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on Accounting and Auditing |
| By: | Quick, Reiner; Pappert, Nicolas |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:153175 |
| By: | Giulia Aliprandi (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, EU Tax - EU Tax Observatory); Kane Borders (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, EU Tax - EU Tax Observatory) |
| Abstract: | Multinational enterprises have risen to become dominant forces in the global economy, accompanied by a troubling trend of aggressive tax avoidance. In 2022 alone, an estimated $1 trillion in profits was shifted to tax havens by multinationals, amounting to 35% of all profits booked outside their headquarters countries (Alstadsæter et al., 2023). Despite tax avoidance being a major public concern, the specific practices employed by individual companies have remained largely opaque to the public due to a lack of transparency and public disclosure obligations. Comprehensive transparency measures promote informed policymaking, accountability, public trust, and sustainable development globally. This report examines the current landscape of corporate tax transparency and evaluates how emerging transparency measures could shape future developments in this critical area. We focus on corporate tax transparency measures via Country-by-Country Reporting (CbCR), where multinationals disclose detailed financial and tax-related information for each country of operation. We collected the publicly available CbCR reports and compiled them into a single database: the Public CbCR Database. This new data source highlights that large multinationals, particularly from Western Europe, are leading the way as primary publishers of such reports. Overall, the large multinationals publishing public CbCR account for less than 2% of large companies, and less than 5% of global revenues and global profits. Despite the small numbers, our research reveals an upward trend in voluntary CbCR disclosures, signalling increasing tax transparency practices. However, significant gaps remain, as U.S. multinationals and firms from major economies like China and Russia have only a few CbCR disclosures available. The European Union (EU) made an important step in furthering corporate tax transparency by adopting a mandatory CbCR directive that started applying this year in many EU countries. Our simulations reveal the impact this directive will have. Nearly one-third of large U.S. MNEs will be compelled to publish more disaggregated financial information than ever before publicly available. The increased disclosure from these U.S. corporate giants, who have historically been opaque, could be a breakthrough in tax transparency. However, the directive has serious limitations, as the requirements for geographical disaggregations are largely insufficient to truly evaluate the activity of multinationals. Broader adoption and enhancement of corporate tax transparency initiatives are crucial, we suggest several ways to improve the directive going forward. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:pseptp:halshs-04947447 |
| By: | Eichfelder, Sebastian; Knaisch, Jonas David; Schneider, Kerstin |
| Abstract: | We analyze how the expiration of a regional bonus depreciation regime in eastern Germany (Development Area Law, DAL) affected real investments and asset structures of establishments in the manufacturing sector. Our rich administrative data allow us not only to identify the aggregate effect, but also to determine which types of investments and firms are most affected. Our baseline results indicate that the DAL increased real aggregate investment by 16.0% to 19.9%. This effect is stronger for investments in buildings (76.6% to 92.9%) with long regular depreciation periods and land (108.0% to 121.3%) that cannot be depreciated regularly. The impact on equipment investment is much smaller (7.3% to 10.5%). Thus, firms not only increased real investment, but also adjusted their asset structure in response to the policy. We observe significantly stronger investment responses for large firms with lower tax planning and compliance costs and multi-establishment firms with more opportunity for subsidy shopping. However, we do not find evidence that firms with higher financial reporting costs (i.e., incorporated firms and firms without an active business owner) show a weaker investment response. |
| Keywords: | bonus depreciation, real investment, user cost of capital, tax elasticity |
| JEL: | G11 H25 H32 M41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:312395 |
| By: | Gabriel Zucman (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, EU Tax - EU Tax Observatory, UC Berkeley - University of California [Berkeley] - UC - University of California) |
| Abstract: | This report presents a proposal for an internationally coordinated standard ensuring an effective taxation of ultra-high-net-worth individuals. In the baseline proposal, individuals with more than $1 billion in wealth would be required to pay a minimum amount of tax annually, equal to 2% of their wealth. This standard could be flexibly implemented by participating countries through a variety of domestic instruments, including a presumptive income tax, an income tax on a broad notion of income, or a wealth tax. The report presents evidence that contemporary tax systems fail to tax ultra-high-net-worth individuals effectively, clarifies the case for international coordination to address this issue, analyzes implementation challenges, and provides revenue estimations. The main conclusions are that (i) building on recent progress in international tax cooperation, such a common standard has become technically feasible; (ii) it could be enforced successfully even if all countries did not adopt it, by strengthening current exit taxes and implementing "tax collector of last resort" mechanisms as in the coordinated minimum tax on multinational companies; (iii) a minimum tax on billionaires equal to 2% of their wealth would raise $200-$250 billion per year globally from about 3, 000 taxpayers; extending the tax to centimillionaires would add $100-$140 billion; (iv) this international standard would effectively address regressive features of contemporary tax systems at the top of the wealth distribution; (v) it would not substitute for, but support domestic progressive tax policies, by improving transparency about top-end wealth, reducing incentives to engage in tax avoidance, and preventing a race to the bottom; (vi) its economic impact must be assessed in light of the observed pre-tax rate of return to wealth for ultra-high-net-worth individuals which has been 7.5% on average per year (net of inflation) over the last four decades, and of the current effective tax rate of billionaires, equivalent to 0.3% of their wealth. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:pseptp:halshs-04947409 |
