Multinational corporations repatriate foreign profits through dividends, royalties, and interest paid by foreign affiliates to their parent firms. International tax rules that govern the taxation of repatriated foreign earnings thus influence decisions on profit repatriation. In 2009, Japan introduced a foreign dividend exemption system (the so-called territorial tax system) that...
The European Union (EU) recently implemented the Minimum Tax Directive (Pillar Two) to ensure that profits of large companies are at least taxed at 15%. At the same time, the European Commission proposed the Debt-Equity Bias Reduction Allowance Directive (DEBRA) to reduce the tax-induced distortions between debt and equity financing. In this simulation study, we examine the...
This paper investigates tax competition in withholding tax rates signed under double tax treaties between developed and developing countries. We document a decline in average withholding tax rates since 1990 and attribute this trend to tax competition. As opposed to traditional tax competition, where every foreign investor benefits from lower tax rates, tax treaties allow...
The debate on the taxation of corporate profits is often focused on the extent of low-taxed profit of multinational enterprises (MNEs) in jurisdictions with low statutory or average effective tax rates. However, some affiliates in high tax jurisdictions may also be subject to low effective rates due to tax incentives or other provisions. To date, a global accounting of the...
Redirecting royalty payments across jurisdictions is a well-known strategy of large multinationals to reduce corporate income taxation. The global impact of these taxes on the direction and size of the royalty payments is, however, seldom investigated. From our network analysis, based on national and bilateral tax rates, we infer which bilateral payments could be tax motivated...
The Covid-19 pandemic increased the salience of childcare and focused attention on the allocation of public funds for it. Focusing on Italy, one of the first countries severely impacted by the Covid-19 crisis, we analyze how male and female politicians responded to the Covid-19 pandemic in the allocation of funds to childcare. To assess causality, we analyze close mixed-gender...
This article introduces the new International Tax Institutions (ITI) database, a unique collection of the most relevant statutory tax indicators for the whole world. It includes taxes on corporate and personal (earned and capital) income, consumption taxes, as well as anti-tax avoidance rules (thin-capitalization and earnings-stripping rules, CFC rules and transfer pricing...
Many countries subsidize low-income employments or small jobs. These subsidies and their phasing out can generate labor market frictions and distort incentives. The German Minijob program subsidizes low-income jobs. It generates a ‘Minijob trap’ with substantial bunching along the earnings distribution. Since 2003, the newly introduced Midijob subsidy aims to reduce the Minijob...
Concerns over the amount of corporation tax paid by firms in digitally intensive industries have led to efforts to reform corporate tax codes at national and international levels. Despite this, there is little evidence to suggest firms in digitally intensive industries pay less corporate tax. The paper examines the interplay of digitalisation, firm size and MNE status to...
Many of the largest and most influential industries in the global economy operate digitally as multi-sided platforms, catering to different groups who are connected through intergroup network effects. This paper provides a survey of the literature on the effects of taxing these firms via indirect and corporate taxes. It seeks to establish an understanding of why traditional...
The global rise in single-person households represents a significant demographic shift with profound implications for government policy, where the household serves as a primary unit of analysis. This study examines the implications of this trend on local government expenditure, focusing specifically on Korea, a nation grappling with unprecedented challenges such as low birth...
Independent and high-quality evaluations of government policies are an important input for designing evidence-based policy. Institutional frictions and lack of incentives to write such evaluations, on the other hand, carry the risk of turning the system into a costly beauty contest. We study one of the most advanced markets of policy evaluations in the world, the evaluations of...
The extent of redistribution in low-income developing countries, including in Africa, is very limited, which raises the question whether the tax rates of high-income individuals should be raised. A crucial parameter when considering a potential increase in progressivity is the response of taxable income to increased tax rates. In this paper, we evaluate a major personal income...
Tax enforcement actions have a direct revenue effect in the form of tax collected from (or refunded to) the contacted taxpayer. These enforcement actions also have an indirect effect on revenues by inducing a change in the future tax reporting of the contacted taxpayer (the “specific” indirect effect) and of the general population (the “general” indirect effect). This paper...
Using a standard macro model with overlapping generations in the manner of Blanchard–Yaari, we show that by broadening the labour supply on the extensive margin through longevity adjustment of the statutory retirement age, labour supply is likely to decrease on the intensive margin. However, this backlash effect depends on the specific design of the pension system. It is...
This paper presents first-round simulations of the tax revenues arising from the Pillar One Amount A proposal of the G20/OECD inclusive framework on base erosion and profit shifting for 2016–2025. Amount A aims at revising taxing rights on multinational enterprises with at least €20 billion in revenue and profitability above 10%. We consider the latest available Pillar One Amount...
Technical assistance and increased use of ICT in tax administrations hold promise for greater revenue collection. Yet, the evidence on how these activities work in the real-world circumstances of developing countries is scant. The paper attempts to fill this gap by evaluating an intervention undertaken jointly by the Finnish and Tanzanian revenue administrations. The programme...
This paper provides a brief and accessible guide to the Marginal Value of Public Funds (MVPF) and offers some new perspectives on its application to the evaluation of tax policy. Specifically, the paper aims to: (i) bridge the gap between traditional uses of the Marginal Cost of Public Funds and the growing interest in the MVPF approach, (ii) highlight the crucial link between...
We analyze the reporting response to an ambitiously targeted government support scheme for Norwegian businesses at the very start of the Coronavirus crisis in 2020. Our empirical design is based on cross-checking self-reported data in the applications for support with administratively reported data used for VAT. We find strong evidence that strategic misreporting was present but...
The key question addressed in this work is whether financial distress recently experienced by several Italian municipalities can be at least partially imputed to the inadequacy of the financial resources they suffer compared to the needs of their populations and their territories. Starting from a multidimensional definition of financial distress, we investigate this issue by...