nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2021‒10‒18
eight papers chosen by

  1. Enhancing Financial Reporting Quality through Corporate Ethics Commitment By Noorul Azwin Md Nasir
  2. RFAs’ Financial Structures and Lending Capacities: a statutory, accounting and credit rating perspective By Gong Cheng; Rudolf Alvise Lennkh
  3. Second-Best Source-Based Taxation of Multinational Firms By Johannes Becker
  4. Taxation of Multinationals: Design and Quantification By Sébastien Laffitte; Julien Martin; Mathieu Parenti; Baptiste Souillard; Farid Toubal
  5. Gender and Tax Compliance: Firm Level Evidence from Ethiopia By Yimam, Seid; Asmare, Fissha
  6. What is 'Offshore'? International Tax Evasion and Avoidance and How to Combat it By Picciotto, Sol
  7. Assessing the Performance of African Tax Administrations: A Malawian Puzzle By Ligomeka, Waziona
  8. Анализ потоков в финансовом счете по секторам экономики // Analysis of the capital account flows by the economy sectors By Оспанов Нурлан // Ospanov Nurlan; Алмагамбетова Меруерт // Almagambetova Meruyert; Құратова Ақбөпе // Kuratova Akbope; Тұрабай Бердібек // Turabai Berdibek; Сейдахметова Клара // Seidakhmetova Klara; Рысбекова Аида // Rysbekova Aida

  1. By: Noorul Azwin Md Nasir (Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia Author-2-Name: Hafiza Aishah Hashim Author-2-Workplace-Name: Faculty of Business Economics and Social Development, Universiti Malaysia Terengganu, Malaysia Author-3-Name: Noorshella Che Nawi Author-3-Workplace-Name: Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia Author-4-Name: "Mohd Nor Hakimin Yusof" Author-4-Workplace-Name: "Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia " Author-5-Name: Nur Athirah Mohd Aluwi Author-5-Workplace-Name: Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective - A rising number of cases involving ethical misconduct within firms have of late received considerable attention in Malaysia. Despite the country's declaring having a strong corporate governance policy, strengthened through the Code of Ethics for Company Directors and Malaysia Code of Corporate Governance, unethical practices, and lack of integrity within firms remain an issue. This paper aims to review the current implementation of corporate ethical conducts among corporate governance practitioners as well as factors that influence corporate ethics commitment in a firm. Methodology/Technique - This paper is developed from extensive readings of previous literature on corporate governance practices and their effect on the quality of financial reports. Findings - This paper discloses collective approaches of corporate ethics practiced in Malaysian firms and how the implementation has enhanced the firms' overall financial reporting quality. It demonstrates current issues and the importance of corporate ethics commitment to enhance financial reporting quality. Firms that emphasize ethical commitments, reduce the risk of financial statement fraud and firms will naturally gain trust from their stakeholders. Novelty - This paper stresses the importance of sound ethical conduct above other factors that influence the financial reporting quality of firms in Malaysia. This paper is the result of extensive research on corporate ethics commitment and financial reporting quality. Type of Paper - Review."
    Keywords: Corporate Ethics; Corporate Governance; Financial Reporting Quality
    JEL: G34 M41
    Date: 2021–09–30
  2. By: Gong Cheng (ESM); Rudolf Alvise Lennkh (Scope Ratings)
    Abstract: This paper documents the diverse financial structures – including capital structures and funding strategies – of Regional Financing Arrangements (RFAs) and offers an analysis of RFAs’ lending capacity from a statutory, accounting and credit rating perspective. Using credit rating agencies’ methodologies, the paper presents the dynamic relationship between RFAs’ financial structures, the support from their member states and their resulting creditworthiness. A stylised model is developed to demonstrate how the relative size of an institution’s paid-in and callable capital, together with its member states’ support, could have an impact on the overall credit rating and lending capacity of an RFA. This paper contributes to the growing policy discussions on the heterogeneity of RFAs and their rising importance in the Global Financial Safety Net.
