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Business and Economics > Production and Operations Management

You are looking at 1 - 10 of 39 items for :

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  • Business Taxes and Subsidies x
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Cover IMF Working Papers
Industrial Policy in Europe: A Single Market Perspective
Andrew Hodge
,
Roberto Piazza
,
Fuad Hasanov
,
Xun Li
,
Maryam Vaziri
,
Atticus Weller
, and
Yu Ching Wong
European countries are increasingly turning to industrial policy to address the challenge of geopolitical fragmentation, enhance productivity, and accelerate the green transition. Well-targeted industrial policy has the potential to correct market failures and support production efficiency by exploiting scale effects and internalizing knowledge externalities. But even the most carefully designed unilateral industrial policies risk generating negative production externalities in other countries, and, under certain conditions, may not even be welfare-enhancing for the implementing country. The reason is that negative externalities of unilateral industrial policy can drive European and international production patterns away from underlying comparative advantages, create regional or global over-supply, and result in changes in terms of trade that reduce domestic welfare. This suggests significant benefits from coordination. Structural modeling and case studies show that a coordinated approach within the European Union and with international trading partners on a narrowly defined and carefully designed set of industrial policies could unlock untapped benefits. Closer European integration would facilitate the adjustment of firms and workers to coordinated and well-targeted industrial policies and amplify their benefits.
Keywords:
Industrial policy; European Single Market; State Aid; EU aerospace industry export; EU single market; fishery block exemption regulation; State aid expenditure; single market perspective; Comparative advantage; Demand elasticity; Competition; Terms of trade; Europe; Global
Cover IMF Staff Country Reports
Panama: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper presents the main features and weaknesses of the current Panamanian tax system and provides an international comparison of its performance. Panama’s macroeconomic performance has been notably robust. Panama’s macroeconomic performance has been notably robust, but Panama’s tax collection has been historically low. A tax system without adequate revenues led to chronic fiscal deficits and a lack of resources to invest in human capital (education and health) and promote social inclusion policies. In addition, the tax system is notably regressive, and several rules are very inefficient and distortive contradicting the overall policy objective of the country to attract investment. Taxation of the business sector is very complex. On the other hand, the system is very generous regarding benefits. Overall, the desirable reform direction is clear: A reduction in tax incentives, following their analysis, as well as stronger anti-abuse provisions, and revenues from an international minimum tax can finance reductions in the inefficient parts of the tax system, such as the multiple business taxes and the strict loss carry forward.
Keywords:
VAT indicator; directorate General; C. consumption tax; tax comparison; revenue performance; International reserves; Total factor productivity; Tax incentives; Corporate income tax; Caribbean; Central America; South America; Global; Asia and Pacific
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 Working Papers
Death and Taxes: Does Taxation Matter for Firm Survival?
Mr. Serhan Cevik
and
Fedor Miryugin
This paper investigates the impact of taxation on firm survival, using hazard models and a large-scale panel dataset on over 4 million nonfinancial firms from 21 countries over the period 1995–2015. We find ample evidence that a lower level of effective marginal tax rate improves firms’ survival chances. This result is not only statistically but also economically important and remains robust when we partition the sample into country subgroups. The effect of taxation on firms’ survival probability is found to exhibit a non-linear pattern and be stronger in developing countries than advanced economies. These findings have important policy implications for the design of corporate tax systems. The challenge is not simply reducing the statutory tax rate, but to level the playing field for all firms by rationalizing differentiated tax treatments across sectors, asset types and sources of financing.
Keywords:
WP; firm; firm survival; nonfinancial firm; survival prospects; appendix table; summary statistics; Marginal effective tax rate; Tax incidence; Capital productivity; Total factor productivity; Corporate income tax; Europe
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 Staff Country Reports
Canada: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
Selected Issues
Keywords:
ISCR; CR; productivity growth; addressing housing supply constraint; housing affordability; LTV policy; LTV limit; rental housing; policy instrument; tax rate; Corporate income tax; Housing; Productivity; Labor productivity; Housing prices; Global; North America
Cover IMF Staff Country Reports
Ireland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper estimates the cyclical position of the Irish economy. Assessing the business cycle in Ireland is complicated by the open character of its labor market and large presence of globally active multinationals. However, analysis suggests that the Irish economy is in the midst of a cyclical upswing. All methods suggest a positive output gap in 2017, while the labor market shows signs of upward wage pressures, as net immigration has been weak so far. These signs are consistent with a cyclical upswing, amid strong estimated potential output growth, and point to risks of a boom-bust cycle, should the economy continue to push the growth momentum.
Keywords:
ISCR; CR; commercial real estate; price; CRE price; labor force gap; growth labor force growth; exit tax; CRE market; Labor force; Corporate income tax; Personal income; Labor markets; Unemployment rate; Global; Europe
Cover IMF Staff Country Reports
Morocco: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper examines the distributional effects of tax reforms in Morocco. Overall, the performance of Morocco’s tax system is satisfactory, but there is scope to strengthen it and make it more equitable and less distortive. Morocco would benefit from a comprehensive and well explained tax reform strategy aiming to reduce inequality and boost growth. For this, a recommended tax reform package should combine several key components, for example, reducing tax exemptions, raising property tax, and lowering corporate tax rates. At the same time, the targeting of social programs should be strengthened. Such a reform approach would protect the most vulnerable and help broaden the tax base, remove tax distortions, and better share the tax burden.
Keywords:
ISCR; CR; Morocco; tax rate; rate; tax; productivity growth; labor productivity level; tax reform; productivity gap; reform package; Value-added tax; Corporate income tax; Productivity; Middle East; North Africa; East Africa; Europe; Asia and Pacific
Cover IMF Working Papers
International Technology Sourcing and Knowledge Spillovers: Evidence from OECD Countries
Sophia Chen
and
Estelle Dauchy
How much do firms benefit from foreign R&D and through what channel? We construct a global network of corporate innovation using more than 1.5 million patents granted to firms in OECD countries. We test the “international technology sourcing” hypothesis that foreign innovation activities tap into foreign R&D and improve home productivity through knowledge spillovers. We find that firms with stronger inventor presence in technology frontier countries benefit disproportionately more from their R&D. The strength of knowledge spillovers depends on the direction of technology sourcing. Knowledge externality is larger for firms in technology frontier countries than for firms in non-frontier countries.
Keywords:
WP; frontier country; innovation activity; country control; production function; Knowledge spillovers; Patent; R&D; Network; Firm productivity; OECD country; source country; destination country; Spillovers; Total factor productivity; Stocks; Productivity; Global
Cover IMF Staff Country Reports
Belgium: 2018 Article IV Consultation - Press Release; Staff Report
International Monetary Fund. European Dept.
This 2018 Article IV Consultation highlights that the economic recovery in Belgium is gaining momentum, with real GDP growth expected to approach 2 percent in 2018 after an estimated 1.7 percent in 2017. It is driven by strong investment and solid consumption growth, and supported by favorable financial conditions as well as a strengthening recovery throughout Europe. Employment growth has picked up, thanks in part to past reform efforts. The fiscal position has improved, reflecting a mix of cyclical, structural, and one-off factors. The medium-term outlook, however, remains subdued in the absence of further structural reforms to raise potential growth, and subject to both external and domestic risks.
Keywords:
ISCR; CR; Belgium; authority; employment growth; productivity development; productivity growth; labor market measure; Belgium's productivity growth; Productivity; Labor markets; Corporate income tax; Employment; Labor taxes; Global; Europe