nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2021‒12‒06
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Maldives: Technical Assistance Report—Estimating Tax Expenditures By International Monetary Fund
  2. A Firm Lower Bound: Characteristics and Impact of Corporate Minimum Taxation By Aqib Aslam; Maria Delgado Coelho
  3. Chile: Fiscal Transparency Evaluation By International Monetary Fund
  4. Profit Taxation, R&D Spending, and Innovation By Lichter, Andreas; Löffler, Max; Isphording, Ingo E.; Nguyen, Thu-Van; Pöge, Felix; Siegloch, Sebastian
  5. Capital Income Taxation in the Netherlands By Mr. Alexander D Klemm; Mr. Christophe J Waerzeggers; Mr. Shafik Hebous
  6. The Cost of Future Policy: Intertemporal Public Sector Balance Sheets in the G7 By Alexander F. Tieman; Jason Harris; Yugo Koshima; Alessandro De Sanctis
  7. Cambodia: Technical Assistance Report—Government Finance Statistics Mission By International Monetary Fund
  8. Kingdom of the Netherlands—Sint Maarten: Technical Assistance Report—Sustainable Tax Reforms By International Monetary Fund
  9. Balance Sheets and Debt Crises – Empirical Regularities for Modern Cases of Sovereign Distress By Alexis Meyer-Cirkel; Gonzalo Huertas

  1. By: International Monetary Fund
    Abstract: The Maldives has identified the estimation and regular reporting of tax expenditures (TEs) as one of the top priority areas in continuing its tax modernization process. TEs are alternative policy tools (e.g., to direct transfers and other spending measures) in the form of provisions in the tax legislation that modify the tax liability of individuals or companies. The cost of TEs should be identified, measured, and publicly reported to improve transparency in fiscal management.
    Keywords: business profit Tax Expenditure; Model structure; memo item; business profit taxpayer; business profit tax data; Value-added tax; Corporate income tax; Consumption taxes; Tax allowances; Personal income tax
    Date: 2021–10–20
  2. By: Aqib Aslam; Maria Delgado Coelho
    Abstract: This paper examines the role of minimum taxes and attempts to quantify their impact on economic activity. Minimum taxes can be effective at shoring up the corporate tax base and enhancing the perceived equity of the tax system, potentially motivating broader taxpayer compliance. Where political and administrative constraints prevent reforms to the standard corporate income tax, a minimum tax can help mitigate base erosion from excessive tax incentives and avoidance. Using a new panel dataset that catalogues changes in minimum tax regimes over time around the world, firm-level analysis suggests that the introduction or reform of a minimum tax is associated with an increase in the average effective tax rate of just over 1.5 percentage points with respect to turnover and of around 10 percent with respect to operating income. Minimum taxes based on modified corporate income lead to the largest increases in effective tax rates, followed by those based on assets and turnover.
    Keywords: firm Lower Bound; MT reform; minimum tax; level data; profit margins; Corporate income tax; Income; Effective tax rate; Income tax systems; Average effective tax rate; Global
    Date: 2021–06–08
  3. By: International Monetary Fund
    Abstract: Strong fiscal institutions have contributed to Chile’s macroeconomic stability, and recent reform initiatives have focused on enhancing these institutions and fiscal transparency. This report assesses fiscal transparency practices in Chile in relation to the requirements of the IMF’s Fiscal Transparency Code and confirms that many elements of sound fiscal transparency practices are already in place. Chile’s practices meet the principles of the code at a good or advanced level for 21 out of the 36 principles. This is a good score, compared to the average for Latin American Countries and Emerging Market Economies. On a further nine principles, Chile meets the basic standard of practice. Chile’s fiscal transparency practices are very strong for fiscal forecasting and budgeting, followed by fiscal reporting, while fiscal risk analysis and management demonstrate more mixed results. Further improvements could be achieved relatively easily through the publication of some internal analyses or through a more timely or user-friendly publication of already available information.
    Date: 2021–11–11
  4. By: Lichter, Andreas (Heinrich Heine University Düsseldorf); Löffler, Max (Maastricht University); Isphording, Ingo E. (IZA); Nguyen, Thu-Van (Stifterverband Essen); Pöge, Felix (Boston University); Siegloch, Sebastian (University of Mannheim)
    Abstract: We study how profit taxation affects plants' R&D spending and innovation activities. Relying on geocoded survey panel data which approximately covers the universe of R&D-active plants in Germany, we exploit around 7,300 changes in the municipal business tax rate over the period 1987–2013 for identification. Applying event study models, we find a negative and statistically significant effect of an increase in profit taxation on plants' R&D spending with an implied long-run elasticity of −1.25. Reductions in R&D are particularly strong among more credit-constrained plants. In contrast, homogeneity of effects across the plant size distribution questions policy makers common practice to link targeted R&D tax incentives to plant size. We further find lagged negative effects on the (citation-weighted) number of filed patents.
