nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2022‒10‒10
six papers chosen by

  1. The Chinese accounting profession in the People’s Republic: A preliminary understanding from an oral history perspective By xue, qingmei; zan, luca
  2. Assessing tax relief from targeted investment tax incentives through corporate effective tax rates: Methodology and initial findings for seven Sub-Saharan African countries By Alessandra Celani; Luisa Dressler; Tibor Hanappi
  3. Fiscal consequences of corporate tax avoidance By Katarzyna Bilicka; Evgeniya Dubinina; Petr Janský
  4. "Property Tax Competition: A Quantitative Assessment" By Rainald Borck; Jun Oshiro; Yasuhiro Sato
  5. Attracting Profit Shifting or Fostering Innovation? On Patent Boxes and RD Subsidies By Haufler, Andreas; Schindler, Dirk
  6. New gig work or changes in reporting?: Understanding self-employment trends in tax data By Andrew Garin; Emilie Jackson; Dmitri Koustas

  1. By: xue, qingmei; zan, luca
    Abstract: While oral history still has a marginal role in accounting literature in general, it has not been applied at all in relation to the history of Chinese accounting. Within broader research on accounting change in China, this paper uses oral history to investigate patterns of the career of accountants in China. We interviewed 21 retired accountants, aging from 60 to 90 at the time of the interview, asking them to share their professional experience in open and unstructured talk. We reconstruct individual experiences, which provides insights into the working lives of our interviewees. Unlike previous studies that only focus on influential informants, we investigate Chinese accounting changes as they emerge from the collective memory of everyday accountants. Taking a pluralist perspective, we collect non-archival data to illustrate the education and common elements in accounting career development. Our approach takes a ‘view from below’, underlining the limitations of top-down perspectives in most of the literature on accounting change in China. The findings contribute to our understanding of accounting changes in China and their social and economic impacts on the profession while providing interesting implications for oral history in accounting in general.
    Keywords: oral history; accounting profession; China; Chinese accounting
    JEL: M41 N35
    Date: 2022
  2. By: Alessandra Celani; Luisa Dressler; Tibor Hanappi
    Abstract: Corporate tax incentives reduce investment costs for businesses, which may affect investment and location decisions. They apply through different designs and interact with countries’ standard tax systems, often making it difficult for tax policy makers and researchers to compare their generosity and assess their impacts across countries. This paper develops a methodology to calculate forward-looking corporate effective tax rates (ETRs) summarising tax relief from investment tax incentives into comparable indicators. It presents ETR indicators for seven Sub-Saharan African countries. Empirical results show that tax incentives substantially lower corporate taxation across these countries. On average, tax incentives reduce ETRs by 30% in the food and automotive industries compared to the standard tax treatment. ETRs often differ among taxpayers in a same sector and country - by up to 55%. The most generous tax treatment is typically offered within Special Economic Zones, where tax incentives can reduce ETRs to near zero.
    Keywords: Corporate taxation, Effective tax rates, FDI, Sub-Saharan Africa, Tax incentives
    JEL: H25 H32 O14 F21
    Date: 2022–09–22
  3. By: Katarzyna Bilicka; Evgeniya Dubinina; Petr Janský
    Abstract: Multinational corporations shift a large share of their foreign profits to tax havens and, due to this corporate tax avoidance, governments worldwide lose a portion of their tax revenues. In this paper we study the consequences of multinational tax avoidance for the structure of government tax revenues. First, we show that, at the country level, countries with large revenue losses due to profit shifting have lower corporate tax revenues and rates. At the same time, they raise a larger share of tax revenues from personal and indirect taxes and have higher indirect tax rates.
    Keywords: Corporate tax, Tax avoidance, Profit shifting, Multinational firms, Tax revenue, Government tax revenue
    Date: 2022
  4. By: Rainald Borck (The Faculty of Economic and Social Sciences, University of Potsdam); Jun Oshiro (Grobal and Regional Studies, University of the Ryukyus); Yasuhiro Sato (Faculty of Economics, The University of Tokyo)
    Abstract: We develop a model of property taxation and characterize equilibria under three alternative taxation regimes often used in the public finance literature: decentralized taxation, centralized taxation, and "rent seeking" regimes. We show that decentralized taxation results in inefficiently high tax rates, whereas centralized taxation yields a common optimal tax rate, and tax rates in the rent-seeking regime can be either inefficiently high or low. We quantify the effects of switching from the observed tax system to the three regimes for Japan and Germany. The decentralized or rent-seeking regime best describes the Japanese tax system, whereas the centralized regime does so for Germany. We also quantify the welfare effects of regime changes.
    Date: 2022–09
  5. By: Haufler, Andreas (LMU Munich and CESifo); Schindler, Dirk (Erasmus University Rotterdam)
    Abstract: Many countries have introduced patent box regimes in recent years, offering a reduced tax rate to businesses for their IP-related income. In this paper, we analyze the effects of patent box regimes when countries can simultaneously use patent boxes and R&D subsidies to promote innovation. We show that when countries set their tax policies non-cooperatively, innovation is fostered, at the margin, only by the R&D subsidy, whereas the patent box tax rate is targeted at attracting international profit shifting. In equilibrium, patent box regimes emerge endogenously under policy competition, but never under policy coordination. We also compare the competition for mobile patents with the competition for mobile R&D units and show that enforcing a nexus principle is likely to reduce the aggressiveness of patent box regimes.
    Keywords: corporate taxation; profit shifting; patent boxes; R&D tax credits; tax competition;
    JEL: H25 H87 F23
    Date: 2022–09–09
  6. By: Andrew Garin; Emilie Jackson; Dmitri Koustas
    Abstract: Rising self-employment rates in U.S. tax data that are absent in survey data have led to speculation that tax records capture a rise in new “gig” work that surveys miss. Drawing on the universe of Internal Revenue Service (IRS) tax returns, we show that trends in firm-reported payments to “gig” and other contract workers do not explain the rise in self-employment reported to the IRS; rather, that increase is driven by self-reported earnings of individuals in the EITC phase-in range. We isolate pure reporting responses from real labor supply responses by examining births of workers’ first children around an end-of-year cutoff for credit eligibility that creates exogenous variation in tax rates at the end of the tax year after labor supply decisions are already sunk. We find that exposing workers with sunk labor supply to negative marginal tax rates results in large increases in their propensity to self-report self-employment—only a small minority of which leads to bunching at kink-points. Consistent with pure strategic reporting behavior, we find no impact on reporting among taxpayers with no incentive to report additional income and no effects on firm-reported payments of any kind. Moreover, we find these reporting responses have grown over time as knowledge of tax incentives has become widespread. Quantitatively, our results suggest that as much as 59 percent of the growth in self-employment rates, and all counter-cyclicality, can be attributed to changes in reporting behavior that are independent of changes in the nature of work. Our findings suggest caution is warranted before deferring to administrative data over survey data when measuring labor market trends.
    JEL: H31 J21 H26
    Date: 2022–09–23

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.