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Business and Economics > Corporate Taxation

You are looking at 1 - 10 of 11 items for :

  • Type: Journal Issue x
  • Hong Kong Special Administrative Region, People's Republic of China x
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Cover IMF Working Papers
Global Firms, National Corporate Taxes: An Evolution of Incompatibility
Mr. Shafik Hebous
How did the rise of multinational enterprises (MNEs) put pressure on the prevailing international corporate tax framework? MNEs, and firms with market power, are not new phenomena, nor is the corporate income tax, which dates to the early 20th century. This prompts the question, what is distinctly new (about multinational enterprises)—if anything—that has triggered unprecedented recent concerns about vulnerabilities in international tax arrangements and the taxation of MNEs? This paper presents a set of empirical observations and a synthesis of strands of the literature to answer this question. A key message is that MNEs of the 21st century operate differently from prior periods and have evolved to become global firms—with important tax ramifications. The fragility of international tax arrangements was present at the outset of designing international tax rules, but the challenges have drastically intensified with the global integration of business, the increased trade in hard-to-price services and intangibles, and the rapid growth of the digital economy.
Keywords:
WP; company; multinational enterprise; conduit company; holding company; business organization; Multinational enterprises; global firm; tax avoidance; international tax; management company; credit card company; financing company; Corporate income tax; Foreign direct investment; Double taxation; Trade in services; Personal income; Global
Cover IMF Working Papers
Exploring Residual Profit Allocation
Sebastian Beer
,
Ruud A. de Mooij
,
Mr. Shafik Hebous
,
Mr. Michael Keen
, and
Ms. Li Liu
Schemes of residual profit allocation (RPA) tax multinationals by allocating their ‘routine’ profits to countries in which their activities take place and sharing their remaining ‘residual’ profit across countries on some formulaic basis. They have recently and rapidly come to prominence in policy discussions, yet almost nothing is known about their impact on revenue, investment and efficiency. This paper explores these issues, conceptually and empirically. It finds residual profits to be substantial, but concentrated in a relatively few MNEs, headquartered in few countries. The impact on tax revenue of reallocating excess profits under RPA, while adverse for investment hubs, appears beneficial for lower income countries even when the formula allocates by destination-based sales. The impact on investment incentives is ambiguous and specific both to countries and MNE groups; only if the rate of tax on routine profits is low does aggregate efficiency seem likely to increase.
Keywords:
WP; routine profits; capital stock; closed economy; cost function; earnings before interest and taxes; Residual Profit Allocation; International Corporate Taxation; Multinational Firms; profit shifting; residual profits; RPA scheme; purged profits; Marginal effective tax rate; Corporate income tax; Income; Stocks; Global
Cover Policy Papers
Fiscalité des entreprises dans l'économie mondiale
International Monetary Fund. Fiscal Affairs Dept.
and
International Monetary Fund. Legal Dept.
Le document Fiscalité des entreprises dans l'économie mondiale insiste sur la nécessité de préserver et de mettre à profit les progrès de la coopération fiscale internationale accomplis ces dernières années qui, sur certains points, sont actuellement menacés. Le document accorde une attention particulière à la situation des pays en développement, et examine plusieurs options envisagées pour que les pays, en particulier les pays à faible revenu, puissent continuer de recouvrer des impôts sur les bénéfices tirés d'activités multinationales.
Keywords:
PP; OECD BEPS project; tax; director; IMF executive board review; tax competition
Cover Policy Papers
Tributación internacional de empresas
International Monetary Fund. Fiscal Affairs Dept.
and
International Monetary Fund. Legal Dept.
El documento «Tributación internacional de empresas» resalta la necesidad de mantener y promover los avances logrados en los últimos años en el terreno de la cooperación internacional sobre cuestiones tributarias, que en algunos sentidos parecen estar ahora sujetos a tensiones. Prestando especial atención a las circunstancias de los países en desarrollo, enumera y analiza distintas opciones en estudio para el sistema de tributación internacional que buscan asegurar que los países —sobre todo los de bajos ingresos— puedan continuar recaudando impuestos sobre las actividades multinacionales de las empresas.
Keywords:
PP; OECD BEPS project; tax; director; IMF executive board review; tax competition
Cover Policy Papers
Corporate Taxation in the Global Economy
International Monetary Fund. Fiscal Affairs Dept.
and
International Monetary Fund. Legal Dept.
The policy paper Corporate Taxation in the Global Economy stresses the need to maintain and build on the progress in international cooperation on tax matters that has been achieved in recent years, and in some respects now appears under stress. With special attention to the circumstances of developing countries, the paper identifies and discusses various options currently under discussion for the international tax system to ensure that countries, and in particular low-income countries, can continue to collect corporate tax revenues from multinational activities.
Keywords:
PP; OECD BEPS project; tax; director; IMF executive board review; tax competition
Cover IMF Staff Country Reports
People’s Republic of China-Hong Kong Special Administrative Region: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper discusses income inequality in Hong Kong Special Administrative Region (SAR). Income inequality in Hong Kong SAR remains high, despite declining recently. Redistributive policies implemented by the authorities have helped to lower income inequality. However, inequality is likely to rise in the medium-term due to aging and thus more needs to be done. A package of policies could lower the Gini index by 3–4 points by 2050 including: more progressive salaries tax; higher reliance on recurrent property taxes; and increased public expenditure on social welfare, health, housing, education and childcare. According to recent evidence in the literature, these policies could also boost growth by 0.2–0.5 percentage points per year. Public spending on social welfare could continue to be raised to boost redistribution and increase access of poorer households. Spending on education and childcare should be raised to help lower the market income inequality directly. The commissioned study aiming to determine the demand and supply for childcare services and map out the long-term service development programs, as well as the initiatives mentioned in the 2018 Policy Address, should help in this regard.
Keywords:
ISCR; CR; financial condition; Hong Kong SAR; Gini coefficient; revenue loss; CIT rate; estimate revenue spillover; financial conditions; Income inequality; Corporate income tax; Income distribution; Personal income; Global; Asia and Pacific
Cover Policy Papers
Tax Policy, Leverage and Macroeconomic Stability
International Monetary Fund
Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern. This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.
Keywords:
PP; debt shifting; asset ratio; cost of capital; cash flow; debt vulnerability; interest deductibility; debt bias; income tax; double taxation; banking sector; Debt bias; Allowance for corporate equity; Housing prices; Corporate income tax; Stocks; Europe; Global; ACE duplication; house-price volatility; ACE system; Personal income tax
Cover Fiscal Monitor, April 2016
Fiscal Monitor, April 2016
Acting Now, Acting Together
International Monetary Fund. Fiscal Affairs Dept.