    Keywords: Regional Financing Arrangements, IMF, Credit rating, Capital, Lending capacity, Global Financial Safety Net
    JEL: F33 F34 F53 F55 G24
    Date: 2020–05–28
  3. By: Johannes Becker
    Abstract: I consider a continuum of multinational enterprises (MNEs), which differ in profitability. MNEs employ capital, shift profit to tax havens and may relocate their production facilities to other countries. Source countries provide public inputs and levy taxes. I derive optimal policy choices for different government objectives (to maximize tax revenue, national income or the representative household’s utility) allowing for an unrestricted set of tax policy instruments — in contrast to most existing work on corporate taxation. With observable productivity types, source governments set type-dependent lump-sum taxes and attain the first-best allocation. With unobservable productivity types, the optimum source-based tax system consists of a small lump-sum tax (driving low-profit types out of the market) and positive marginal taxes on reported profit. Optimal marginal tax rates on capital inputs are positive if more profitable firms employ more capital. Optimal public inputs are lower than in the first best if they are of higher value to more profitable firm types. I use a sufficient statistics approach (following Saez 2001) to express optimal tax and input choices as functions of elasticities of observable choice variables. Finally, I use the model to evaluate tax policy measures, e.g. the introduction of an effective minimum tax on profits in tax havens, and to derive the welfare properties of tax competition with an unrestricted set of tax instruments.
    Keywords: corporate taxation, multinational firms, optimum taxation, tax competition
    JEL: H25 H71 F23
    Date: 2021
  4. By: Sébastien Laffitte (CEPS - Centre d'Economie de l'ENS Paris-Saclay - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay - Université Paris-Saclay); Julien Martin (CEPR - Center for Economic Policy Research - CEPR); Mathieu Parenti (ECARES - European Center for Advanced Research in Economics and Statistics - ULB - Université libre de Bruxelles); Baptiste Souillard (ECARES - European Center for Advanced Research in Economics and Statistics - ULB - Université libre de Bruxelles); Farid Toubal (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CEPR - Center for Economic Policy Research - CEPR, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Minimum corporate taxation is the second Pillar of the reforms of international corporate taxation. It is a simple and powerful tool that could curb profit shifting towards low or no tax jurisdictions. Its implementation would allow France to tax the profits that French headquarters have shifted to tax havens, but also to reduce the erosion of its tax base. We estimate the French corporate income tax (CIT) revenues would increase by almost 6 billion euros in the short run after the implementation of an effective minimum tax rate of 15% and by 8 billion euros at a rate of 21%. CIT gains may vary substantially depending on the scope of the tax base, the possibility of headquarters' inversion, and whether it includes domestic corporations or not. CIT gains are relatively higher in France than in Germany or the United States. The expected gains are substantially larger than those to be expected from the implementation of the first Pillar of the reform in its version proposed by the US in April 2021, which opens up rights to tax the 100 largest corporations in the world according to their sales' destination. According to our estimates, Pillar One would bring in about 900 million euros for France.
    Keywords: Tax rate,multinational corporation,reform
    Date: 2021
  5. By: Yimam, Seid; Asmare, Fissha
    Abstract: Developing countries often lack tax information and enforcement capacity necessary to effectively implement instruments of a modern tax system, such as VAT, income taxes and others. An alternative strategy to increase tax compliance, and thus revenue, in these countries may depend on the capacity of policymakers to harness individual’s civicmindedness, social norms, reciprocity and cultural values of trust (Prichard, Custers, Dom, Davenport and Roscitt 2019). To do so in an effective and targeted way, policymakers need clear evidence on how tax compliance correlates with key taxpayer characteristics, such as gender. However, such evidence remains limited in the Global South, particularly in Africa, and our study aims to fill this gap. In this study, we investigate the correlation between business owner’s gender and tax compliance in Ethiopian enterprises. We measure the tax compliance of businesses from tax audit registry data and combine it with survey data collected from 408 enterprises. Our results suggest that enterprises’ tax compliance behaviour is significantly affected by their owners’ gender: female owned enterprises are more likely to be tax compliant than those owned by men. The correlation between the owner’s gender and tax compliance also becomes stronger as enterprises get larger in size. The results of our study imply that development-related polices, especially in the area of tax administration and compliance, should consider the behavioural variation among male and female business owners. Moreover, improving the participation of women in business in the country may also enhance equity and tax revenue collection for better resource mobilisation and development.
