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Business and Economics > Corporate Taxation

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Cover Tax Law Technical Note
Legislating for Fair and Effective Tax Collection
Irving Aw
,
Brendan Crowley
,
Cory Hillier
,
Lydia E Sofrona
, and
Christophe J Waerzeggers
Fair and effective tax collection is critical to the success of any tax system in raising revenue and should be properly legislated. Voluntary payment of taxes by taxpayers is always preferred and should be encouraged and supported by the tax procedure legal framework. However, the law should also provide for protective measures to prevent taxpayers from frustrating tax collection efforts by taking either themselves or their assets out of the tax administration’s reach. As a last resort, the tax administration should be able to compel the recovery of outstanding tax debts from taxpayers or certain third parties through different legislative measures. Such powers should however be complemented by adequate safeguards for taxpayers. This note focuses on the key issues that should be taken into consideration in designing tax law provisions to support fair and effective tax collection.
Keywords:
Tax Collection; Legislation; Protective Measures; Compelled Recovery; Tax Liens; Installment Arrangements; Crisis Events; clearance mechanism; penalties regime; tax procedure; tax law provision; clearance certificate; tax rulings regime; IT system; Tax administration core functions; Tax arrears management; Tax law; Collateral
Cover Technical Assistance Reports
Libya: Technical Assistance Report-Redesign of Income Tax Forms
International Monetary Fund. Middle East and Central Asia Dept.
METAC assisted the Libyan Tax Authority in reviewing tax forms to enhance taxpayer data collection. The proposed data set will significantly expand existing information, improving the completeness of taxpayer records and greatly aiding the risk assessment process.
Keywords:
Registration application; Annual Tax declaration for unincorporated taxpayers; Annual Corporate Income Tax; Data; Risk assessment; Industry classification; Business community; Libya.; declaration reporting; LTA staff; LTA income tax operation; income tax registration; request of the Libyan Tax Authority; Income tax systems; Income; Corporate income tax; Tax administration core functions; Taxpayer registration
Cover IMF Staff Country Reports
Luxembourg: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper explores implications for safeguarding fiscal space in Luxembourg. The analysis discusses the main drivers of revenues and expenditures in recent years. Against the background of rising ageing costs, the analysis discusses the fiscal outlook, accounting for the announced government plans, as well as fiscal risks. Additionally, it offers options for helping to safeguard ample fiscal space, in view of the spending pressures and risks. In order to preserve its ample fiscal buffers, which will support the government’s commitment of keeping Luxembourg’s AAA rating, a more prudent fiscal policy would be advisable. Recent revenue increases should not be taken as given, and additional tax reforms should be done in a budget-neutral manner. The growth of compensation of employees should be limited, social programs better targeted, and their efficiency increased. Early pension reform would also help limit spending pressures. Finally, a national framework could help anchor fiscal policy and maintain a credible commitment to prudent fiscal policies.
Keywords:
personal income taxation; copyright page; ample fiscal space; spending pressure; CIT revenue; property taxation reform; GDP share; Corporate income tax; Social protection spending; Personal income tax; Global
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 IMF Working Papers
Deciphering the GloBE in a Low-Tax Jurisdiction
Shafik Hebous
,
Cory Hillier
, and
Andualem Mengistu
Pillar Two rules of the Inclusive Framework agreement on a minimum corporate tax (known as ‘Global Anti-Base Erosion Rules’, for short GloBE) have important implications for the design of the corporate income tax. This chapter discusses these implications particularly from the perspective of low-tax jurisdictions. It argues that it is not possible to design a system that always guarantees generating exactly the bare minimum tax intended by the rules and motivates that this should not be the policy objective anyway. Importantly, if no profit tax already exists, countries need to consider whether to adopt one, and if yes, in what form. There is a case for introducing a general profit tax beyond the GloBE rules, together with a qualifying GloBE domestic minimum top-up tax as a backstop. The familiar alternatives of efficient economic rent tax designs, however, are no longer equivalent under the GloBE. In practice, given the specifics of the rules, an efficient rent tax on in-scope multinationals cannot be combined with a statutory tax rate below a certain cutoff, because the minimum tax becomes always binding. Under the GloBE, immediate expensing particularly maintains the time-value of fully deducting the cost of investment, without impacting the GloBE effective tax rate.
Keywords:
Investment; Minimum Tax; Tax Competition; Rent Taxation; Cash-Flow Tax; International Taxation; scope multinational; profit tax; top-up tax; tax design; Corporate income tax; Allowance for corporate equity; Corporate taxes; Tax allowances; Global
Cover Technical Assistance Reports
Republic of Moldova: Technical Assistance Report-Analysis of the Draft Law on the Anti-Corruption Judicial System and on Amending Some Normative Acts
International Monetary Fund. Legal Dept.
