nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2024‒01‒29
seven papers chosen by

  2. Behavioral responses to wealth taxation: evidence from a Norwegian reform By Iacono, Roberto; Smedsvik, Bård
  3. The TCJA and Domestic Corporate Tax Rates By Christine L. Dobridge; Patrick Kennedy; Paul Landefeld; Jacob Mortenson
  4. Transfer (mis)pricing of multinational enterprises: evidence from Finland By Viertola, Marika
  5. DISTRIBUTIONAL ANALYSIS OF THE TAX BURDEN ON INDIVIDUALS IN THE RUSSIAN FEDERATION By Sokolov, Ilya (Соколов, Илья); Belev, Sergey (Белев, Сергей); Deryugin, Alexander (Дерюгин, Александр); Leonov, Elisey (Леонов, Елисей); Vekerle, Konstantin (Векерле, Константин)
  6. Current approaches to improving customs administration in the system of regulation of foreign economic activity By Balandina, Galina (Баландина, Галина)
  7. Optimal Income Taxation and Formalization of the Informal Economy By Hirofumi Takikawa

  1. By: Chipurenko, Elena (Чипуренко, Елена) (The Russian Presidential Academy of National Economy and Public Administration); Lisitskaya, Tatyana (Лисицкая, Татьяна) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: TThe subject of the study is the procedure for financial accounting and audit of digital assets, which in recent years have become significant distribution as objects of current business activity. The aim of the study was to analyze Russian and international practice to select the possible approaches of reliable and uniform reflection in the corporate reporting of digital assets and audit methods. The study was carried out during 2022 based on the department of accounting, economic analysis and audit of the Russian Academy of National Economy and the Presidential Service of the Russian Federation (RANEPA). Relevance. The absence of the rules for identifying and classification of digital assets in financial accounting does not allow to correctly reflect in the reports of organizations significant objects. No jurisdiction in the world has accounting standards for digital assets, and the IFRS Foundation only in 2022 set a priority task for developing the rules for accounting for digital assets. The research methodology is based on theoretical and practical methods. An inductive research approach is the desire to understand the nature of the problem related to digital assets. High -quality research method is a subjective assessment of attitudes, expert opinions in the field of digital assets. Practical research methods follow from theoretical and are mainly data collection and their analysis. Based on the results of the study, conclusions were drawn about the need: — for financial accounting for the clarification of the term “digital currency”, established by law, to divide the concepts of decentralized digital currency and the digital ruble of the Central Bank of the Russian Federation; — development of the federal standard of accounting of operations with crypto actures; — distinguish between the issues of accounting for crypto acts for commercial organizations of the real sector of the economy and professional participants in the financial market. Recommended: — before the development of the federal standard, use a single approach to identify crypt-toactics as intangible assets in accordance with the accumulated practice; — creation of publicly accessible terminological reference books in relation to digital assets with regular actualization; — Creating an information resource about digitalization risks.
    Keywords: financial accounting, financial reporting, digital assets, accounting standards, assets assessment, audit of digital assets, distributed ledger technology (DLT), blockchain, crypto assets
    Date: 2022–11–17
  2. By: Iacono, Roberto; Smedsvik, Bård
    Abstract: We analyze behavioral responses to wealth taxation, estimating the causal effects of a unique municipal wealth tax reform in Norway. We exploit variation from the single-period municipal reform reducing the marginal tax rate (MTR) on wealth exclusively in the northern Norwegian municipality of Bø from 0.85% to 0.35%, since 2021. Mimicking the behaviour of a tax haven, Bø represents the first municipality to unilaterally reduce the municipal wealth tax rate since the establishment of wealth taxation in Norway in 1892. We document a significant 66.6% increase in average taxable wealth in response to a 1 percentage point drop in the wealth tax rate. The elasticity of taxable wealth increases to 71.6% when focusing exclusively on wealth taxpayers. We also estimate a significant but more modest 10.3% jump in the weighted mass of wealth taxpayers in the treated municipality. Non-real effects of the reform dominate: mobility of wealthy taxpayers appears as the major behavioral response to the change in the net tax rate, accounting for a staggering 79% of the post-treatment total net wealth in the treated municipality (up from 19% in the pre-reform period). These results emerge in a context with third-party reported wealth data with negligible measurement error, limited evidence of bunching, highly enforced residence-based wealth taxation, and a low degree of out-migration rates.
    Keywords: wealth tax; administrative data; mobility effects
    JEL: H20 H21 H24 H26
    Date: 2023–12–01
  3. By: Christine L. Dobridge; Patrick Kennedy; Paul Landefeld; Jacob Mortenson
    Abstract: We study changes in tax positions for U.S. C corporations following passage of the 2017 tax legislation commonly known as the Tax Cuts and Jobs Act (TCJA). While existing research has focused primarily on publicly traded companies, data limitations have prevented more holistic analyses of the corporate sector. Using a representative sample of U.S. corporate tax returns, we highlight how trends in effective tax rates (ETRs) and exposure to the legislation’s main provisions varied for public, private, multinational, domestic, and large versus small firms. We document several novel facts, including that ETRs increased on average for privately held, domestic firms and for firms in the bottom 90% of the firm sales distribution after TCJA. In contrast, public, multinational, and large firms saw substantial ETR cuts on average. We find that firms' pre-TCJA exposure to changes in the corporate tax rate and treatment of net operating losses have the strongest correlation with post-TCJA ETR changes. Overall, the analysis underscores the divergent impacts of TCJA on different firm types and illuminates the economic scope and relative significance of TCJA’s myriad provisions.
    Keywords: Corporate taxes; Tax Cuts and Jobs Act; Tax reform
    JEL: H20 H25
    Date: 2023–12–15
  4. By: Viertola, Marika