    Keywords: Economic Development, Finance, Gender, Governance,
    Date: 2020
  6. By: Picciotto, Sol
    Abstract: This briefing aims to explain the ‘offshore’ system which enables both evasion and avoidance of tax, as well as of other types of laws and regulations, and discusses countermeasures. All illicit cross-border financial flows exploit the offshore system, so understanding how it works is the key to ensuring effective and coherent countermeasures, in relation to tax, money-laundering and corruption. It was written as a submission to the United Nations High Level Panel on Financial Accountability, Transparency & Integrity.
    Keywords: Economic Development, Finance, Governance,
    Date: 2020
  7. By: Ligomeka, Waziona
    Abstract: When judged by the standard criteria for effective tax administration, as carried out under the Tax Administration Diagnostic Assessment Tool (TADAT), the Malawi Revenue Authority (MRA) appears to perform very poorly, even by the standards of low-income countries. These observations are in conflict with the facts that the MRA (a) is rather effective at capturing a relatively high proportion of gross domestic product (GDP) in tax (above the average for sub-Saharan African (SSA) countries every year since 2009), and (b) collects a high proportion of that through what is normally seen as a very challenging channel, i.e. direct taxes on corporate profits (corporate income tax – CIT) and on employment income (personal income tax – PIT). This paper aims at exploring this puzzle in detail. The issue is explored by examining the MRA’s performance in four areas: taxpayer registration and data management; detection and prosecution of tax fraud through tax audit; handling of administrative appeals and complaints through a dispute resolution process; and provision of services and assistance to taxpayers through taxpayer education.
    Keywords: Economic Development, Finance, Governance,
    Date: 2020
  8. By: Оспанов Нурлан // Ospanov Nurlan (National Bank of Kazakhstan); Алмагамбетова Меруерт // Almagambetova Meruyert (National Bank of Kazakhstan); Құратова Ақбөпе // Kuratova Akbope (National Bank of Kazakhstan); Тұрабай Бердібек // Turabai Berdibek (National Bank of Kazakhstan); Сейдахметова Клара // Seidakhmetova Klara (National Bank of Kazakhstan); Рысбекова Аида // Rysbekova Aida (National Bank of Kazakhstan)
    Abstract: НБРК продолжает цикл исследований, посвященных анализу внешнеэкономической деятельности. Целью данного исследования является разработка целостной системы прогнозирования платежного баланса Казахстана, позволяющей оценить устойчивость внешнего сектора экономики для эффективной реализации денежно-кредитной политики. В исследовании представлен анализ международных потоков капитала и потоков капитала в Казахстане, рассмотрен мировой опыт прогнозирования финансового счета, а также раскрыта система прогнозирования финансового счета в НБРК. // The NBRK continues the series of studies devoted to the analysis of foreign economic activity. The purpose of this study is to develop an integral system of forecasting the balance of payments of Kazakhstan, which allows assessing the sustainability of the external sector of the economy for effective implementation of monetary policy. The study presents the analysis of international capital flows and those in Kazakhstan, considers the world experience of the capital account forecasting, as well as reveals the system of forecasting of the capital account in the NBRK.
    Keywords: финансовый счет, прогноз финансового счета, международное движение капитала, прямые инвестиции, портфельные инвестиции, эконометрические модели, capital account, capital account forecasting, international capital flows, direct investments, portfolio investments, econometric models
    JEL: E22 E27 E44 F01 F41
    Date: 2021

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