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on Accounting and Auditing |
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Issue of 2023‒06‒26
six papers chosen by |
| By: | Chen, Xuyang (Université catholique de Louvain, LIDAM/CORE, Belgium); Hindriks, Jean (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | To address international profit shifting by multinational enterprises, a number of countries are broadening their tax bases and using turnover tax to secure corporate tax revenues. This paper investigates the impact of tax deductibility on multinationals’ behavior and corporate taxes by considering a model of corporate tax competition with two countries and a tax haven. A pure profit tax (with either separate accounting or formula apportionment) giving deductions for all costs can preserve production efficiency at the expense of tax base erosion. In contrast, a turnover tax with no deductibility of costs can eliminate profit shifting incentives at the expense of production distortion. We show that profit tax with formula apportionment dominates the other two tax regimes when the output elasticity is high and tax capacity is intermediate. In other cases, turnover tax (profit tax with separate accounting) can dominate under low (high) tax capacity. We then analyze the general case to allow for partial tax deductibility and revisit the Diamond-Mirrlees production efficiency theorem in the profit shifting context. We show that less deductibility can yield more revenue when tax capacity is low, but that revenue increases with deductibility when tax capacity is sufficiently high. Simulations further suggest that the optimal deductibility rate increases with the tax capacity and the output elasticity. |
| Keywords: | Corporate taxes ; Profit shifting ; Tax haven ; Tax deductibility ; Tax competition ; Digital economy ; Extractive sector |
| JEL: | H25 H71 H73 F23 D24 |
| Date: | 2023–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2023013&r=acc |
| By: | International Monetary Fund |
| Abstract: | This report presents the results of applying the RA-GAP VAT gap estimation methodology to Belgium for the period 2011-2021. The Revenue Administration Gap Analysis Program (RAGAP) methodology employs a top-down approach for estimating the potential Value-Added Tax (VAT) base, using statistical data on value-added generated in each sector. There are two main components to this methodology for estimating the VAT gap: 1) estimate the potential VAT collections for a given period; and 2) determine the accrued VAT collections for that period. The difference between the two values is the VAT gap. |
| Date: | 2023–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2023/166&r=acc |
| By: | Beznoska, Martin; von Haldenwang, Christian; Schüler, Ruth M. |
| Abstract: | The Global Tax Expenditures Database (https://GTED.net/) collects national reports on tax expenditures for 101 countries for the period from 1990 to the present. Based on these data, the development of tax expenditures in the 38 OECD countries between 1999 and today is examined. A look at the data shows that even in countries with high GDP and comprehensive tax coverage, reporting is often incomplete. For a subset of 16 OECD countries for which (relatively) continuous reporting over the period is available, we look at the development of tax benefits for households and firms. We can show that data availability improves over time. For the development of business tax expenditures, a weakly significant positive trend can be identified in terms of tax revenues foregone, driven mainly by the Netherlands and Ireland. Both countries are known for wanting to strengthen their business location through generous tax expenditures for businesses. Tax expenditures for private households, which are on average higher than the level of tax expenditures for businesses in the countries under review, do not show any significant time trend, even though they were increasingly used to relieve the burden on private households and businesses during the financial crisis of 2008/09. In order to compare tax expenditures between countries and to better assess their effectiveness, regular reporting at the national level, transparent definitions and ideally uniform standards would be helpful. Regular monitoring by a commission of experts could contribute to the consistency and comparability. |
| Keywords: | OECD, Tax Expenditures, Tax Incentives |
| JEL: | C82 H24 H25 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:diedps:72023&r=acc |
| By: | Kämpf, Vanessa; Stadtmann, Georg; Zimmermann, Lilli |
| Abstract: | The Swiss National Bank (SNB) announced to refrain from profit distribution in 2022 owing to the accumulation of a huge financial loss. In this note we examine the key determinants of the SNB's loss and shed light on its implications to conduct monetary policy. In particular, we show that different accounting principles yield different results concerning the equity position of a central bank's balance sheet, yet not affecting the ability to run monetary policy. |
| Keywords: | Swiss National Bank, central bank, monetary policy |
| JEL: | E5 G15 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:euvwdp:429&r=acc |
| By: | Jung Ho Choi; Brandon Gipper |
| Abstract: | To identify and understand non-response in U.S. Census Bureau data, this technical note compares information about firms’ employment and wages in three different data sets from 1985 to 2014: S&P Compustat, the Longitudinal Business Database (LBD), and the Longitudinal Employer-Household Dynamics (LEHD). Accounting fraud firms could be manipulating many data sources, including those related to employees or employee wages. As a result, firms could have divergent reporting patterns to Census programs, thus affecting the data quality in the LBD and LEHD. This technical note explores various analyses to better understand patterns of non-reporting and makes the following main contributions: (1) The note describes employee and payroll data across S&P Compustat, LBD, and LEHD. (2) The note describes firms that are in S&P Compustat that do not report data in the LEHD. (3) The note compares LEHD-reporting with LEHD-non-reporting firms, conducting t-tests of means across various size categories. (4) The note conducts a preliminary regression and t-test analysis of whether accounting-fraud firms appear to be more or less likely than other firms to report data to LEHD. |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:cen:tnotes:23-07&r=acc |
| By: | Hale, Galina; Juvenal, Luciana |
| Abstract: | At the onset of the COVID-19 economic crisis, as in other crisis episodes, we observed a rapid appreciation of "safe haven" currencies. We quantify currency-induced balance sheet valuation effects for aggregate external positions as well as for broadly defined asset classes for the first quarter and the full year 2020. To do so, we use new data on the currency composition of cross-border assets and liabilities for 46 countries. In contrast with past financial crises, many emerging markets did not experience losses on their aggregate external balance sheets despite facing a domestic currency depreciation. This was partly due to currency-induced valuation gains on equity positions offsetting losses on debt positions, and partly due to reduced currency mismatch on their external debt positions. We conduct the stock-flow reconciliation of net international investment positions to measure overall valuation effects and compute the proportion that is due to changes in currency values. For about half of the countries in our sample, currency-induced valuation effects were substantial, representing over 50 percent of total valuation effects in 2020Q1 and the full year 2020. |
| Keywords: | Balance sheet effects, COVID-19, Currency mismatch, Valuation effects, Applied Mathematics, Economic Theory, Banking, Finance and Investment, Finance |
| Date: | 2023–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucscec:qt00p8f01t&r=acc |