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Business and Economics > Corporate Taxation

You are looking at 1 - 10 of 107 items for :

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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 Technical Assistance Reports
Republic of Armenia: Technical Assistance Report-Corporate Income Tax Gap Estimation Based on Operational Audits
International Monetary Fund. Fiscal Affairs Dept.
This report presents estimates of the Corporate Income Tax (CIT) gap for Armenia for the period 2020–2022. The CIT gap is based on a bottom-up approach using operational audits. The average CIT gap in Armenia is estimated at 26.4-35.2 percent of potential CIT liability.
Keywords:
Republic of Armenia; Corporate Income Tax Gap; Bottom-up approach; Operational audits; Heckman Sample Selection model; Machine learning model; Select cases for future audits.; CIT Gap; CIT gap estimate; A. CIT gap result; CIT gap; Corporate income tax; Auditing; Income; Tax audit performance measurement; Business enterprises
Cover IMF Working Papers
International Tax Spillovers and Tangible Investment, with Implications for the Global Minimum Tax
Mr. Michael Keen
,
Ms. Li Liu
, and
Hayley Pallan
This paper articulates and, using newly-assembled data, explores how international taxation affects aggregate tangible cross-border investment. Spillovers from statutory tax rates abroad seem: As sizable as effects from the host’s rate; larger than previous consensus values (attributed to a systematic bias from FDI data); and consistent with ‘implicit’ profit shifting through real investment (rather than ‘paper’ profit shifting). Contrary to much policy discussion, the results also imply that: Host countries’ marginal effective tax rates have at best a weak effect on real investment; those elsewhere have none; and, applied to the prospective global minimum tax, inward tangible investment in most sample countries will increase.
Keywords:
Corporate Taxation; International Tax; Multinational Investment; Foreign Direct Investment; host country; Affiliate investment; FDI data; investment impact; corporate tax tax rate; cross-border investment; Corporate income tax; Marginal effective tax rate; International tax issues; Capital account; Global
Cover IMF Working Papers
Unpleasant Surprises? Elections and Tax News Shocks
Mr. Antonio David
and
Can Sever
Unanticipated changes in tax policy are likely to have different macroeconomic effects compared to anticipated changes due to several mechanisms, including fiscal foresight and policy uncertainty. It is therefore important to understand what drives such policy surprises. We explore the nature of unanticipated tax policy changes by focusing on a political economy determinant of those events, namely the timing of elections. Using monthly data for 22 advanced economies and emerging markets over the period 1990-2018, we show that implementation lags tend to be significantly longer for tax policy change announcements that are made during the pre-election periods, thereby leading to a lower likelihood of “tax news shocks”. We also find that implementation lags become much shorter for tax policy changes that are announced in the aftermath of elections, generating more frequent tax news shocks. This pattern remains similar for different tax measures or types of taxes. The findings are robust to a number of checks, including alternative definitions of tax news shocks, or to controlling for various economic and institutional factors.
Keywords:
Tax Shocks; Electoral Cycles; Political Economy; news shock; implementation lag; election period; change announcement; tax policy policy change; Probit models; Income tax systems; Consumption taxes; Corporate income tax; Global
Cover Selected Issues Papers
Drivers of Corporate Cash Holdings in Japan: Japan
Seho Kim
,
Pablo Lopez Murphy
, and
Rui Xu
In Japan, corporate savings have risen since 2000 in line with profits. A large share of the additional savings was kept as cash holdings (i.e., cash and short-term investments) rather than used for investment. Building on a rich literature, this paper identifies two additional drivers of corporate cash holdings using financial data of public and private Japanese firms. First, a higher share of intangible capital is associated with more cash holdings. This indicates the presence of financial frictions as intangible capital is not easily collateralizable. Such financial friction could be alleviated by shifting towards cash flow-based lending that is prevalent in the United States (US). Second, corporate tax cuts are associated with more cash holdings while having no significant effect on investment. Given the significant fiscal cost, the efficiency of corporate tax cuts should be re-evaluated.
