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Business and Economics > Corporate Taxation

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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 Technical Notes and Manuals
Estimating the Corporate Income Tax Gap: The RA-GAP Methodology
Mr. Junji Ueda
The IMF Fiscal Affairs Department's Revenue Administration Gap Analysis Program (RA-GAP) aims to provide a quantitative analysis of the tax gap between potential revenues and actual collections, and this technical note explains the concept of the tax gap for corporate income tax (CIT), and the methodology to estimate CIT gaps. It includes detailed steps to derive the potential CIT base and liability with careful consideration for the theoretical differences between the coverage of statistical macroeconomic data and the actual tax base of CIT, and then compare the estimated results with actual declarations and revenues. Although the estimated gaps following the approach will have margins of errors, it has the advantage of using available data without additional costs of collection and suits initial evaluations of overall CIT noncompliance in a country.
Keywords:
TNM; CIT gap; CIT efficiency ratio; CIT base; CIT liability; CIT legislation; Tax Gap; Tax Evasion; Tax Compliance; Corporate Income Tax; CIT Policy gap; CIT payment; CIT credit; CIT noncompliance; taxable income; CIT collection gap; Personal income; Business enterprises; Fiscal accounting and reporting
Cover IMF Staff Country Reports
Hungary: Report on the Observance of Standards and Codes—Data Module and Fiscal Transparency—Updates
International Monetary Fund
This report presents an updates on the Observance of Standards and Codes—Data Module and Fiscal Transparency for Hungary. Hungary continues to observe the Special Data Dissemination Standard specifications for the coverage, periodicity, and timeliness of all data categories, including the detailed template on international reserves and foreign currency liquidity, and for the dissemination of advance release calendars. Progress has been made in the project to revise the data on imputed rents, currently extrapolated from 1993 data, on the basis of more up-to-date survey data.
Keywords:
ISCR; CR; budget; statistics; financial asset; State holding company; purview of the Ministry of Finance; customs statistics; economic statistics; summary methodology; Government finance statistics; Budget planning and preparation; Corporate income tax