nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒02‒26
six papers chosen by
Alexander Harin
Modern University for the Humanities

  1. International Tax Disputes: Between Supranational Administration and Adjudication By Picciotto, Sol
  2. Shifting the Burden of Corporate Taxes – Heterogeneity in Direct Wage Incidence By aus dem Moore, Nils
  3. Taxing Multinational Enterprises as Unitary Firms By Picciotto, Sol
  4. The statistical classification of cash pooling activities By Colangelo, Antonio
  5. La adopción de las Normas Internacionales de Información Financiera en Colombia By Rocío Vergara De La Ossa; Claudia Ines Londoño Vega; Nazly Del Carmen Pérez Benítez; Roberto Torres Castellar
  6. Is the International Tax System Fit for Purpose, Especially for Developing Countries? By Picciotto, Sol

  1. By: Picciotto, Sol
    Abstract: The proposals resulting from the G20/Organisation for Economic Cooperation and Development (OECD) project on Base Erosion and Profit Shifting (BEPS) include a drive for mandatory binding arbitration of international tax disputes, strongly supported by business. This issue should be considered in the context of the reasons for and nature of international tax disputes. The bulk of such conflicts concern ‘economic’ double taxation, resulting from divergent interpretations by different tax authorities of the standards for attributing profits to affiliates within a corporate group, so that the firm as a whole may be taxed on more than 100 per cent of its worldwide profit. Such divergences result from transfer pricing rules that treat the affiliates within a TNC group as if they were an independent entity dealing ‘at arm’s length’ with each other, and requiring subjective judgements by each tax authority on the profits attributable to each. Hence, it is not surprising that the number of such conflicts has grown steadily, especially in the past decade, as countries have applied the rules more vigorously. Arbitration has been advocated not because it can provide objective adjudication, but as a fall-back in order to pressurise tax authorities to resolve cases by negotiation rather than submitting to a third party decision. In fact, although binding arbitration has been available among European Union (EU) members as well as some other states since 1990, only a handful of the continually growing number of conflict cases have actually been referred to arbitration. The newer approach of ‘last best offer’ (LBO) arbitration, widely regarded as more successful, aims to pressurise tax authorities to give up positions that are likely to be considered unorthodox. The Mutual Agreement Procedure (MAP), including arbitration, is essentially a supranational administrative procedure for coordination of the application of international tax rules. Its improvement should form part of a wider process of reform of both the institutions and the substantive rules of international taxation.
    Keywords: Development Policy, Economic Development, Governance,
    Date: 2016
  2. By: aus dem Moore, Nils
    Abstract: We contribute to the empirical literature on the effective incidence of corporate income taxation. We focus on the so-called direct incidence via the wage bargaining process. Building on the innovative framework of Arulampalam, Devereux and Maffini (2012), we analyze the importance of various dimensions of heterogeneity at the firm-level. In particular, we investigate the distinct effects of (i) firm size, (ii) level of profitability, and (iii) competition intensity across (iv) different economic sectors. Furthermore, we investigate the relative importance of the surrounding institutional setting. To this end, a firm-level within-country approach is pursued separately for two different economies, namely France and the United Kingdom, which can be regarded as polar cases with respect to the relevant features of the wage-setting process. However, in many respects, we find surprisingly similar results for both countries. Thereby, this paper also adds to the literature by providing new insights on the degree to which results from previous single-country studies can possibly be generalized.
    JEL: H22 H25 J31
    Date: 2016
  3. By: Picciotto, Sol
