nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2021‒06‒14
three papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Evaluating Japan's Corporate Income Tax Reform using Firm-specific Effective Tax Rates By Toshiyuki Uemura
  2. Welfare improving tax evasion By Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz
  3. How to Manage Value-Added Tax Refunds By Mario Pessoa; Andrew Okello; Artur Swistak; Virginia Alonso-Albarran; Muyangwa Muyangwa; Vincent de Paul Koukpaizan

  1. By: Toshiyuki Uemura (School of Economics, Kwansei Gakuin University)
    Abstract: This study evaluates Japan's corporate tax reforms in the 2010s by estimating the effective average tax rate (EATR) and effective marginal tax rate (EMTR), common methods for international comparisons, using data on Japanese firms. Japan lowered its statutory tax rate while it expanded the tax base. The estimated EATR and EMTR declined in Japan, though the EATR decreased less than the statutory tax rate. This was due to the depreciation method reform. This study analyzes the differing effects of the tax rate reduction and depreciation method reform by conducting simulations to represent the effects of each reform on the EATR and EMTR. Japan’s tax reform in the 2010s lowered the EATR via the lower tax rate, while it raised the EMTR via the depreciation method reform.
    Keywords: Corporate income tax, Firm-specific effective tax rates, Effective average tax rates, Effective marginal tax rates
    JEL: H25 H87
    Date: 2021–06
  2. By: Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz
    Abstract: We study optimal income taxation in a framework where one's willingness to report his income truthfully is positively correlated with his type. We show that allowing low-productivity types to cheat leads to Pareto-superior outcomes as compared to deterring them, even if audits can be performed costlessly. When there is no cheating, redistribution takes place on first- and second-best frontiers and can never make low-ability types more well-off than high-ability types. Letting low-ability types cheat allows first-best redistribution up to a limit at which low-ability types are better off than high-ability types.
    Keywords: audits; optimal taxation; tax evasion; welfare-improving
    JEL: H20 H21 H26
    Date: 2020–07
  3. By: Mario Pessoa; Andrew Okello; Artur Swistak; Virginia Alonso-Albarran; Muyangwa Muyangwa; Vincent de Paul Koukpaizan
    Abstract: The value-added tax (VAT) has the potential to generate significant government revenue. Despite its intrinsic self-enforcement capacity, many tax administrations find it challenging to refund excess input credits, which is critical to a well-functioning VAT system. Improperly functioning VAT refund practices can have profound implications for fiscal policy and management, including inaccurate deficit measurement, spending overruns, poor budget credibility, impaired treasury operations, and arrears accumulation.This note addresses the following issues: (1) What are VAT refunds and why should they be managed properly? (2) What practices should be put in place (in tax policy, tax administration, budget and treasury management, debt, and fiscal statistics) to help manage key aspects of VAT refunds? For a refund mechanism to be credible, the tax administration must ensure that it is equipped with the strategies, processes, and abilities needed to identify VAT refund fraud. It must also be prepared to act quickly to combat such fraud/schemes.
    Keywords: value-added tax; refunds; VAT; management framework; VAT refund; Georgia revenue service; VAT system; Tax refunds; Tax administration core functions; Credit; Income; Global; Africa;Currencies
    Date: 2021–05–10

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