nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2022‒05‒23
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Pareto-Improving Minimum Corporate Taxation By Shafik Hebous; Michael Keen
  2. Benin: Technical Assistance Report—Fiscal Transparency Evaluation By International Monetary Fund
  3. Granting Market Countries the Right to Tax Profit without Physical Nexus By Wolfram F. Richter
  4. Asymmetric Investment Rates By Hang Bai; Erica X. N. Li; Chen Xue; Lu Zhang
  5. How Africa Borrows From China: And Why Mombasa Port is Not Collateral for Kenya's Standard Gauge Railway By Brautigam, Deborah; Bhalaki, Vijay; Deron, Laure; Wang, Yinxuan

  1. By: Shafik Hebous; Michael Keen
    Abstract: The recent international agreement on a minimum effective corporate tax rate marks a profound change in global tax arrangements. The appropriate level of that minimum, however, has been, and remains, extremely contentious. This paper explores the strategic responses to a minimum tax, which—–the policy objective being to change the rules of tax competition game–—are critical for assessing the design and welfare impact of, and prospects for, this fundamental policy innovation. Analysis and calibration plausibly suggest sizable scope for minima that are Pareto-improving, benefiting low tax countries as well as high tax, relative to the uncoordinated equilibrium.
    Keywords: tax competition, minimum taxation, corporate tax reform, international taxation
    JEL: H21 H25 F23
    Date: 2022
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_9633&r=
  2. By: International Monetary Fund
    Abstract: This report provides an evaluation of fiscal transparency practices (FTE) in Benin according to the standards defined by the IMF’s Fiscal Transparency Code. The evaluation focuses on 36 principles covering three pillars of the Code: (I) fiscal reporting; (II) fiscal forecasting and budgeting; and (III) fiscal risk analysis and management. To take account of different levels of institutional capacity in each country, the Code distinguishes three levels of practices for each principle: basic, good, and advanced. A practice is considered “not met” if it has not met the Code’s requirements for basic level.
    Keywords: government budget control; programming paper; budget law; IMF resident Representative; authorities of Benin; Subnational government; du Bénin; quantitative analysis; government action program; Budget planning and preparation; Fiscal risks; Fiscal law; Budget execution and treasury management; West Africa; Global
    Date: 2022–04–08
    URL: http://d.repec.org/n?u=RePEc:imf:imfscr:2022/111&r=
  3. By: Wolfram F. Richter
    Abstract: More than 130 countries have accepted the OECD invitation to reform the taxation of multinational enterprises (MNEs). One of two reform pillars aims at granting market countries the right to tax supernormal (“residual”) profit without requiring physical nexus. This paper examines the method of implementation proposed by the OECD and compares it with various discarded options. It concludes that intercountry tax equity, allocative efficiency, and practicality of negotiation speak against the OECD proposal to use a sales-based formula for allocating an MNE’s group profit. Simply splitting each market country’s residual profit contribution by an MNE-independent key is to be preferred.
    Keywords: BEPS Project, Pillar One, residual profit allocation/splitting, tax withholding, destination-based cash flow taxation
    JEL: H25 M48 F23
    Date: 2022
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_9556&r=
  4. By: Hang Bai; Erica X. N. Li; Chen Xue; Lu Zhang
    Abstract: Integrating national accounting with financial accounting, we provide firm-specific estimates of current-cost capital stocks for the entire Compustat universe, as well as an array of estimates of investment flows, economic depreciation rates, and capital and investment price deflators. The firm-level current-cost investment rate distribution is heavily right-skewed, with a small fraction of negative investment rates, 5.51%, but a huge fraction of positive investment rates, 91.64%. Despite a tiny fraction of inactive investment rates, 2.85%, firm-level investment also seems lumpy, featuring a fraction of 32.66% for positive spikes (investment rates higher than 20%). For a typical firm, 39% of total investment is completed within 20% of the sample years.
    JEL: E44 G12
    Date: 2022–04
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:29957&r=
  5. By: Brautigam, Deborah; Bhalaki, Vijay; Deron, Laure; Wang, Yinxuan
    Abstract: In December 2018, rumors began circulating that Kenya had staked its valuable Mombasa Port as collateral for US$ 3.6 billion in Chinese loans for the Standard Gauge Railway (SGR). New research from CARI shows why the collateral rumor is wrong. A CARI team of scholars and practitioners of international commercial law, auditing, and project finance spent nearly two years collecting and investigating all available SGR contracts and documentation.1 Solving the mystery of the collateral rumor through reconstructing the contractual arrangements also allowed the team to diagram for the first time how China Eximbank and its borrowers structure financing relationships and payment flows in a large Belt and Road Initiative (BRI) project (Figure 1), blending project finance into sovereign loans. The collateral rumor originated in a critical mistake by Kenya's Auditor General (AG). In a routine audit, the AG wrongly labeled Kenya Ports Authority (KPA), owner of Mombasa Port, as a "borrower" responsible for repaying the China Eximbank SGR loans. The AG-and many others-also misunderstood the "waiver of sovereign immunity" clause signed by Kenya's National Treasury, KPA, and Kenya Railway Corporation (KRC). Instead of a deliberate debt trap, we find that the railway project was carefully and creatively designed to reduce the risks of a sovereign default and enhance the bankability of a project with high costs but significant long-term benefits for Kenya and the region.
    Date: 2022
    URL: http://d.repec.org/n?u=RePEc:zbw:caripb:622022&r=

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