin; Schreiber, Ulrich; Todtenhaupt, Maximilian; Voget, Johannes
  2. Tax bunching by owners of small corporations By Leon Bettendorf; Arjan Lejour; Maarten van 't Riet
  3. Study on Structures of Aggressive Tax Planning and Indicators By Ramboll Management Consulting and Corit Advisory
  4. FISIM Accounting By Kimberly D. Zieschang

  1. By: Feld, Lars P.; Ruf, Martin; Schreiber, Ulrich; Todtenhaupt, Maximilian; Voget, Johannes
    Abstract: Taxing capital gains is an important obstacle to the efficient allocation of resources because it imposes a transaction cost on the vendor which locks in appreciated assets by raising the vendor's reservation price in prospective transactions. For M&As, this effect has been intensively studied with regard to share-holder taxation, whereas empirical evidence on the effect of capital gains taxes paid by corporations is scarce. This paper analyzes how corporate level taxation of capital gains affects inter-corporate M&As. Studying several substantial tax reforms in a panel of 30 countries for the period of 2002-2013, we identify a significant lock-in effect. Results from estimating a Poisson pseudo-maximum-likelihood (PPML) model suggest that a one percentage point decrease in the corporate capital gains tax rate would raise both the number and the total deal value of acquisitions by about 1.1% per year. We use this result to estimate an efficiency loss resulting from corporate capital gains taxation of 3.06 bn USD per year in the United States.
    Keywords: corporate taxation,M&A,capital gains tax,lock-in effect
    JEL: H25 G34
    Date: 2016
  2. By: Leon Bettendorf; Arjan Lejour; Maarten van 't Riet
    Abstract: In the Netherlands owners of small corporations face taxation of corporate, labour and capital income. Taxation of the latter may be deferred. We study their options for income shifting using bunching techniques. Based on individual tax records over the period 2007-2011 we report four main findings. The first is that the distribution of gross labour income strongly peaks at the legal 'minimum' level. Second, taxable labour income bunches at the cut-offs of the tax brackets. The elasticity of taxable income at the top tax cut-off ranges from 0.06 to 0.11. Third, we show that distributed profits strongly responded to the temporary tax cut from 25 to 22% in 2007, which doubled tax revenues on dividends. Fourth, using a Heckman selection model we find that the size of own equity has a positive effect on the probability of distributing profits and the size. We reconfirm the importance of intertemporal income shifting for business owners.
    JEL: E62 H24 H68
    Date: 2016–03
  3. By: Ramboll Management Consulting and Corit Advisory
    Abstract: As a response to the increasing sophistication of tax planners in identifying and exploiting the legal arbitrage opportunities and the boundaries of acceptable tax planning, policy makers across OECD, G20 and EU countries have taken steps to ensure that taxation duly takes place where economic value is generated and where the economic activity is actually carried out. In this context, the European Commission sees a strong need to obtain increased knowledge of the tax laws and practices of Member States of the European Union, which may expose particular jurisdictions to aggressive tax planning (ATP). The present study was commissioned with the aim to: 1. Identify model ATP structures; 2. Identify ATP indicators which facilitate or allow ATP; 3. Review the corporate income tax systems of the EU Member States by means of the ATP indicators, in order to identify those tax rules and practices (or lack thereof) that result in Member States being vulnerable to ATP. This study was carried out by Ramboll and Corit Advisory with the support of a network of independent national tax experts. It reviews and assesses the corporate income tax systems of all EU Member States. It identifies weaknesses of the national tax systems in the EU and sets the ground for additional analysis and new policy initiatives
    Keywords: European Union, corporate income tax, BEPS, agressive tax planning, ACE, CCCTB
    JEL: G30 H21 H26
    Date: 2016–01
  4. By: Kimberly D. Zieschang (FISIM Task Force of the Inter-Secretariat Working Group on National Accounts)
    Abstract: In the System of National Accounts (SNA), the output of financial intermedation services is the sum of directly and indirectly measured components. This paper considers the second, “financial intermediation services indirectly measured†(FISIM) component, analyzing FISIM in a series of rearrangements of a cash flow identity facing any enterprise with financial instruments on its balance sheet. Our framework encompasses essentially all versions of the SNA, the user cost of money approach to financial services pioneered by Diewert (1974), Barnett (1978, 1980), Donovan (1978), and Hancock (1985), and recent analyses by Basu, Inklaar, and Wang (2011) and Colangelo and Inklaar (2012). The paper argues that the SNA’s “reference rate of interest†for calculating FISIM output is the Modigliani-Miller (1958) cost of capital, that SNA FISIM then comprises three computable components—account servicing, asset management, and risk intermediation—and that allocating FISIM to institutional sectors and thus to its intermediate and final uses should follow a “funders pay the spread†principle similar in spirit to the 1953 version of the SNA. The paper characterizes the differing views on the SNA’s inclusion of maturity and risk premia in FISIM as taking different approaches to the treatment of FISIM’s risk intermediation component.
    Keywords: FISIM, financial intermediation, national accounts, SNA, user cost of money
    JEL: G20 G21
    Date: 2016–01

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