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Business and Economics > Corporate Taxation

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Cover Technical Assistance Reports
Republic of Armenia: Technical Assistance Report-Personal Income Tax and Social Security Contribution Gaps
International Monetary Fund. Fiscal Affairs Dept.
This report presents results on a review of data available to the State Revenue Committee for estimating the Personal Income Tax and Social Security Contribution gaps. It is concluded that SRC has sufficient quality data available from operational audits to assess the gaps.
Keywords:
Personal Income Tax Gap; Social Security Contributions Gap; Bottom-up approach; Operational audits; Heckman Sample Selection model; Republic of Armenia.; SSC gap; PIT gap measurement methodology; social security contribution gap; PIT gap; SRC data; assessed PIT; Personal income tax; Auditing; Tax audits; Corporate income tax; Tax gap; Global
Cover IMF Working Papers
Citizens Perceptions of Tax Authorities and Tax Efficiency
Telma Yamou
,
Alun H. Thomas
, and
Kaihao Cai
This paper examines the relationship between citizens’ perceptions of tax authorities and the governments’ efficiency in collecting VAT and CIT revenues in Africa. Drawing on data from 32 countries over 2014-2019, we find a negative and significant association between negative perceptions of trust in authorities (the tax department) from the Afrobarometer survey and tax efficiency for these revenue categories. A 1 percent increase in the share of citizens’ perception of little or no trust in the tax department leads to a 0.22 percent decrease in VAT tax efficiency, controlling for macroeconomic indicators. The magnitude of the effect is significantly greater in fragile compared to non-fragile states. For corporate income tax productivity focusing on tax payments of corporates we find a significant effect only in fragile states. Perceptions about corruption in tax authorities have a similar effect on VAT and CIT tax efficiency since perceptions about trust and corruption capture the tendency to misappropriate revenues but we are unable to distinguish the two effects except for fragile states. Our findings suggest that in the face of fragility, policies aimed at improving fiscal capacity should place a high importance on ensuring that citizens believe resources will be used properly, an aspect of tax policy not typically prioritized.
Keywords:
Trust in authorities; fragility; tax efficiency; Africa; tax authorities; tax department; payments of corporate; tax payment; CIT efficiency; Corporate income tax; Corruption; Value-added tax
Cover Technical Assistance Reports
Republic of Armenia: Technical Assistance Report-Corporate Income Tax Gap Prediction 2023 Based on Corporate Income Tax Returns
International Monetary Fund. Fiscal Affairs Dept.
This report presents estimates of predictions of the Corporate Income Tax (CIT) gap for Armenia for 2023. The predicted CIT Gap is based on not-yet audited tax returns. The CIT gap is predicted to be 25.5 to 34.1 percent of potential CIT liability in 2023.
Keywords:
Predicted Corporate Income Tax Gap; Bottom-up approach; Not-yet audited tax returns; Heckman Sample Selection model; Republic of Armenia.; CIT gap; CIT gap estimate; IMF team; gap analysis; IMF short term expert; Corporate income tax; Auditing; Business enterprises; Tax gap; Tax audit performance measurement
Cover IMF Working Papers
Cash Flow Analysis of Fiscal Regimes for Extractive Industries
Thomas Benninger
,
Dan Devlin
,
Eduardo Camero Godinez
, and
Nate Vernon
Mining and petroleum projects share characteristics distinguishing them from other sectors of the economy, which has led to the use of dedicated fiscal regimes for these projects. The IMF’s Fiscal Affairs Department uses fiscal modeling to evaluate extractive industry fiscal regimes for its member countries, and trains country officials on key modeling concepts. This paper outlines important preconditions needed for effective fiscal modeling, key evaluation metrics, and emphasizes the importance of transparent modeling practices. It then examines the modeling of commonly-used fiscal instruments and highligts where their economic impact differs, and how fiscal models can inform fiscal regime design.
Keywords:
Natural resource taxation; extractive industries; progressivity; economic rents; fiscal modeling; investment analysis; mining; petroleum.; D. resource rent tax; cash flow; petroleum project; regime design; Corporate income tax; Production sharing; Fiscal Analysis of Resource Industries (FARI); Oil; Carbon tax; Global
Cover Technical Notes and Manuals
Corporate Income Tax Gap Estimation by using Bottom-Up Techniques in Selected Countries: Revenue Administration Gap Analysis Program
Patricio A Barra
,
Mr. Eric Hutton
, and
Polina Prokof'yeva
This technical note describes bottom-up CIT gap estimation techniques applied by revenue administrations in the following highly experienced countries in this approach: Australia, Brazil, Canada, Denmark, Sweden, the United Kingdom, and the United States. The main topics included in the descriptions are techniques applied, CIT gap results, advantages and disadvantages of different available options, and future developments and recommendations for any revenue administration interested in starting bottom-up CIT gap estimation programs having no prior experience.
Keywords:
Tax Administration; Tax Compliance; Corporate Income Tax; Tax Gap; Tax Evasion; Random Audit Program; Risk-Based Audits; bottom-up technique; CIT gap; gap definition; Ra-GAP team; members of the Revenue Administration Gap Analysis Program; Auditing; Revenue Administration Gap Analysis Program (RA-GAP); Small and medium enterprises
Cover IMF Staff Country Reports
Republic of Slovenia: Technical Assistance Report-Revenue Administration Gap Analysis Program—Corporate Income Tax Gap
International Monetary Fund. Fiscal Affairs Dept.
