nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2016‒08‒14
three papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax havens compliance with international standards : a temporal perspective By Patrice Pierreti; Giuseppe Pulina; Skerdilajda Zanaj
  2. Do tax Incentives for Research Increase Firm Innovation? An RD Design for R&D By Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
  3. Optimal Tax Administration By Michael Keen; Joel Slemrod

  1. By: Patrice Pierreti (CREA, Université du Luxembourg); Giuseppe Pulina (CREA, Université du Luxembourg); Skerdilajda Zanaj (CREA, Université du Luxembourg)
    Abstract: This paper contributes to the debate centring on the fight against aggressive tax avoidance practices through the release of international standards. We develop a model in which identical tax havens decide upon their compliance date while competing for onshore capital. The timing of these decisions depends on the effects of two opposing forces. One force is linked to the tax sensitivity of international capital and the other to the reaction of nearby potential capital. When the former force dominates, asynchronous compliance arises, which occurs even with identical tax havens and perfect information. However, when the latter force dominates, tax havens comply simultaneously. In any case, the loss of the tax base within the onshore region is minimized when compliance is simultaneous and occurs at the earliest possible date. Surprisingly, when the adoption of new standards does not severely reduce the potential supply of capital and onshore capital is sufficiently tax sensitive, the compliance of a lone tax haven does not decrease the loss of tax base relative to the non-compliance of all the havens.
    Keywords: Tax Havens, International standards, Compliance, Timing
    JEL: F21 F23 H23 H25 H26
    Date: 2016
  2. By: Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
    Abstract: We present evidence of a causal impact of research and development (R&D) tax incentives on innovation. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting (even when quality-adjusted). R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population of smaller firms and subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design. Over the 2006-11 period aggregate business R&D would be around 10% lower in the absence of the tax relief scheme. We also show that the R&D generated by the tax policy creates positive spillovers on the innovations of techno-logically related firms.
    JEL: O31
    Date: 2016–07
  3. By: Michael Keen; Joel Slemrod
    Abstract: This paper sets out a framework for analyzing optimal interventions by a tax administration, one that parallels and can be closely integrated with established frameworks for thinking about optimal tax policy. At its heart is a summary measure of the impact of administrative interventions—the “enforcement elasticity of tax revenue”—that is a sufficient statistic for the behavioral response to such interventions, much as the elasticity of taxable income serves as a sufficient statistic for the response to tax rates. Amongst the applications are characterizations of the optimal balance between policy and administrative measures, and of the optimal compliance gap.
    JEL: H21 H26
    Date: 2016–07

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