nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒07‒02
eight papers chosen by

  1. Innovation, patent location and tax planning by multinationals By Øystein Bieltvedt Skeie; Åsa Johansson; Carlo Menon; Stéphane Sorbe
  2. When the State Doesn't Play Dice: An Experimental Analysis of Cunning Fiscal Policies and Tax Compliance By Luigi Mittone; Matteo Ploner; Eugenio Verrina
  3. China’s Household Balance Sheet: Accounting Issues, Wealth Accumulation, and Risk Diagnosis By Li, Cheng
  4. Analysis of tax harmonisation in the SADC By Michael Ade; Jannie Rossouw; Tendai Gwatidzo
  5. China’s Current Account : External Rebalancing or Capital Flight? By Anna Wong
  6. Reforming the Financial Accounting Regulation and Reporting System, the Order of Integration into the Economic and Educational Environment By Chipurenko, Elena; Lisovskaya, Irina; Trapeznikova, Natalia
  7. Central Bank Balance Sheet Analysis By Bagus, Philipp; Howden, David
  8. Euro area imbalances: How much could an expansion in the North help the South? By Oliver Picek; Enno Schröder

  1. By: Øystein Bieltvedt Skeie; Åsa Johansson; Carlo Menon; Stéphane Sorbe
    Abstract: This paper assesses the effect of international differences in taxes on the choice of patent location by multinational enterprises (MNEs). The analysis is based on a large sample of patents and firms from the OECD-PATSTAT and OECD-ORBIS databases over 2004-10. The approach is to compare the number of patent applications of MNE entities with different links to other countries and thus different sets of location choices, while controlling for other factors affecting patenting behaviour. The results suggest that lower corporate taxes, either in the form of a lower statutory rate or a preferential intellectual property regime, are associated with more patent applications. Both the location of research activities, which is proxied by the location of patent inventors, and the legal ownership of patents are found to be sensitive to corporate taxes. For instance, a 5 percentage point cut in the preferential tax rate on patent income is associated with a 6% increase in patent applications. On average, about two-thirds of the increase comes from patents invented at home and one third from patents invented abroad, but the relative importance of these two effects is likely to vary with the design of the preferential regime and especially the existence of activity requirements. In addition, strong anti-avoidance measures against tax planning are found to reduce patent shifting by MNEs. Innovation, localisation des brevets et planification fiscale des multinationales Cet article évalue l'effet des différences internationales d’imposition sur le choix de l'emplacement des brevets par les entreprises multinationales. L'analyse est basée sur un large échantillon de brevets et d’entreprises des bases de données OCDE-PATSTAT et OCDE-ORBIS sur 2004-10. L'approche consiste à comparer le nombre de demandes de brevets d'entités de multinationales ayant différents liens vers d'autres pays et donc différents ensembles de choix de localisation, tout en contrôlant pour les autres facteurs qui influent sur le comportement en matière de brevets. Les résultats suggèrent qu’un niveau plus faible d’impôt sur les sociétés, soit sous la forme d'un taux légal inférieur soit d’un régime de propriété intellectuelle préférentiel, est associé à davantage de demandes de brevets. Tant la localisation des activités de recherche, qui est approchée par le lieu de résidence des inventeurs de brevets, que la propriété juridique des brevets seraient sensibles à l'impôt sur les sociétés. Par exemple, une baisse de 5 points de pourcentage du taux d'imposition préférentiel sur le revenu de brevet est associée à une augmentation de 6% des demandes de brevet. En moyenne, environ deux tiers de l'augmentation provient de brevets inventés dans le pays en question et un tiers des brevets inventés à l'étranger, mais l'importance relative de ces deux effets est susceptible de varier en fonction de la conception du régime préférentiel et plus particulièrement de l'existence d'exigences de localisation d’activité. En outre, de fortes mesures anti-évitement contre la planification fiscale réduiraient selon les estimations de l’article les transferts de brevets par les multinationales.
    Keywords: BEPS, corporate taxation, multinational enterprises, patents, research and development, tax planning
    JEL: F23 H26 O34
    Date: 2017–02–16
  2. By: Luigi Mittone; Matteo Ploner; Eugenio Verrina
    Abstract: We provide a test of the effect of aggressive fiscal policies on tax com- pliance in the lab. Our experimental setup allows tax agents to break a deontological rule concerning the implementation of audits on a group of tax payers. In one incentive condition, tax agents have a direct monetary benefit from higher compliance; in another, they have none. Tax payers, on the other hand, go through a phase of stringent controls under their tax agents and one where audit probabilities are fixed and implemented by a random device. We find that tax agents bend the rules to their advantage. Many either perform very frequent audits or place them in a strategic way, thus enforcing a norm of high compliance. Those following the rules have no success. Surprisingly, this is true for both incentive conditions. Tax payers exposed to these audit strategies display nearly full compliance and con- tinue to do so also when tax agents are inactive. We conclude that cunning fiscal policies can effectively be used by tax authorities, if it is transparent that they lead to higher overall compliance. This establishes a virtuous norm that can have positive spillovers even in domains where the state has less coercive power.
    Keywords: Tax evasion, die under the cup, taxpaying strategies, audit strategies, endogenous audits; Tax evasion, die under the cup, taxpaying strategies, audit strategies, endogenous audits
    JEL: C91 C92 H24 H26 H83
    Date: 2017
  3. By: Li, Cheng