    Abstract: This paper explores the issues raised for international tax rules of explicitly treating multinational enterprises (MNEs) as single or unitary firms. It first briefly explains why reform of international corporate taxation is important particularly for developing countries, then outlines the flaws in the current system. It discusses the impetus created for reforms, and the political and institutional dynamics of the tax treaty system. An evaluation is provided of the results of the G20/OECD project on base erosion and profit shifting (BEPS), focusing essentially on the extent to which they moved towards a unitary approach, and the problems created by their continued adherence to the independent entity principle. It then outlines several proposals which, in different ways, would apply a unitary approach to MNEs. The remainder of the paper focuses more particularly on one variant: unitary taxation with formulary apportionment – this was the focus of the ICTD’s research programme, which resulted in the outputs discussed here. It outlines the main findings on optimal design of an international formulary apportionment system, evaluates the evidence about its possible effects on national tax revenue, and considers the possibilities and prospects for adoption of such a system regionally.
    Keywords: Development Policy, Economic Development, Governance,
    Date: 2016
  4. By: Colangelo, Antonio
    Abstract: Cash pooling is a bank service that allows corporates to externalise the intra-group cash management, and thus manage their global liquidity effectively with lower costs. Although there is little quantitative information on the significance of the phenomenon, cash pooling appears to have become increasingly popular after the onset of the financial crisis when, in an environment characterised by limited access to capital markets, reduced bank lending, low returns and higher risks on banks' deposits, corporate groups started to maximise their use of internal sources of financing. In particular, cash pooling is currently very relevant in Western and Northern European countries, and is mainly offered in the United Kingdom, France and the Netherlands. This paper first analyses cash pooling agreements with a focus on the aspects that are relevant from a statistical viewpoint. It then addresses their statistical recording in compliance with ESA 2010 and, specifically, the methodological framework of Monetary Financial Institutions (MFI) balance sheet item statistics. It is proposed that positions related to cash pooling shall be recorded on a gross basis vis-à-vis the actual beneficiaries and obligors of the corresponding accounts. However, the proposed treatment goes beyond MFI balance sheet statistics and affects other data domains as well, ranging from financial accounts to balance of payments and international investment positions. While the statistical approach may seem straightforward, applying it in practice is more difficult, not least because of the treatment of cash pooling contracts in accounting terms. The analysis is complemented by numerical examples and also includes data for the Netherlands, which show the importance of clarifying the statistical treatment of cash pooling in light of the large impact it may have on macroeconomic aggregates. JEL Classification: G21, G32, E51, E43, M41
    Keywords: accounting standards, cash management, cash pooling, credit, MFI balance sheet statistics, monetary aggregates, statistical standards
    Date: 2016–07
  5. By: Rocío Vergara De La Ossa; Claudia Ines Londoño Vega; Nazly Del Carmen Pérez Benítez; Roberto Torres Castellar
    Abstract: El presente documento tiene por objetivo describir el panorama general de la adopción de las normas internacionales de información financiera en Colombia ad portas de su implementación. La metodología empleada es la investigación documental. Durante el recorrido del artículo, se revisa la normatividad colombiana en materia contable, la evolución de las normas internacionales de información financiera, las normas internacionales de información financiera para Pymes, hasta llegar al periodo de convergencia. ****** This article is aimed at describing an overview of the adoption of International Financial Reporting Standards in Colombia. For our study we used the methodology based on desk research. Throughout this article, we will show an accounting analysis about the Colombian normativity, the evolution of these standards and how they work in SMEs, until getting to the convergence period.
    Keywords: IFRS, IAS, SMEs, NIIF, NIC, Pymes.
    JEL: L10 L15 F30 G15 G18
    Date: 2015–09–01
  6. By: Picciotto, Sol
    Abstract: This ICTD Research in Brief is a two-page summary of ICTD Working Paper 13, by Sol Picciotto. The brief is aimed at policy makers, tax administrators, fellow researchers and anyone else who is big on interest and short on time. We hope you enjoy it. This paper traces the historical development of the international tax system, and shows why it is increasingly unfit for purpose, especially in view of the growing dominance of transnational corporations (TNCs). It makes proposals for an evolutionary shift towards a unitary approach for taxing TNCs.
    Keywords: Development Policy, Economic Development, Governance,
    Date: 2016

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