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Business and Economics > Corporate Taxation

You are looking at 1 - 8 of 8 items for :

  • Type: Journal Issue x
  • Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems x
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Cover IMF Working Papers
Pouring Oil on Fire: Interest Deductibility and Corporate Debt
Pietro Dallari
,
Mr. Nicolas End
,
Fedor Miryugin
,
Alexander F. Tieman
, and
Mr. Seyed Reza Yousefi
This paper investigates the role of tax incentives towards debt finance in the buildup of leverage in the nonfinancial corporate (NFC) sector, using a large firm-level dataset. We find that so-called debt bias is a significant driver of leverage, for both small and medium-sized enterprises and larger firms, with its effect accounting for about a quarter of leverage. The strength of this effect differs with firm size, the availability of collateral, income and income volatility, cash flow, and capital intensity. We conclude that leveling the playing field between debt and equity finance through tax policy reform would decrease NFC leverage, reducing economic risks posited by leverage.
Keywords:
WP; firm; debt; SME; Leverage; Debt Bias; Tax Policy; Corporate Income Tax; SMEs; Micro data; leverage decision; coefficient estimate; incurred debt; debt firm; debt contract; leverage ratio; estimates of debt bias; long-term debt; strength of debt bias; effect of debt bias; bias coefficient estimate; Capital productivity; Financial statements; Currencies; Europe; Global; interest deductibility; corporate debt; quantile regression; copyright Page; Oil
Cover IMF Working Papers
Where Does Multinational Investment Go with Territorial Taxation? Evidence from the UK
Ms. Li Liu
In 2009, the United Kingdom changed from a worldwide to a territorial tax system, abolishing dividend taxes on foreign repatriation from many low-tax countries. This paper assesses the causal effect of territorial taxation on real investments, using a unique dataset for multinational affiliates in 27 European countries and employing the difference-in-difference approach. It finds that the territorial reform has increased the investment rate of UK multinationals by 15.7 percentage points in low-tax countries. In the absence of any significant investment reduction elsewhere, the findings represent a likely increase in total outbound investment by UK multinationals.
Keywords:
WP; gross investment; tax rate; UK affiliate; retained earnings; foreign direct investment; corporate tax policy; multinational firms; UK multinational; investment by UK; tax country; investment response; Dividend tax; Corporate income tax; Wages; Private investment; Currencies; Global
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
Japan’s Quest for Growth: Exploring the Role of Capital and innovation
Mr. Murtaza H Syed
and
Ms. Jinsook Lee
As labor input in Japan shrinks with population aging, capital accumulation and productivity gains will drive growth over the medium-term. At the same time, a changing global landscape calls for a shift in export-oriented investment toward new markets and a new generation of products, as well as increased investment by domestically-oriented firms. What policies could be adopted to help firms adjust to the imperatives of the post-crisis global economy and boost medium-term growth? Using disaggregated data, this paper investigates the determinants of investment and R&D spending by Japanese firms. The results suggest that policies could usefully focus on four areas. First, raising the return on investment, including through reforms to the tax code. Second, decreasing uncertainty through improved risk management by firms and by bolstering the business climate. Third, improving SME access to finance, notably by encouraging venture capital investment in innovative areas and more risk-based lending. And fourth, reducing excess leverage and supporting corporate restructuring to enable new investments to flourish.
Keywords:
WP; firm; SME; investment; panel data; Japan; Capital; Innovation; start-up company; tax loss; SME restructuring; nonviable company; companies from the Worldscope database; SME access; Currencies; Services sector; Manufacturing; Corporate income tax; Global
Cover IMF Staff Country Reports
Albania: Sixth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Review Under the Extended Arrangement, and Financing Assurances Review: Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Albania
International Monetary Fund
The staff report for Albania’s Sixth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility is presented. The economy has achieved robust noninflationary growth, albeit with increasing external imbalances, and has begun to tackle longstanding problems in the business environment. The upcoming elections risk diverting policymakers’ attention from stability-oriented policies. Despite significant buffers and inbuilt strengths of the financial sector, continued diligent supervision, high-frequency monitoring, and enhanced cooperation with foreign supervisors of resident banks will be needed to underpin prompt, proactive responses to changing circumstances.
Keywords:
ISCR; CR; GDP data; staff appraisal; growth; inflation expectation; report; deposit withdrawal; financing condition; Loans; Arrears; Corporate income tax; Global
Cover IMF Staff Country Reports
Former Yugoslav Republic of Macedonia: Second Review Under the Stand-By Arrangement and Request for Waiver of Performance Criteria and Rephasing of the Program: Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for the former Yugoslav Republic of Macedonia
International Monetary Fund
This paper discusses the Former Yugoslav Republic of Macedonia’s Second Review Under the Stand-By Arrangement and Request for Waiver of Performance Criteria and Rephasing of the Program. The 2007 fiscal deficit target increased modestly to 1 percent of GDP. Taxes were cut and budget quality improved, but there remain fiscal risks, in particular in delivering the planned reduction in transfers and subsidies. Over the medium term, the government aims to keep the fiscal deficit below 1½ percent of GDP, cutting overall government spending by 2 percent of GDP while raising public investment.
Keywords:
ISCR; CR; staff appraisal; fund staff; IMF staff representative; information; executive board discussion; interest rate spread; Currencies; Europe; Global
Cover IMF Working Papers
A Superior Hybrid Cash-Flow Taxon Corporations
Mr. Howell H Zee
This paper proposes a new hybrid cash-flow tax on corporations that, on one hand, taxes only excess corporate profits as they accrue, and, on the other hand, treats real and financial transactions neutrally. It is, therefore, a superior tax compared to the cash-flow tax on real transactions that seems to have gained common acceptance. The hybrid tax is a modified version of the cash-flow tax on real and financial transactions combined. The modification involves replacing expensing of fixed assets with normal depreciation allowances, but the undepreciated value of fixed assets is carried forward with interest at the opportunity cost of equity capital.
Keywords:
WP; cash flow; tax burden; proceeds; Corporate income tax; cash-flow tax; tax reform; modified S-CFT; cash inflow; tax liability; tax calculation; tax depreciation; tax implication; equity capital; tax payment; tax deferral; Currencies; Tax allowances; Anti-money laundering and combating the financing of terrorism (AML/CFT); Depreciation
Cover IMF Working Papers
Inflation-Proof Tax System? Some Lessons From Israel
International Monetary Fund
This paper strengthens the claim made by Vito Tanzi that when the effect of a high inflation on the tax system is taken into account, then the overall revenues from inflationary finance may well be negative. The paper analyzes some genuine and neat measures taken in Israel in an attempt to construct an inflation-proof tax system. Despite these very elegant measures, the paper concludes that the Israeli experience suggests that it is more appropriate to talk about the “inflation subsidy” rather than the “inflation tax.”
Keywords:
WP; income; cash flow; inflation rate; taxable income; rate of inflation; business income; firm B; nominal income; net cash flow; tax relief; tax year; taxpaying firm; inflation tax; Personal income; Inflation; Income tax systems; Cash-flow tax; Currencies