Keywords:
Corporate cash holdings; Investment; intangible assets; financial frictions; tax cuts; Japan; cash holding; corporate tax tax cut; drivers of Corporate Cash Holdings; firm sample; short-term investment; Intangible capital; Corporate income tax; Effective tax rate; Tax allowances; Global
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 Working Papers
Personal Income Taxes in the Middle East and North Africa: Prospects and Possibilities
Mario Mansour
and
Eric M. Zolt
Personal income taxes (PITs) play little or no role in the Middle East and North Africa, often yielding less than 2 percent of GDP in revenue—with the exception of few North African countries. This paper examines how PITs have evolved in recent decades, and what they might look like in the next 20 years. Top marginal tax rates on labor and business income of individuals have declined substantially, a trend that mirrors reductions in advanced and developing economies. Taxation of passive capital income has changed very little, and the revenue intake from this source remains low throughout the region (less than 1 percent of GDP on average and concentrated in oil-importing non-fragile states). Social security contributions (SSC) have increased in importance in nearly all MENA countries, and some countries have introduced additional payroll taxes. The combination of reduced marginal tax rates, light taxation of income from capital and business activities, and increase of SSC, have resulted in income tax systems that create disincentives to work and incentives for informality, and contribute little to government revenue and income redistribution. Given differences in economic and political structures, demographics, and starting points, the path to PIT/SSC reforms will vary across the region. Countries with relatively mature PIT/SSC systems, where revenue performance has improved in the past two decades, will increasingly need to balance the revenue and equity objectives against effciency objectives (in particular labor market incentives and infromality). Countries with no PITs will have to weigh whether a consumption tax/SSC system that mimic a flat tax on labor income is sufficient to diversify revenue away from oil and whether to adopt PITs to address rising income and wealth inequality. Finally, fragile states, who face more political volatility and weaker fiscal institutions, will have to focus on simplicity of tax design and collection to be able to raise revenue from PITs.
Keywords:
Personal income taxes; social security contributions; payroll taxes; fragile and conflict states; Middle East and North Africa; Gulf-Cooperation Council; SSC reform; SSC system; revenue performance; PIT objective; PIT revenue; Personal income tax; Income tax systems; Income; Income and capital gains taxes; Corporate income tax; North Africa; Middle East; East Africa; Global
Cover Policy Papers
International Corporate Tax Reform
International Monetary Fund. Fiscal Affairs Dept.
and
International Monetary Fund. Legal Dept.
To relieve the pressure on the outdated international corporate tax system, an ambitious reform was agreed at the Inclusive Framework (IF) on Base Erosion and Profit Shifting in 2021, with now 138 jurisdictions joining. It complements previous efforts to mitigate profit shifting by addressing the challenges of the digitalization of the economy through a new allocation of taxing rights to market economies (Pillar 1) and tax competition through a global minimum corporate tax (Pillar 2). This paper concludes that the agreement makes the international tax system more robust to tax spillovers, better equipped to address digitalization, and modestly raises global tax revenues.
Keywords:
Tax Policy; allocation rule; IMF capacity development; tax competition; G. revenue mobilization agenda; A. reform direction; International tax issues; Corporate income tax; Double taxation; Tax incentives; Global
Cover IMF Working Papers
Home or Away? Profit Shifting with Territorial Taxation
Dominika Langenmayr
and
Ms. Li Liu
In 2009, the United Kingdom abolished the taxation of profits earned abroad and introduced a territorial tax system. Under the territorial system, firms have strong incentives to shift profits abroad. Using a difference-in-differences research design, we show that the profitability of UK subsidiaries in low-tax countries increased after the reform compared to subsidiaries of non-UK multinationals in the same countries by an average of 2 percentage points. This increase in profit shifting also leads to increases in measured productivity of the foreign affiliates of UK multinationals of between 5 and 9 percent.
Keywords:
profit shifting; territorial tax system; multinational firms; shifted profit; UK multinational; UK subsidiary; difference-in-differences research design; Total factor productivity; Transnational corporations; Corporate income tax; Income; Wages; Global
Cover IMF Staff Country Reports
Ireland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper on Ireland focuses on ensuring an inclusive and growth-enhancing fiscal policy mix. It assesses the scope for improving the tax system toward a more growth-friendly structure, and for achieving efficiency gains in public expenditure. It also discusses upcoming impediments to long term fiscal sustainability and proposes options to achieve a more growth friendly and equity-enhancing revenue and expenditure policy mix. Under the 2021 National Development Plan, the government plans to significantly expand investment to historically high levels over the medium term. Good progress has been achieved in raising public spending efficiency but there is scope for further improvement. The stylized facts highlight the need for reforms to broaden the tax base and find new and stable sources of revenues as well as improving public expenditure efficiency. Public spending should focus on growth-friendly spending and reducing efficiency gaps. Decisive reforms are needed to ensure the future sustainability of the pension system and safeguard long term fiscal sustainability.
Keywords:
expenditure needs; GROWTH-ENHANCING fiscal policy mix; disparity in Ireland; spending pressure; OECD housing affordability database; Income inequality; Income; Corporate income tax; Europe