    Keywords: corporate taxation, firms, R&D, innovation, patents
    JEL: H25 H32 O31 O32
    Date: 2021–11
  5. By: Mr. Alexander D Klemm; Mr. Christophe J Waerzeggers; Mr. Shafik Hebous
    Abstract: This paper looks at capital income taxation in the Netherlands from an international and domestic perpective. The Netherlands is a major conduit country for FDI. Recent reforms taken by the Dutch authorities as well as public statements represent a strong move to address international tax avoidance, but it is too early to be able to detect the impact in the data, and measuring tax avoidance even in the past is fraught with difficulties. Domestically, the unique system, which for many financial assets effectively taxes wealth rather than capital income, leads to inequities and distortions. Owner-occupied housing is strongly tax-favored and in many cases effectively subsidized. Various reforms, not necessarily of a fundamental nature, would improve efficiency and equity.
    Keywords: Netherlands, International Tax, Schedular Tax, Debt Bias.
    Date: 2021–05–20
  6. By: Alexander F. Tieman; Jason Harris; Yugo Koshima; Alessandro De Sanctis
    Abstract: This paper compiles the Intertemporal Public Sector Balance Sheets for all G7 countries and examines their relationship with government borrowing costs. In 2018, all G7 countries have negative Intertemporal Net Financial Worth (INFW), falling short of their intertemporal budget constraint. A decomposition of the evolution of INFW shows that short-term fluctuations are mainly driven by fiscal policy changes, while in the long run demographic changes and health and pension obligations play a larger role. We find that on average a 10 percentage point of GDP increase in INFW reduces the (future) 10-1 year sovereign yield curve spread by 2.8 basis points. This results suggest that financial markets pay attention to governments’ future policy obligations, in addition to its current assets and liabilities.
    Keywords: balance sheet framework; negative Intertemporal Net Financial Worth; INFW 0; evolution of INFW; INTERTEMPORAL NET; Financial statements; Health care spending; Fiscal stance; Pension spending; Global
    Date: 2021–05–06
  7. By: International Monetary Fund
    Abstract: The A remote technical assistance (TA) mission to the Ministry of Economy and Finance (MEF) was conducted during ten days over the period of August 31–November 30, 2020.1 This activity was part of Cambodia’s participation in the Japan-funded Government Finance Statistics (GFS) and Public Sector Debt Statistics (PSDS) Project for selected Asian countries (JSA3)2. The overall goal of the JSA3 Project is to assist the MEF in strengthening compilation and dissemination of fiscal data in line with the GFS Manual 2014 and the PSDS: Guide for Compilers and Users to support macro-fiscal surveillance and decision making. The mission liaised with Mr. Alexandros Mourmouras, Director of the Capacity Development Office in Thailand (CDOT), Mr. Rifaat Basanti, the IMF Regional JSA3 GFS/PSDS Project Manager, Mr. Suhas Joshi, the IMF Regional Treasury Advisor—both in the CDOT, Mr. Yasuhisa Ojima, the IMF’s Resident Representative for Cambodia, and Ms. Magdalena Tomczynska-Smith, the IMF’s Budget Planning Advisor for Cambodia. The mission would like to thank the authorities for their excellent collaboration and support (Appendix I lists the main official contacts).
    Keywords: PSDS compilation; government finance statistics yearbook; IMF's Statistics Department; GFS classification; IMF activity; Government finance statistics; Financial statements; PFM information systems; Fiscal accounting and reporting
    Date: 2021–10–20
  8. By: International Monetary Fund
    Abstract: Sint Maarten’s economy has been hit hard over the last 4 years. In 2017, two major hurricanes struck the island causing significant damage. While reconstruction was largely financed by insurance proceeds and grants from The Netherlands, economic recovery from the hurricane damage was slow and in early 2020 the coronavirus pandemic shut down most of Sint Maarten’s tourism sector. As a result, fiscal revenue declined by 15 percent since 2016; payroll tax revenue declined by only 4.5 percent, whereas the turnover tax revenue declined by 23 percent. Since April 2020, The Netherlands has provided immediate financial support to cushion the economic shock of the pandemic. In December 2020, Sint Maarten concluded an agreement with The Netherlands to receive more substantial financial support for recovery and ensuring long-term fiscal sustainability. In return, the authorities committed to make structural changes to their tax system, making it more growth-friendly and equitable, while optimizing and ensuring its revenue mobilization capacity.
    Keywords: capacity development mission; authorities of Sint Maarten; Sint Maarten's authorities; bank transaction; E. profit Tax; personal property; Income; Income and capital gains taxes; Personal income tax; Property tax; Income tax systems; Caribbean; Global
    Date: 2021–10–19
  9. By: Alexis Meyer-Cirkel; Gonzalo Huertas
    Abstract: Public and private sector balance sheets are an important component to any analysis of debt sustainability. A vulnerable and indebted private sector can become a sudden liability for the government; alternatively, resilient household and bank balance sheets may reveal potential sources of funding for the sovereign during times of fiscal distress. In this paper, we document empirical regularities in the behavior of macroeconomic variables during debt crises, and show how both macroeconomic fundamentals and sectoral net worth can affect the likelihood of undergoing default.
    Keywords: balance sheet dynamics; default probability; sectoral balance sheets; default episode; predicting default; banking sector balance sheet data; Financial statements; Commercial banks; Debt default; Global
    Date: 2021–05–04

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