    Abstract: In this paper, we compile China’s household balance sheet and apply this perspective to the analysis of household financial conditions. Specifically, we first address some technical issues on the balance sheet accounts, and detail the estimations of two important asset items, “dwellings” and “automobiles.” Next, through reading the sheets, we provide an international comparative analysis, and show: (1) China’s households are still on their early stage of wealth accumulation, and this trend is associated with a changing structure in favour of financial assets. (2) Although being subject to relatively low insolvency and liquidity risks, the sector has experienced, generally contrary to major developed countries, a climbing leverage cycle since the global financial crisis. These findings imply that China’s policymakers should, on the one hand, make further efforts to help households accumulate wealth with an improved structure in terms of liquidity and risk diversification, and on the other hand need to pay high attention to the increasing household financial stress and the potential risk contagion.
    Keywords: Balance sheet; Household sector; Wealth accumulation; Debt risks; Financial deepening
    JEL: E01 E21 O57
    Date: 2017–06–26
  4. By: Michael Ade; Jannie Rossouw; Tendai Gwatidzo
    Abstract: This paper analyses tax harmonisation in the SADC region. Results of first attempt to devise a tax policy harmonisation measure (TPHM) by the use of a cross-sectional and panel data are reported. New methodology of computing optimum tax rates (OTRs) are introduced and a robustness test (via a sensitivity analysis) on the impact of taxation (based on new tax dataset from the TPHM and OTRs computation) on FDI inflows to the SADC is conducted.The research shows a need for the SADC countries to develop policies aimed at collectively expanding their corporate tax base in order to accommodate the relatively low optimum CIT rates. It is also shown that the adoption of an optimum VAT rate by all SADC member countries will reduce the usage of different politically motivated VAT rates by individual member states as instruments to gain voters' confidence. The research shows that, some further policy considerations towards enhanced harmonisation and tax revenue could include developing a benchmarking process with other regional economic groupings such as the EU and the EAC.
    Keywords: SADC; Harmonisation; Tax Policy; Tax Rates; EBA; FDI
    JEL: E60 F15 H21 H25 H27
    Date: 2017–06
  5. By: Anna Wong
    Abstract: This paper examines an anomaly in China’s current account: its large and rapidly growing travel expenditure. Drawing evidence from counterparty data, Chinese international arrival statistics, and gravity equation models extended to travel trade, I find that a significant amount of China’s travel spending in the period 2014-2016 could not be explained by accounting factors or economic fundamentals. The unexplained travel imports are inversely associated with domestic growth and positively associated with renminbi depreciation expectations against the dollar, suggesting that they are less likely to be consumption of goods and services abroad than domestic residents’ acquisition of foreign financial assets. Adjusted for these potential disguised outflows, China’s current account balance could be higher than reported by around 1 percent of GDP in 2015 and 2016, a period when the Chinese economy slowed noticeably as it shifted away from investment-driven growth (i.e.“internal rebalancing”). These results suggest that Chinese households, through the travel channel, have in part replaced the official sector in directing domestic surplus savings abroad in recent years. While the official sector preferred liquid foreign government assets, Chinese households appear to prefer private foreign assets.
    Keywords: Capital flight ; Current account ; Trade mis-invoicing ; Services trade
    JEL: F32 F21 F14 G15
    Date: 2017–06–19
  6. By: Chipurenko, Elena (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Lisovskaya, Irina (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Trapeznikova, Natalia (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: A study of the world experience has shown that one of the main conditions ensuring achievement of the main goals in the education of professional accountants is the development and implementation of uniform requirements for their educational and professional training. These requirements, on the one hand, must correspond to the positions of the entire professional community, but, on the other hand, they can not contradict national regulatory requirements. The need to unify the requirements for the professional training of accountants has become especially relevant after Russia's transition to the application of IFRS.
    Date: 2017–05
  7. By: Bagus, Philipp; Howden, David
    Abstract: Balance sheet analysis is standard practice for assessing private sector businesses. No such analysis has been applied to central banks previously. We provide the theoretical foundation and rationale for such analysis. This foundation is rooted in the quality theory of money which places special emphasis on subjective factors as a complement to the more conventional quantitative factors that determine money’s purchasing power. The balance sheet of a central bank reveals the quality of the assets backing a currency and serves as an indicator of future monetary policy. Several accounting ratios proxy the quality of money in terms of assets held by the central bank, alluding to potential shifts in its purchasing power. These ratios can also be used to estimate the scope of future monetary policies that are feasible by the central bank.
    Keywords: Central Bank Balance Sheet, Quality of Money, Balance sheet analysis, Monetary Policy, Inflation
    JEL: E31 E52 E58 E59 M4 M40
    Date: 2016
  8. By: Oliver Picek; Enno Schröder
    Abstract: We run simulations of current account rebalancing scenarios in the Euro Area and the European Union based on a closed multi-country input-output model. The spillover effects of domestic demand booms in the Northern European surplus countries are non-negligible, but not large. While they cannot on their own create a meaningful upswing in the former Southern European deficit countries, they could be an important element thereof. In particular, a Northern expansion can create the necessary policy space for a domestic demand-driven expansion in the European South by relaxing the balance of payments constraint. Then, a coordinated asymmetric expansion in the Euro Area could alleviate the unemployment crisis in the European South.
    Keywords: Current Account Imbalances, Current Account Rebalancing, Euro Crisis, Euro Zone, Domestic Demand Expansion, European Union
    JEL: F45 F32 F15
    Date: 2017

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