This paper documents the rise of corporate tax-base narrowing measures in the EU using a novel dataset covering both tax rate and tax base reforms implemented between 2014 and 2022. Our findings indicate a shift away from the ’cut rate – broaden base’ approach, as governments increasingly...

Tax expenditures are tax relief measures targeted at some socially desirable activities or specific groups of taxpayers. This paper reviews issues related to tax expenditures in the EU and presents some stylised facts related to tax expenditures in personal income taxation (PIT), value-added...

Corporate taxation assumes a pivotal role in all economies, as it constitutes a substantial source of revenue for governmental agencies tasked with fulfilling social obligations. Nonetheless, modifications in financial policies and the unpredictability of macroeconomic factors result in a...

This paper examines how the economic growth in advanced countries is affected by various types of tax revenue. Ten developed countries were chosen based on the Human Development Index, and data from 1995 to 2020 were examined using the feasible generalized least squares method. A total of 260...

What is the impact of taxation on growth? Is it supported by specific taxes and harmed by others? We use an error correction model to study the relationship between the tax composition and GDP growth in the EU27 Member States over the period 1995-2019. Under the constraint of revenue-neutrality,...

In accordance with the purchasing tax-deduction method and the receipt-based value added tax (VAT) system, the same transaction can be recorded by two firms, which creates self-enforcement properties, thereby restraining tax avoidance. Using the Replacement of Business Tax with VAT reform in...

This study investigates the effect of a Turnover-based Corporate Income Tax (TbCIT) on corporate risk-taking. TbCIT is a simplified presumptive tax levied on a firm's turnover and commonly applied to SMEs and hard-to-tax income. Using a rich sample of Indonesian firms for the years 2009 to 2021,...

This paper documents the rise of corporate tax-base narrowing measures in the EU using a novel dataset covering both tax rate and tax base reforms implemented between 2014 and 2022. Our findings indicate a shift away from the 'cut rate - broaden base' approach, as governments increasingly align...

Despite the large fiscal footprint of corporate tax incentives, limited causal evidence exists on their impact on economic outcomes. This paper helps fill this gap by exploiting the phasing out of a large income tax exemption scheme for export- oriented firms in Tunisia. Using data on the...

This note presents the results of the analysis of Value Added Tax (VAT) and Corporate Income Tax (CIT) compliance and policy gap estimates in Indonesia between 2016 and 2021. The study's objective is to quantify the magnitude of the tax gaps and to identify drivers behind the low efficiency of...

The effective corporate tax rate is a critical measure reflecting a nation's fiscal policy and its attractiveness to foreign investment. This study investigates the relationship between macroeconomic determinants and effective corporate tax rates, focusing on Slovakia's competitiveness within...

This Perspective discusses the fiscal and economic impacts of the global minimum tax; currently being implemented by many countries around the world. The global minimum tax is expected to raise tax revenues, reduce profit-shifting, and allow jurisdictions to strike a better balance between...

This study examines the impact of vertical interlock on corporate tax avoidance in business groups using data on Chinese listed companies from 2003 to 2019. We find that vertical interlock has a negative impact on corporate tax avoidance. Our result is robust to alternative measures,...

We study how the OECD transfer pricing guidelines aimed at curbing tax-motivated transfer pricing practices affect investment incentives. Our theoretical model integrates the different OECD's transfer pricing methods into the tax planning cost function of an MNC to evaluate how the choice of...

A broad empirical literature examines the impact of corporate taxes on firms' investment, location, and tax avoidance behaviour. Other corporate adjustment margins have received little attention. In this paper, we use administrative customs and tax return data from South Africa to demonstrate...

We provide novel evidence on the incidence of business taxes using comprehensive survey and experimental data from German firms. Leveraging randomized variation in hypothetical tax changes, we find that the incidence of profit taxes is highly asymmetric. Tax decreases are more likely to benefit...

The World Bank Investment Climate Unit, in collaboration with the Global Fiscal Policy and Sustainable Growth Unit, developed a Corporate Income Tax (CIT) Incentives Database to address data gaps and meet emerging needs for more information on the prevalence and role of incentives. The Database...

The paper advances a framework to take stock of CIT incentives across two interrelated policy objectives: stimulating investment in green sectors and processes; and/or encouraging divestment from dirty sectors. It distinguishes three categories of CIT incentives related to the green agenda: (i)...

We extend Trade-Off Theory (TOT) by assuming that EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), rather than EBIT (Earnings Before Interest and Taxes), follows a Geometric Brownian Motion (GBM), and we thus consider the role of tax depreciation allowances (TDA) in...

We examine changes in the corporate tax rate across the U.S. and their implications on the pricing and quantity of loans. We find that the cost of credit decreases (increases) by approximately ten (nine) basis points in response to a one percentage tax cut (hike). The estimates are more...

Effective policymakers must balance the demands of formulating a corporate tax system that raises revenue and spurs economic activity (e.g., investment) while promoting a "level playing field" across firms. Balancing these tradeoffs has likely caused tax systems to become more complex over time,...

Corporate profit shifting to tax havens negatively impacts corporate tax revenue, particularly in low-income countries. Two studies published in 2016 and 2018 have proven this correlation using data from 2013. In this paper, I use the most recent version of the UNU-WIDER Government Revenue...

We discuss corporate tax effects on multinationals’ R&D. Theoretically, we find that a host country’s tax increase may boost local R&D expenditure: while R&D becomes deductible at a higher rate, this higher rate may not apply to all R&D returns. First, as R&D creates a public good within the...

The international agreement on a corporate minimum tax is a milestone in global corporate tax arrangements. The minimum tax disturbs the equivalence between otherwise equivalent forms of efficient economic rent taxation: cash-flow tax and allowance for corporate equity. The marginal effective...

Using a narrative identification of tax changes in the United States over the post-WWII period, we document that a temporary cut in corporate income tax rates leads to a long-lasting increase in innovation and productivity, whereas changes in personal income tax rates only have short-term...