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on Accounting and Auditing |
| By: | José María Durán-Cabré (Universitat de Barcelona & IEB); Alejandro Esteller-Moré (Universitat de Barcelona & IEB); Christos Kotsogiannis (Tax Administration Research Centre (TARC), University of Exeter Business School & CESIfo); Luca Salvadori (Universitat Autònoma de Barcelona & BSE & IEB & Tax Administration Research Centre (TARC), University of Exeter Business School) |
| Abstract: | Enforcing wealth tax compliance among high-net-worth individuals is particularly challenging. Using administrative data on the Net Wealth Tax for Catalan taxpayers over the 2011–2020 period, this paper evaluates the impact of audits on voluntary compliance. The evidence suggests that wealth tax audits do enhance compliance, but the impact is short-lived — and driven by taxpayers rebalancing their tax evasion and avoidance responses. On the institutional side, the results indicate that Spain’s overlapping tax audit mandates can create coordination frictions that reduce the efficiency and effectiveness of audit-based enforcement of the New Wealth Tax. Effective enforcement depends not only on robust audit strategies, but also on coherent institutional design and sound tax policy. |
| Keywords: | Tax Audit Evaluation; Overlapping Tax Audit Mandates; Wealth Tax; Tax Evasion; Tax Compliance |
| JEL: | H26 D31 O17 D02 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ieb:wpaper:doc2025-15 |
| By: | Phiri Kampanje, Brian |
| Abstract: | Adoption of IFRS S1 and S2 became mandatory on 1st January 2024 and yet only 33 percent of Malawi’s listed companies disclosed to have adopted the said new sustainability standards and purported no significant impact on the financial statements without producing the required reports as per the International Sustainability Standards Board. The board of directors of those listed companies which did not adopt IFRS S1 and S2 expressed ignorance and pushed the issue to the external auditors who incorrectly stated that prior approval was required as a jurisdictional matter. Some listed companies produced ESG and Sustainability Reports which to lesser extent mitigate the problem. Remedial actions are needed now. |
| Keywords: | Jurisdiction; Auditor, IFRS S1 and S2; Malawi |
| JEL: | M41 M48 M49 |
| Date: | 2025–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126553 |
| By: | Bray, Sean; Bunn, Daniel; Gaul, Johannes; Spengel, Christoph |
| Abstract: | For the better part of the last decade, the global minimum tax, or Pillar Two, has dominated international tax policy discussions. Developing out of the Base Erosion and Profit Shifting (BEPS) Project at the Organisation for Economic Co-operation and Development (OECD), Pillar Two's main objective is to ensure that multinational enterprises (MNEs) with a consolidated group revenue of over EUR 750 million pay an effective tax rate of at least 15 percent in each jurisdiction where they earn profit. Some portion of the Pillar Two model rules have been adopted by several dozen countries around the world, but, importantly, not by other large economies such as the United States, India, or China. This especially puts European MNEs at a competitive disadvantage vis-àvis jurisdictions without a domestic minimum tax system. Our estimates show that the additional compliance costs for affected European MNEs amount to EUR 1.2 billion (up to EUR 2.0 billion) and total recurring costs amount to EUR 517 million p.a. (up to EUR 865 million p.a.). Due to the incentive for jurisdictions to implement a qualified domestic minimum top-up tax (QDMTT), Pillar Two leaves a geographic asymmetry. Additional tax revenues would predominantly accrue to low-tax jurisdictions, with hightax jurisdictions receiving little to no increase. At the same time, it is likely that MNEs expense compliance costs in the jurisdictions where they are headquartered, often high-tax jurisdictions. Furthermore, Pillar Two incentivizes jurisdictions to move from competition on tax rates to less transparent subsidies, which could also result in less disposable tax revenue. The combination of losing international competitiveness, increasing compliance costs for firms and tax authorities, and the lack of significantly more revenue is forcing some Member States to reconsider the policy altogether. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewpbs:331233 |
| By: | Mr. Marco Gross; Laurent Millischer |
| Abstract: | We develop a model framework that can be used to derive the forward-looking credit loss distributions for banks' credit exposures, to use it for (1) assessing the adequacy of provisions at the bank-portfolio level; (2) macro stress testing; and (3) informing the sufficiency of capital requirements, both from a micro- and macro-prudential perspective. The model is semi-structural and simulation-based, entailing a large number of simulated macro-financial scenarios instead of employing handpicked scenarios and ad-hoc scenario weights. The way the model-based credit loss distributions are generated can be made compatible with IFRS 9 or any other accounting regime. The model codes are made available online along with this paper. |
| Keywords: | Credit loss modeling; provisioning; micro-prudential policy; macroprudential policy |
| Date: | 2025–11–07 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/228 |
| By: | Rafael Guntin (UNIVERSITY OF ROCHESTER); Federico Kochen (BANCO DE ESPAÑA AND CEMFI) |
| Abstract: | What are the origins of top firms? What features characterize their life cycle trajectories on the way to the top? Using longitudinal firm-level data, we document novel facts about the first twenty years of the firms that reach the top 1 percent of the size distribution. Compared to the firms in the bottom 99 percent, top firms are eight times larger at entry and grow six times more during their first two decades. In terms of inputs, they start with high capital investments, yet their capital-output ratio and labor share decline as they age. As a result, their profit share is much more backloaded towards the second decade of their life cycle. We show that a firm dynamics model with ex-ante heterogeneity, non-homothetic input costs, and forward-looking financing can explain these empirical patterns. Our quantitative results showcase the importance of accounting for top and bottom firm dynamics for the aggregate implications of financial frictions, recent macroeconomic trends, and corporate taxation. |
| Keywords: | top 1 percent, firm size distribution, firm dynamics, financial frictions |
| JEL: | E44 O47 G30 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2541 |
| By: | Guttorm Schjelderup; Floris Zoutman |
| Abstract: | This paper analyzes how a wealth tax affects investor portfolio choice when a realization-based capital gains tax is present. We develop a two-period model with heterogeneous investors and show that while a capital gains tax distorts portfolio choice by encouraging investors to postpone realization, a wealth tax can eliminate this distortion and enhance efficient portfolio choice. Our optimal-tax model balances the equity gains from both taxes against efficiency losses related to intertemporal and portfolio choice. We use the model to derive an elasticity-based criterion for empirically evaluating the desirability of a wealth tax. |
| Keywords: | wealth tax, capital-gains tax, dividend tax, lock-in effect, capital-market efficiency |
| JEL: | H24 D14 G51 H21 M21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12254 |