| By: | Osaid Alshamleh (Vienna University of Economics and Business, Cyprus International University, North Cyprus, and Cambridge Resources International Inc.); Glenn P. Jenkins (Department of Economics Queen’s University, Canada, and Cambridge Resource International Inc.); Mikhail Miklyaev (Department of Economics Queen’s University, Canada, and Cambridge Resource International Inc.) |
| Abstract: | This report analyses the revenue generation and distributional impact of excise taxes in Ethiopia. Using the Ethiopian Household Consumption-Expenditure Survey (HCE), the study examines 10 categories of excisable goods, including alcohol, cigarettes, cosmetics, and motor fuel. The findings reveal that the top 40% of households account for over 84% of expenditures on excisable goods and 81.4% of total excise tax revenues. The most significant revenue sources are clothing, textiles, and garments (31.02%), motorized vehicles (20.79%), and cigarettes (14.88%). The excise tax system is mildly regressive, with lower-income households bearing a slightly higher burden relative to their total expenditures. Taxes on cosmetics and non-alcoholic beverages are the most regressive, while taxes on motor fuels and cigarettes are progressive due to higher consumption by wealthier households. The report also identifies five major items currently exempt from excise taxes, including edible oils, sugar, and kerosene. If these items were taxed, excise revenues could increase by 33%. Notably, taxing kerosene would be progressive, with 92.6% of the burden falling on the top 40% of households. The study suggests that revising exemptions and adjusting tax rates could make Ethiopia’s excise tax system more efficient and equitable. For example, taxing kerosene could generate significant revenue while targeting higher-income households, and revising exemptions on edible oils and sugar could reduce regressivity. Overall, the report highlights opportunities to enhance revenue collection and improve the equity of Ethiopia’s excise tax system by aligning policies with international best practices. |
| Keywords: | Ethiopia, Excise Taxes, Household Expenditure, Progressive Taxation, Regressive Taxation, Tax Incidence, Tax Revenue |
| JEL: | D31 H22 H23 H24 H25 O3 |
| URL: | https://d.repec.org/n?u=RePEc:qed:dpaper:4631 |
| By: | Herbst, Tobias; Roling, Christoph |
| Abstract: | We study the credit risk of banks in Germany from lending to non-financial firms. We model changes in Expected Credit Loss, which is derived from the guidelines in the IFRS 9 accounting standard. We map the accounting model to a dataset with individual loans as the unit of observation (AnaCredit). We present new approaches to modeling two well-known credit risk parameters: Loss Given Default (LGD), and Probability of Default (PD), which both affect Expected Credit Loss. First, we obtain an approxima tion of the Loss Given Default for each individual loan. This step makes use of the detailed collateral data available in AnaCredit and reveals a heterogeneity in LGD that is typically ignored in top-down stress tests. Second, regarding PD, we encounter a missing data problem since only a subset of banks reports default probabilities in AnaCredit. We employ machine learning algorithms to impute missing default probabilities. With the help of these credit risk parameters, we then apply the stress test model to two ad-hoc scenarios in which the downturn in CRE markets worsens to varying degrees and report how this would affect the capital of German banks. |
| Keywords: | Stress test, Credit Risk, Banks, Non-financial Firms, Commercial Real Estate, Germany |
| JEL: | G17 G21 C53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubtps:312404 |
| By: | Glenn P. Jenkins (Department of Economics Queen’s University, Canada, and Cambridge Resource International Inc.); Abdallah Othman (Cambridge Resources International Inc.); Edna Armendariz (Inter-American Development Bank (IDB)); Anastasiya Yarygina (Inter-American Development Bank (IDB)) |
| Abstract: | This report provides a systematic review of the impact of tax incentives on investment and economic growth in Latin American and Caribbean (LAC) countries. While tax incentives are widely used to attract foreign direct investment (FDI), stimulate employment, and promote sectoral development, empirical evidence on their effectiveness remains mixed. The analysis reveals that although some incentives have successfully increased investment in targeted sectors, many fail to deliver significant economic benefits, often leading to substantial revenue losses. A critical gap in this report is the lack of comprehensive ex-ante evaluations, with most studies focusing on ex-post assessments. Cost-benefit analyses indicate that broad-based tax incentives are less efficient than targeted schemes, particularly in research and development (R&D) and export-oriented industries. The findings highlight the need for improved evaluation frameworks, better governance, and more strategic tax incentive policies to ensure sustainable economic growth. |
| Keywords: | Corporate Income Tax, Cost-Benefit Analysis (CBA), Economic Growth, Investment Policy, Fiscal Policy, Public Finance, Foreign Direct Investment (FDI), Latin America and the Caribbean (LAC), Special Economic Zones (SEZs), Tax Incentives |
| JEL: | F21 H20 H25 H32 O23 |
| Date: | 2025–02–05 |
| URL: | https://d.repec.org/n?u=RePEc:qed:dpaper:4630 |
| By: | Thomas, Alastair Geoffrey Arthur |
| Abstract: | Most countries’ value-added tax (VAT) systems apply reduced VAT rates to a selection of expenditure items in order to achieve distributional goals, and (to a lesser extent) social and cultural objectives. This paper assesses the case for applying reduced VAT rates, with a particular focus on OECD countries where reduced rates feature prominently. It examines both the theoretical and empirical evidence, as well as practical considerations, and concludes that the case for reduced VAT rates is weak. In particular, the optimal indirect tax literature finds no redistributive role for reduced VAT rates when other more direct instruments are available. These theoretical findings are supported by the empirical literature that shows reduced VAT rates to be a poorly targeted means of supporting lower income households, particularly when compared to targeted cash transfer programs. Similarly, reduced VAT rates are unlikely to be a well-targeted way to encourage consumption of merit goods, while they also create significant administrative complexity. These findings have significant implications for tax reform in both developed and developing economies. In particular, where countries have the administrative capacity to implement effectively targeted cash transfer programs, they should use these programs to support poorer households instead of reduced VAT rates. |
| Date: | 2024–01–18 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10677 |
| By: | Quick, Reiner; Toledano, D. Sánchez; Toledano, J. S. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:153174 |