    Abstract: This paper studies how firms manipulate their transfer prices to shift profit from high tax countries to low tax countries. Using detailed transactiondestination level firm data for years 2013-2019, I find evidence of Finnish multinational enterprises underpricing their exports to low tax destinations. By exploiting variation in corporate income tax rate differences and differences in the ownership of affiliates, I apply a triple difference estimation strategy. I find that a 1 percentage point increase in tax rate difference decreases export unit value by 1.2% among multinational firms exporting to low tax countries. My results suggest firms use transfer pricing as a complement channel, as firms more prone to other profit shifting mechanisms also underprice their exports more. Also, I provide evidence that transfer mispricing is concentrated in exports destined to countries where the multinational’s affiliate has a higher level of economic activity. Where the results with exports are very robust, the results with imports are mixed, suggesting an asymmetrical pattern in transfer pricing.
    Keywords: multinational firms, international corporate taxation, tax avoidance, profit shifting, Business taxation and regulation, F23, H25, H26, fi=Verotus|sv=Beskattning|en=Taxation|,
    Date: 2024
  5. By: Sokolov, Ilya (Соколов, Илья) (The Russian Presidential Academy of National Economy and Public Administration); Belev, Sergey (Белев, Сергей) (The Russian Presidential Academy of National Economy and Public Administration); Deryugin, Alexander (Дерюгин, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Leonov, Elisey (Леонов, Елисей) (The Russian Presidential Academy of National Economy and Public Administration); Vekerle, Konstantin (Векерле, Константин) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The relevance: during the period 2000–2020 in the Russian Federation, there were serious changes in terms of taxation. An assessment of the tax burden on individuals is important in order to answer the question to which degree tax reforms are in line with the initially stated goals, primarily from the fairness criteria point of view. The consequences of these changes for both the budgetary system and the Russian population are still poorly understood, in particular, how changes in social contributions, VAT, and the introduction of various tax incentives and/or spending contributed to reducing income inequality. Such studies are needed both in terms of determining the extent to which various incentives are distorted by tax policy measures, and in terms of assessing the effectiveness of these measures. The object: taxation systems and features of tax administration in world practice and the Russian Federation. The subject of the study is distribution of the tax burden on taxpayers in the Russian Federation. The aim of the study is to assess the distribution of the tax burden by groups of taxpayers and types of taxes in the Russian Federation. When forming the work, such methods as the hypothetical-deductive method, grouping and comparison methods, analysis of international and Russian experience, econometric and statistical analysis, case methods were used. The study used data from the Tax Code of the Russian Federation, Rosstat and the Russian Monitoring of the Economic Situation and Health of the Population of the Higher School of Economics. The scientific novelty of the study lies in the assessment of the distribution of tax burdens of personal income tax, social contributions and VAT by individuals and households, as well as in assessing the degree of regressivity/progressivity of taxation using regression analysis. The result of the work was a report containing: 1. International experience in determining and assessing the tax burden. 2. Generalization of empirical and theoretical approaches to assessing the distribution of the tax burden. 3. Russian experience in terms of the main changes that determine the tax burden on taxpayers. 4. The results of the assessment of the tax burden by categories of taxpayers and various types of taxes. The results allowed us to conclude that when analyzing the tax burden of personal income tax and social contributions on the basis of RLMS data, the distribution of the share of tax payments in the payroll by net labor income is almost identical to the distribution by the total disposable income of an individual. It is important to note, however, that in both cases the share drops sharply when people employed in the informal sector are included in the analysis. For the officially employed, on average for the period under review, the share of tax payments in the payroll ranged from 26.9% to 30%, and for the full sample from 21.3% to 26.3%. When analyzing the distribution of the VAT tax burden, a weaker degree of regressivity was found compared to taxes on labor income. In the future, the authors plan to continue the study of the distribution of the tax burden on individuals in Russia and in the world.
    JEL: H21 H24 H26
    Date: 2022–11–11
  6. By: Balandina, Galina (Баландина, Галина) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: This paper analyzes the most important tools of modern customs administration: authorized economic operator, customs audit, financial guarantees for payment of customs duties. Based on the analysis carried out and taking into account international practice, proposals have been developed for the further development of these institutions.
    Date: 2022–11–17
  7. By: Hirofumi Takikawa
    Abstract: Tax revenues, particularly in developing countries, play a crucial role in driving economic development, and formalizing the informal economy offers significant potential for raising revenues, given the large size of the informal economy and the limited role of personal income taxes in tax collection. However, effective formalization also requires sufficient redistributive incentives for a smooth transition to the formal economy. By addressing both formalization and redistribution simultaneously, this study examines the impact of formalizing the informal economy on an optimal tax schedule using an extended Mirrlees model, and identifies an optimal tax formula that incorporates formalization of the informal economy. Quantitative analysis shows that formalization increases tax revenue and income transfers when the tax schedule is optimized together with formalization. Conversely, these benefits diminish when the tax schedule remains unchanged and is not fine-tuned for formalization. This study improves our understanding of the informal economy and provides valuable insights into the implications for designing optimal tax policies with formalization.
    Date: 2023–12

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