Abstract

The global economy remains fragile at this time. While the recovery in advanced economies is softening, many emerging market and developing economies have experienced a significant economic slowdown, and some large countries show signs of distress. Global risk aversion has risen, and commodity prices have continued to fall since the April 2015 Fiscal Monitor. The weaker outlook and concerns about the ability of policymakers to provide an adequate and swift policy response have amplified downward risks and clouded global prospects. According to this issue of the Fiscal Monitor, the challenging environment calls for a comprehensive policy response to boost growth and reduce vulnerabilities. In particular, it is critical to identify policies that could lift productivity growth by promoting innovation. Fiscal policy can play an important role in stimulating innovation through its effects on research and development, entrepreneurship, and technology transfer.

Keywords:
FM; def; country abbreviation; statistics manual; commodity exporter; potential GDP; middle-income economy; Fiscal stance; Emerging and frontier financial markets; Macroeconomic and fiscal forecasts; Global; Africa; Middle East; North Africa; Europe; Tax incentives; Asia and Pacific; fiscal policy; tax treatment; imputed interest; rate of return; Fiscal risks
Cover Policy Papers
Spillovers in International Corporate Taxation
International Monetary Fund
This paper explores the nature, significance and policy implications of spillovers in international corporate taxation—the effects of one country’s rules and practices on others. It complements current initiatives focused on tax avoidance by multinationals, notably the G20-OECD project on Base Erosion and Profit shifting (BEPS). The paper draws on the IMF’s experience on international tax issues with its wide membership, including through technical assistance (TA), and on its previous analytical work, to analyze spillovers and how they might be addressed. In doing so, it goes beyond current initiatives to look at a wide set of possible responses.
Keywords:
PP; double taxation; residence country; tax system; single tax; taxable income; transfer pricing; withholding tax; income tax; cost of capital; companies resident; capital gain; Intra-company debt shifting; Corporate income tax; Corporate taxes; Spillovers; Personal income; Transfer pricing; Global
Cover IMF Working Papers
A Partial Race to the Bottom: Corporate Tax Developments in Emerging and Developing Economies
Junhyung Park
,
Mr. Sukhmani Bedi
,
S. M. Ali Abbas
, and
Mr. Alexander D Klemm
This paper assembles a new dataset on corporate income tax regimes in 50 emerging and developing economies over 1996-2007 and analyzes their impact on corporate tax revenues and domestic and foreign investment. It computes effective tax rates to take account of complicated special regimes, such as partial tax holidays, temporarily reduced rates and increased investment allowances. There is evidence of a partial race to the bottom: countries have been under pressure to lower tax rates in order to lure and boost investment. In the case of standard tax systems (i.e. tax rules applying under normal circumstances), the effective tax rate reductions have not been larger than those witnessed in advanced economies, and revenues have held up well over the sample period. However, a race to the bottom is evident among special regimes, most notably in the case of Africa, creating effectively a parallel tax system where rates have fallen to almost zero. Regression analysis reveals higher tax rates adversely affect domestic investment and FDI, but do raise revenues in the short-run.
Keywords:
WP; tax rate; revenue; GDP; investment; Effective Tax Rates; Corporate Income Tax; Special Economic Zones; Emerging Markets; Low-Income Countries; Developing Economies; investment impact; tax rate cut; regime data; economic rent; tax competition; present discounted value; capital tax elasticity; lowering tax rates; corporate tax; Effective tax rate; Average effective tax rate; Marginal effective tax rate; Africa; Europe; Sub-Saharan Africa; Global