nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2018‒10‒01
four papers chosen by

  1. Capitalization of tangible and intangible assets in non-profit organizations in Bulgaria By Georgieva, Daniela
  2. Cross-border tax evasion after the common reporting standard: Game over? By Casi, Elisa; Spengel, Christoph; Stage, Barbara
  3. Royalty Taxation under Tax Competition and Profit Shifting By Steffen Juranek; Dirk Schindler; Andrea Schneider
  4. Internal factors influencing the cost of equity capital By Natalia Mokhova; Marek Zinecker; Tomáš Meluzín

  1. By: Georgieva, Daniela
    Abstract: The report analyzes applicability of the equity capital approach for the acquisition of tangible and intangible assets by non-profit organizations in Bulgaria. Attention is also paid to the accounting of depreciation of the assets. Without any claims of comprehensiveness, the conclusions in the report are based on analysis of accounting and legal literature, Bulgarian national accounting standards, as well as data collected from individual interviews that the author conducted among accountants.
    Keywords: non-profit organizations, depreciation, long-lasting assets, capitalization
    JEL: M40 M41 M49
    Date: 2018
  2. By: Casi, Elisa; Spengel, Christoph; Stage, Barbara
    Abstract: Back in 2013, the Automatic Exchange of Information (AEOI) was endorsed as the prevailing universal solution to fight cross-border tax evasion. In this regard, the OECD launched a global standard for the AEOI, the Common Reporting Standard (CRS). Currently, around 100 jurisdictions have committed to implement it into respective national laws by 2018. In this study, we analyze the impact of the CRS on cross-border tax evasion using a difference-in-difference research design. By considering a period of four years (2014-2017), results suggest that the CRS induced a reduction of 14% in cross-border deposits parked in offshore locations for tax evasion purposes. Moreover, such wealth and related income has not been repatriated but rather a new location to avoid domestic tax obligations has emerged. More specifically, upon the CRS implementation at domestic level, the United States (U.S.), i.e. the only major economy in the world, which so far did not commit to the CRS, seems to emerge as a potentially attractive location for cross-border tax evasion.
    Keywords: Tax Evasion,Automatic Exchange of Information,Offshore Locations,Cross-Border Deposits
    JEL: F42 G21 H26 H31
    Date: 2018
  3. By: Steffen Juranek; Dirk Schindler; Andrea Schneider
    Abstract: The increasing use of intellectual property as a means to shift profits to low-tax jurisdictions or jurisdictions with so-called ‘patent boxes’ is a major challenge for the corporate tax base of medium- and high-tax countries. Extending a standard tax competition model for capital-enhancing technology, royalty payments, and profit shifting, this paper suggests a simple fix: It is optimal to set a withholding tax on (intra-firm) royalty payments equal to the corporate tax rate and deny any deductibility of royalties. As the tax applies to the full payment, the problem of identifying the arm’s-length component in a digital economy (OECD BEPS Action 1) does not apply. Most importantly, the denial of royalty deductions is the Pareto-efficient solution under coordination and the unilaterally optimal policy under competition for mobile capital. In the latter case, a weakened thin capitalization rule is a crucial part of the policy package in order to avoid negative investment effects. Our results question the ban of royalty taxes in double tax treaties and the EU Interest and Royalty Directive.
    Keywords: source tax on royalties, tax competition, multinationals, profit shifting
    JEL: H25 F23
    Date: 2018
  4. By: Natalia Mokhova (Brno University of Technology); Marek Zinecker (Brno University of Technology); Tomáš Meluzín (Brno University of Technology)
    Abstract: In this paper we compile and evaluate the research available on internal factors influencing the cost of equity capital. The topic has been extensively studied for the past few decades; however, the information is spread and is not accumulated. We begin by reiterating the reasons why information asymmetry drives financial decisions. Next, we review recent literature that focuses on financial disclosure and accounting information, i.e. internal factors that are directly connected with information asymmetry. In the remainder of our review we discuss a recent debate on the impact of corporate governance and social factors. Aside from theoretical contribution, the comprehensive literature review of existing studies results in formulation of a strategy how to decrease to cost of equity capital by means of internal factors adjustments. We believe that highlighting the key points in the debate will be beneficial for both academicians and practitioners who will be able to form an independent view of the approaches how to take influence on the cost of equity capital.
    Keywords: social responsibility,disclosure policy,cost of equity,costs reduction,corporate governance,information asymmetry
    Date: 2018–06–29

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