Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Governments use tax expenditures (TEs) to provide financial support or benefits to taxpayers. The budgetary impact of TEs can be similar to that of direct outlays: after the support is provided, less money is available to fund other government priorities. Systematic evaluations are needed to guide informed decision-making and to avoid a situation where the narrative on the benefits of TEs is primarily driven by profiting stakeholders. By TE "evaluation," this note refers to a process that seeks to systematically inform policymakers on the desirability of introducing or maintaining specific tax benefits by gathering and analyzing available quantitative and qualitative information on their effects. Evaluation processes can be tailored to different levels of data availability and analytical capacity. An evaluation should focus on the policy objective of a TE and whether it effectively and efficiently contributes to that policy objective. Although important lessons can be learned from country practices in implementing increasingly ambitious evaluation processes, there is no single best-practice approach to replicate.

Tax expenditures. --- Tax deductions.

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper investigates the costs and benefits of concluding double tax treaties with investment hubs. Based on a sample of 41 African economies from 1985–2015, the results suggest that signing treaties with investment hubs is not associated with additional investments; yet, these treaties tend to come with nonnegligible revenue losses. Building on a theoretical model, the paper investigates the role of treaty shopping in driving nominal investment flows and provides indirect evidence for its importance in the sample.

Domestic resource mobilization --- Double tax treaties --- Economic adjustment and lending --- Governance --- International economics and trade --- International law --- International trade and trade rules --- Law and development --- Legal products --- Legal reform --- Macroeconomics and economic growth --- Public sector development --- Social development --- Social policy --- Tax law --- Tax treaty policy --- Taxation and subsidies --- Treaties --- Exports and Imports --- Public Finance --- Taxation --- Corporate Taxation --- International Investment --- Long-term Capital Movements --- Multinational Firms --- International Business --- Business Taxes and Subsidies --- Tax Evasion and Avoidance --- Fiscal Policies and Behavior of Economic Agents: Firm --- Taxation, Subsidies, and Revenue: General --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Public finance & taxation --- Corporate & business tax --- Finance --- Revenue administration --- Corporate income tax --- Foreign direct investment --- Double taxation --- Withholding tax --- Taxes --- Balance of payments --- Revenue --- Corporations --- Investments, Foreign --- Income tax --- Mauritius

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper develops a simple model to explore whether a higher detection probability for offshore tax evaders—e.g. because of improved exchange of information between countries and/or due to digitalization of tax administrations—renders it optimal for governments to introduce a voluntary disclosure program (VDP) and, if so, under what terms. We find that if the VDP is unanticipated, it is likely to be optimal for a revenue-maximizing government to introduce a VDP with relatively generous terms, i.e. a low or even negative penalty. When anticipated, however, the VDP is neither incentive compatible nor optimal, as it induces otherwise compliant taxpayers to evade tax. A VDP can then only be beneficial if tax evasion induces an external social cost beyond the direct revenue foregone, e.g., due to adverse effects on overall tax morale. In contrast to the common view that VDPs should come along with additional enforcement effort, we find that governments should relax enforcement if the VDP itself provides more powerful incentives to come clean.

Macroeconomics --- Economics: General --- Taxation --- Public Finance --- Tax Evasion and Avoidance --- Taxation, Subsidies, and Revenue: General --- Economic & financial crises & disasters --- Economics of specific sectors --- Tax planning and compliance --- Public finance & taxation --- Tax evasion --- Revenue administration --- Tax administration core functions --- Tax return filing compliance --- Currency crises --- Informal sector --- Economics --- Tax administration and procedure --- Revenue --- Indonesia

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper describes, and where possible tentatively quantifies, likely tax spillovers from the U.S. corporate income tax reform that was part of the broader 2017 tax reform. It calculates effective tax rates under various assumptions, showing among other findings, how the interest limitation and the Foreign Derived Intangible Income provision can raise or reduce rates. It tentatively estimates that under constant policies elsewhere, the rate cut will reduce tax revenue from multinationals in other countries by on average 1.6 to 5.2 percent. If other countries react in line with historical reaction functions, the revenue loss from multinationals rises to an average of 4.5 to 13.5 percent. The paper also discusses profit-shifting, real location, and policy reactions from the more complex features of the reform.

Public Finance --- Taxation --- Corporate Taxation --- Business Taxes and Subsidies --- International Fiscal Issues --- International Public Goods --- Taxation, Subsidies, and Revenue: General --- Public finance & taxation --- Corporate & business tax --- Corporate income tax --- Effective tax rate --- Average effective tax rate --- Revenue administration --- Marginal effective tax rate --- Taxes --- Tax policy --- Tax administration and procedure --- Corporations --- Revenue --- United States

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Expected inflation has few real effects in purely private economies, but this is not the case when the tax system is not neutral with respect to inflation. In practice, tax systems are not neutral—though some have attempted to be so in the past—and this paper provides a comprehensive overview of the most relevant non-neutralities drawing both on existing literature and showing new illustrations and evidence of the effects. The paper shows, for example, how taxing inflationary gains can have tremendous impact on effective tax rates—even at relatively low rates of inflation. It also shows how partial adjustment—for only some types of incomes—can create additional distortions. A new empirical analysis reveals how the erosion of the value of depreciation allowances through inflation affects investment. Finally the paper discusses policy options to address such non-neutralities.

Macroeconomics --- Economics: General --- Inflation --- Investments: General --- Taxation --- Labor --- Taxation, Subsidies, and Revenue: General --- Price Level --- Deflation --- Investment --- Capital --- Intangible Capital --- Capacity --- Nonwage Labor Costs and Benefits --- Private Pensions --- Aggregate Factor Income Distribution --- Economic & financial crises & disasters --- Economics of specific sectors --- Public finance & taxation --- Labour --- income economics --- Prices --- Depreciation --- National accounts --- Income tax systems --- Taxes --- Non-wage benefits --- Income --- Currency crises --- Informal sector --- Economics --- Saving and investment --- Income tax --- Employee fringe benefits --- United States