This paper discusses the estimates of tax gaps for corporate income tax (CIT) for nonfinancial corporations in Slovenia by applying the methodology of the IMF’s Revenue Administration – Gap Analysis Program (RA-GAP). The RA-GAP methodology for CIT gap is based on a top-down approach, which estimates the potential tax base and liability from macroeconomic data. The top-down estimation of the CIT gap provides an initial evaluation of the level and change in taxpayers’ compliance; however, further work in some areas is needed to improve the application of the methodology and reliability of results. Assessed CIT for nonfinancial corporations dropped from 2011 to 2012 then rose until 2020; potential CIT roughly followed the same pattern. The estimates for the assessment gap for nonfinancial corporations indicate there may have been an increase in 2012, and then a decline back to the 2011 levels. Under either method, the bulk of the assessment gap appears to be in the manufacturing sector.
Keywords:
CIT productivity; CIT liability; Ra-gap CIT gap methodology; gap estimate; IMF's Fiscal Affairs Department; CIT-efficiency ratio; CIT compliance gap; CIT gap analysis; Corporate income tax; Tax gap; Business enterprises; Global
Cover IMF Staff Country Reports
Indonesia: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper provides an overview of the exchange rate and trade dynamics in Indonesia. Using data on monthly export and import price and volume at the sectoral level, the paper estimates pass-through effects of exchange rate changes to trade price and volume. Results indicate adjustment frictions that depend on the source of the exchange rate fluctuation and the degree of integration in global value chains. Overall, combining price and volume effects, we find that 10 percent depreciation in the exchange rate is associated with a rise in the goods net-exports of up to 1.6 percent of GDP. Results indicate that there is considerable asymmetry and sectoral heterogeneity in the pass-throughs of exchange rate on import and export prices. Import prices adjust well to exchange rate fluctuations with the effects being stronger for appreciation episodes. The price sensitivity of export prices to exchange rate shocks is generally lower than of imports and concentrated over shorter horizons and during episodes of depreciation. The price and quantity results imply that exchange rate changes can have significant effects on the current account, by affecting movements in net-exports of goods.
Keywords:
ISCR; CR; rate; price; market; pass-through; monetary policy report; market rate; monetary policy press releases; monetary policy decision; pass-through coefficient; upside risk; Exchange rates; Corporate income tax; Tax administration core functions; Value-added tax; Medium term revenue strategy; Global
Cover IMF Staff Country Reports
Costa Rica: Technical Assistance Report-Revenue Administration Gap Analysis Program-Tax Gap Analysis for General Sales and Corporate Income Tax
International Monetary Fund. Fiscal Affairs Dept.
This Technical Assistance Report presents the estimates of tax gaps for general sales tax (GST) and corporate income tax in Costa Rica. The estimated GST compliance gap in Costa Rica increased from 29 percent in 2012 to 31 percent in 2016. The compliance gap in 2016 was equivalent to 1.9 percent of GDP. The estimated compliance gap is higher than the average value-added tax compliance gaps of European countries and Latin American countries. Large GST compliance gaps relative to GDP are observed in manufacturing, trade, and hotels and restaurants. The estimated GST policy gaps were at about 4 percent of GDP from 2012 to 2016. Most of the GST policy gap consists of the GST expenditure gap, showing the effects of policy choices.
Keywords:
ISCR; CR; compliance gap; CIT liability; GST revenue; Ra-gap GST Gap methodology; CIT base; gap analysis; policy gap consist; expenditure gap; revenue performance; gap estimation; collection gap; Corporate income tax; Value-added tax; Tax gap; Business enterprises; Caribbean
Cover Technical Notes and Manuals
Fiscal Analysis of Resource Industries: (FARI Methodology)
Ms. Oana Luca
and
Diego Mesa Puyo
This manual introduces key concepts and methodology used by the Fiscal Affairs Department (FAD) in its fiscal analysis of resource industries (FARI) framework. Proper evaluation of fiscal regimes for extractive industries (EI) requires economic and financial analysis at the project level, and FARI is an analytical tool that allows such fiscal regime design and evaluation. The FARI framework has been primarily used in FAD’s advisory work on fiscal regime design: it supports calibration of fiscal parameters, sensitivity analysis, and international comparisons. In parallel to that, FARI has also evolved into a revenue forecasting tool, allowing IMF economists and government officials to estimate the composition and timing of expected revenue streams from the EI sector, analyze revenue management issues (including quantification of fiscal rules), and better integrate the EI sector in the country macroeconomic frameworks. Looking forward, the model presents a useful tool for revenue administration practitioners, allowing them to compare actual, realized revenues with model results in tax gap analysis.
Keywords:
TNM; income tax; discount rate; cash flows; capital expenditure; withholding tax; Mining taxation; petroleum taxation; fiscal regime design; profit petroleum; Project net cash flows; payback period; internal rate of return; cost of capital; Currencies; Oil; Corporate income tax; Discount rates; Fiscal Analysis of Resource Industries (FARI); Africa
Cover IMF Working Papers
Taxation Reforms and Changes in Revenue Assignments in China
Mr. Raju J Singh
,
Mr. Ben Lockwood
, and
Mr. Ehtisham Ahmad
The value-added tax (VAT) in China has the unusual feature that capital goods are included in the VAT base. In addition, most services are subject to the business tax, which is not creditable against VAT, but which accrues to local governments, and operates as a turnover tax. On grounds of economic efficiency, it would be desirable to eliminate these distortions so that domestic producers are not increasingly placed at a disadvantage as China dismantles tariff and nontariff barriers on competing goods. Reforming indirect taxation would however generate considerable revenue losses for local governments and, in the absence of any compensatory mechanisms, there would be significant impediments to the needed reforms. This paper focuses on the extent of revenue losses, their distribution across provinces, and possible options for compensation.
Keywords:
WP; VAT revenue; tax revenue; business tax; revenue-returned formula; Fiscal Policy; Indirect Taxation; Intergovernmental Fiscal Relations; China; base scenario; VAT base; Value-added tax; Consumption taxes; Corporate income tax; Tax efficiency