Upon the request of the authorities of Moldova, the Legal Department provided Technical Assistance on the establishment of the Specialized Anti-Corruption Judiciary (SAJ) in Moldova. The TA report provides analysis of the draft law on the Anti-Corruption Judicial System and other related laws, and proposes recommendations. The recommendations are informed by international standards and good practices on judicial independence and integrity, and are designed to respond to specific challenges faced by Moldova. The creation of the SAJ is an important new initiative aimed at strengthening anti-corruption efforts following the establishment of the Anti-Corruption Prosecutor Office (APO) in 2016. A SAJ composed of judges selected through competitive process with the participation of civil society and reputable anti-corruption experts, can significantly contribute to reducing corruption through effective adjudication of corruption cases.
Keywords:
Republic of Moldova; specialized courts; anti-corruption; rule of law; judiciary; judges; judicial independence; Pre-selection Commission; vetting.; draft law; parliament of the Republic of Moldova; legal department; subject matter jurisdiction; SAJ member; comments from the World Bank; Corruption; Allowance for corporate equity; Civil society organizations; Europe
Cover IMF Staff Country Reports
Ireland: 2023 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. European Dept.
This 2023 Article IV Consultation highlights that Ireland’s economy has shown remarkable resilience in the face of consecutive shocks. The Irish economy has displayed remarkable resilience in the face of recent consecutive shocks and is well-positioned to achieve a soft landing. Growth is expected to moderate to a still solid level in 2023-24, from a very high base, as tighter financial conditions, domestic capacity constraints, and weakening external demand weigh on the economy. Continued fiscal prudence is warranted to complement monetary tightening in sustaining disinflation and to build adequate buffers for the future. As fiscal policy should avoid adding to aggregate demand amid still elevated inflation, tax revenue over performance should be saved. The 2023 fiscal stance is appropriate. Fiscal policy should support growth-enhancing investment and broaden the tax base. The authorities’ decision to save part of excess corporate income tax revenues in two savings funds is welcome. Tighter financial conditions, persistent inflation, and rising vulnerabilities in the commercial real estate market with linkages to leveraged non-banks call for continued heightened vigilance of financial stability risks.
Keywords:
liability positions vis-à-vis nonresident; inflation development; transparency policy; money market rate; quarterly balance of payments; growth-enhancing investment; Medium-term fiscal policy; persistent inflation; Ireland's economy; Housing; Inflation; Corporate income tax; Credit; Global
Cover IMF Staff Country Reports
Ireland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper provides an international perspective to the authorities’ two recent policy measures: setting up new savings and counter cyclical and climate infrastructure funds and reforming the judicial review of planning decisions in Ireland. The first essay presents international best practices in the design and operation of sovereign wealth funds that could inform the setup of the two new funds in Ireland. It highlights the importance of operating the funds within a strong fiscal policy framework. The second essay reviews Ireland’s planning and permitting system, underscoring the key elements that have hindered public investment. It also looks into the government’s proposed Bill to reform the planning system and contrasts its key features with those of other international jurisdictions. It finds that several issues may contribute to the inefficiencies in the planning and judicial review system, such as the loose standing requirements and lack of mandatory timelines related to judicial review, as well as institutional governance issues within the planning board, which the newly proposed reforms and legislative measures seek to address.
Keywords:
housing affordability; D. policy option; savings fund; modernizing judicial review; impulse response; Housing; Housing prices; Pension spending; 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 How To Notes
How to Combat Value-Added Tax Refund Fraud
Cedric Andrew
and
Ms. Katherine Baer
A previous IMF Working Paper on value-added tax (VAT) refunds (WP/07/31, by Keen and Smith) describes the main forms of VAT noncompliance and concludes that VAT is susceptible to evasion and fraud like any other tax. This paper shows the insidious nature and extent of VAT refund fraud in selected EU countries and argues that this type of noncompliance requires tax administrations to adopt a coordinated strategy and deploy a range of countermeasures to combat this threat. Because such fraud is primarily a criminal legal issue, tackling it successfully will require cooperation, both internationally between VAT administrations and nationally between tax authorities and the judiciary. The paper’s focus is primarily on advanced economies in the context of the EU, but many of the recommendations are applicable to emerging market and developing countries. A separate IMF How to Note discusses managing VAT refunds in developing countries.
Keywords:
value-added tax; refund; fraud; strategies; cooperation; refund fraud; acquisition fraud scheme; return fraud; MTIC VAT Contra carousel scheme; Customs and Excise tax office case study; Tax refunds; Tax administration core functions; Middle East