nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒11‒19
seven papers chosen by

  1. Dynamic scoring of tax reforms in the European Union By Barrios, Salvador; Dolls, Mathias; Maftei, Anamaria; Peichl, Andreas; Riscado, Sara; Varga, Janos; Wittneben, Christian
  2. Taxation and the Multinational Firm By Peter Egger; Michael Stimmelmayr
  3. Tax incentives for research and development and their use in tax planning By Pfeiffer, Olena; Spengel, Christoph
  4. : In official international trade statistics, annual product-level commerce between every pair of countries is reported twice: once by the importing country and once by the exporter. In principle, the two reported trade values will differ systematically only by transport costs. But as has long been recognized, the product-level reports differ systematically with product-level tariffs. We aggregate across products to construct a dataset of annual country-level bilateral trade, separately for importer and exporter-reported values. These data enable us to reexamine the reporting gaps, this time controlling for country characteristics aside from tariffs. After accounting for distance and other standard trade costs, the remaining gaps between aggregate importer- and exporter-reported trade vary systematically with countriesÕ GDPs, auditing standards, domestic taxes, corruption, and trade agreements. These new results have implications for trade agreements and domestic fiscal policy, and for empirical assessments of the efficacy of those policies. By Derek Kellenberg; Arik Levinson
  5. What are the drivers of tax complexity for multinational corporations? Evidence from 108 countries By Hoppe, Thomas; Schanz, Deborah; Sturm, Susann; Sureth-Sloane, Caren
  6. Follow the Value Added: Tracking Bilateral Relations in Global Value Chains By Borin, Alessandro; Mancini, Michele
  7. Policy Should Focus on the Need to Overcome Private Indebtedness By Savvides, Savvakis C.

