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on Public Finance |
| By: | Pierre Bachas (Institute for Fiscal Studies); Christopher Hoy (Institute for Fiscal Studies); Anders Jensen (Institute for Fiscal Studies); Mahvish Shaukat (World Bank) |
| Date: | 2026–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:ifsewp:46/46 |
| By: | Shafik Hebous; Brendan Crowley; Rasmi Das; Tibor Hanappi; Cory Hillier; Adam Jakubik; Eric Robert; Christophe Waerzeggers |
| Abstract: | Faced with the limitations of existing tax frameworks for cross-border trade in services — particularly the lack of taxing rights over certain income from highly digital business models and the continuing scope for profit shifting through payments for cross-border services — countries and scholars have adopted or proposed a wide range of tax measures. This paper brings these measures together in a coherent framework and examines them from both an economic and a legal perspective. It documents how cross-border services trade has grown, become more digital in composition, and become increasingly concentrated across sectors, firms, and jurisdictions. It then develops a comparative synthesis covering destination-based consumption taxes such as VAT, gross-revenue taxes — notably digital services taxes — as well as income-based instruments such as nexus and withholding rules, and anti-avoidance rules aimed at limiting profit shifting through deductible cross-border payments. The paper argues that the economic incidence of each instrument is central to policy assessment and that evaluating these instruments in isolation obscures their interaction. Its main conclusion is that broader reliance on destination-based taxation can address many of the core problems raised by digitalized services trade more effectively than narrower, more distortionary alternatives. |
| Keywords: | Digital Service Taxes (DST), tax policy, trade policy, digital economy, services trade |
| JEL: | H22 H25 F13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12845 |
| By: | Koch, Reinald; Rehrl, Christoph; Spengel, Christoph |
| Abstract: | Over the past decade, the European Union has built a comprehensive supranational framework to combat corporate tax avoidance. This article provides the first integrated assessment of the EU's post-2015 anti-avoidance architecture, combining evidence on profit shifting by European multinationals, the effectiveness and side-effects of individual regulatory instruments, and the cumulative costs of tax complexity. While these measures have reduced specific profit-shifting channels, their marginal revenue impact appears limited relative to the rise in tax complexity, compliance costs, and distortions to investment, risk-taking, and innovation. The uneven global implementation of recent instruments - notably the Global Minimum Tax and public country by-country reporting - has created a competitive asymmetry in which European multinationals bear regulatory burdens that their non-European competitors largely do not. The article concludes with policy recommendations to recalibrate the framework, eliminating rules whose marginal costs outweigh their marginal benefits while restoring the balance between enforcement and competitiveness that the EU's standard of "fair and efficient taxation" demands. |
| Keywords: | Anti-tax avoidance, profit shifting, ATAD, Global Minimum Tax (Pillar Two), tax policy, corporate tax competitiveness |
| JEL: | H26 H25 F23 H87 K34 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:341997 |
| By: | Busso, Matías; Messina, Julián; Quigua, Juliana |
| Abstract: | This study examines whether information about corruption and tax evasion changes perceived unfairness in the income distribution, perceived inequality of opportunity, and support for specific redistributive policies. Using a survey experiment administered in eight Latin American countries, we find that factual information about public corruption and elite tax evasion increases perceptions of unfairness and unequal opportunity. It also increases support for taxing rich households relative to middle-class households. However, these effects do not extend to broader tax-financed redistribution: respondents do not become more supportive of raising corporate taxes, broadening the personal income tax, or increasing the VAT to finance social spending, nor do they become more supportive of expanding conditional cash transfers or non-contributory pensions through higher taxes. The results are consistent with trust limiting the translation of inequality concerns into support for broader tax-financed redistribution: the treatments increased perceived elite influence over government policy and reduced some measures of trust in public officials and firms. |
| JEL: | D31 H21 H26 D73 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14661 |
| By: | Ana Cebreiro Gomez; Ms. Christina Kolerus |
| Abstract: | After decades in the making, Brazil’s landmark VAT reform was approved in 2023. The primary objective of the reform is to eliminate distortions and reduce the complexity of the current consumption tax system while maintaining revenue neutrality. In addition, specific design features were included to alleviate the VAT’s inherent regressivity and improve the equity of the Brazilian tax system. This paper assesses the reform’s expected equity print leveraging a microstatic model based on household data and simulates policy options to further improve distributional outcomes. While the new VAT achieves a fairly equal distribution of the tax burden across most income groups, the poorest still carry a heavier load in terms of their disposable income. Dissecting the impact by policy instrument, the reform’s approved reduced rates aggravate regressivity, while zero rates and the new cashback lower the tax burden for poorer households, under the revenue neutrality assumption. Overall, the combined use of these measures dampens the reform’s equity outcomes somewhat as a higher VAT reference rate is required on all other items to maintain revenue neutrality. The paper also shows that some equity improvements stem from the reform’s implied pivot towards taxing services. Finally, simulations show that focusing on and expanding the cashback could amplify equity gains by raising the poorest disposable income by 25 percent via reductions in their tax liability. |
| Keywords: | VAT reform; equity analysis; microstatic simulations |
| Date: | 2026–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/132 |