  1. By: Barrios, Salvador; Dolls, Mathias; Maftei, Anamaria; Peichl, Andreas; Riscado, Sara; Varga, Janos; Wittneben, Christian
    Abstract: In this paper, we present the first dynamic scoring exercise linking a multi†country microsimulation and DSGE models for all countries of the European Union. We illustrate our novel methodology analysing a hypothetical tax reform for Belgium. We then evaluate real tax reforms in Italy and Poland. Our approach takes into account the feedback effects resulting from adjustments in the labor market and the economy†wide reaction to the tax policy changes. Our results suggest that accounting for the behavioral reaction and macroeconomic feedback to tax policy changes enriches the tax reforms' analysis, by increasing the accuracy of the direct fiscal and distributional impact assessment provided by the microsimulation model for the tax reforms considered. Our results are in line with previous dynamic scoring exercises, showing that most tax reforms entail relatively smaller feedback effects in terms of the labor tax revenues for tax cuts benefiting workers, compared with the ones granted to firms.
    Date: 2017–10–30
  2. By: Peter Egger; Michael Stimmelmayr
    Abstract: This chapter provides a survey of issues which emerge with the taxation of multinational enterprises. It addresses tax rates which affect multinational firms directly and focuses on provisions and incentives which relate to the profits and investments of such firms directly. It survey positive as well as normative principles of such taxation and incentives, relates to tax-avoidance practices, and discusses their remedies.
    Keywords: taxation, foreign direct investment, multinational firms
    JEL: F21 F23 H25 H26
    Date: 2017
  3. By: Pfeiffer, Olena; Spengel, Christoph
    Abstract: This study provides a comprehensive analysis of various aspects of R&D tax incentives. It explains the economic justification behind the state support of research and development and summarizes its main types. In addition, it gives an overview of the existing R&D tax incentives in Europe and provides a thorough review of the empirical literature on the outcomes of fiscal incentives. Furthermore, the Devereux and Griffith model is used to determine the effective tax burden of multinational firms that reside in countries which implement R&D tax support and countries which do not. The model is developed further following Spengel and Elschner (2010) and Evers et al. (2015) to reflect a potential use of R&D tax incentives by multinational firms for tax planning. The hypothesis developed in the model is tested in an empirical estimation, where we employ the OECD data on international co-operation in patents. According to our main findings, there are at least two reasons why input-oriented R&D tax incentives, such as tax credits and tax super-deductions, constitute a more suitable instrument for fostering research and development than the output-oriented incentives, such as IP Boxes. First, there is robust evidence found in the empirical literature which shows the positive effect introducing input-oriented tax incentives has on a firm's innovative activity, whereas studies on output-oriented tax incentives are not able to support this argument. Secondly, according to our theoretical and empirical analyses, output-oriented R&D tax incentives may be used by multinationals for tax planning as opposed to their intended use of fostering research and development.
    Keywords: research and development,R&D,tax planning,corporate taxation
    JEL: H25 F23 H26 H3
    Date: 2017
  4. By: Derek Kellenberg (Department of Economics, University of Montana); Arik Levinson (Department of Economics, Georgetown University)
    Keywords: Tariff evasion, international trade, auditing and accounting standards, organized crime, regional trade agreements (RTAs)
    JEL: F13 F14 H26
    Date: 2017–08–31
  5. By: Hoppe, Thomas; Schanz, Deborah; Sturm, Susann; Sureth-Sloane, Caren
    Abstract: All over the world, firms and governments are increasingly concerned about the rise in tax complexity. To manage it and develop effective simplification measures, detailed information on the current drivers of complexity is required. However, research on this topic is scarce. This is surprising as the latest developments - for example, triggered by the BEPS project - give rise to the conjecture that complexity drivers may have changed, thus questioning the findings of prior studies. In this paper, we shed light on this issue and provide a global picture of the current drivers of tax complexity that multinational corporations face based on a survey of 221 highly experienced tax practitioners from 108 countries. Our results show that prior complexity drivers of the tax code are still relevant, with details and changes of tax regulations being the two most influential complexity drivers. We also find evidence for new relevant complexity drivers emerging from different areas of the tax framework, such as inconsistent decisions among tax officers (tax audits) or retroactively applied tax law amendments (tax enactment). Based on the responses of the practitioners, we develop a concept of tax complexity that distinguishes two pillars, tax code and tax framework complexity, and illustrates the various aspects that should be considered when assessing the complexity of a country's tax system.
    Keywords: Complexity Drivers,International Comparison,Survey,Tax Complexity,Tax Practitioners
    JEL: H20 H25 C83 O57
    Date: 2017
  6. By: Borin, Alessandro; Mancini, Michele
    Abstract: Following the spread of global value chains new statistical tools, the Inter-Country Input-Output tables, and new analytical frameworks have been recently developed to provide an adequate representation of supply and demand linkages among the economies. Koopman, Wang and Wei propose an innovative accounting methodology to decompose a country's total gross exports by source and final destination of their embedded value added. However this decomposition presents some limitations and relevant inexactnesses in some of its components. We develop their approach further by deriving a fully consistent counterpart for bilateral trade flows, also at the sectoral level, addressing the main shortcomings of previous works. We also provide correct breakdown of the foreign content in total (world) trade flows and a brand new classification of these components that take the perspective of the exporting country. Finally, drawing on our methodology we derive for the first time a precise measure of international trade generated within global production networks. Two examples of empirical applications with relevant policy implications are also provided.
    Keywords: global value chains; input-output tables; trade in value added; trade elasticity
    JEL: F1 F14 F15
    Date: 2017–11–14
  7. By: Savvides, Savvakis C.
    Abstract: The author emphasizes the need to address private indebtedness as the main cause of the problem which manifests itself in a huge amount of non-performing loans following the bail-in of deposits of 2013. The focus should not be on how to compensate depositors or bond holders or even shareholders of the affected banks. It should be on how the over-indebted businesses and households can lighten their debt burden and be in a position to engage in normal economic activity in a stable and sustainable manner.
    Keywords: Balance Sheet Recession, Debt Deflation Spiral, Sustainable Growth, Debt Minimization
    JEL: D61
    Date: 2017–11–01

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