Causal effects of corporate taxes on private firms' earnings management: a regression discontinuity analysis

PurposeThe authors emphasize the information role of earnings management and how it may be used to “mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers.” Specifically, the authors examine the causal effect of tax incentives on private firms' earnings management based on a corporate tax reform in China.Design/methodology/approachIn December 2001, China implemented a tax collection reform which moved the collection of corporate income taxes from the local tax bureau to the state tax bureau. This reform results in exogenous variations in the effective tax rate among similar firms established before and after 2002. The authors apply a regression discontinuity design and use the generated variation in the effective tax rate to investigate the impact of taxes on firm earnings management.FindingsThe authors find that tax reduction substantially increases private firms' incentives to manage earnings information, and such effect is particularly pronounced when tax collection intensity and government interventions are low. Further evidence shows that lower tax rates stimulate firms' investment, inventory turnover and recruitment of skilled human capital. A plausible mechanism is that private firms signal a promising outlook by managing earnings to attain greater financing and improve investment/operation levels when financial constraints are removed.Originality/valueFirst, the authors present the causal effects of tax incentives on private firm's earnings management, which deepens the authors’ understanding on the determinants of firm's earnings information production. Second, this study also contributes to the literature on tax-induced earnings management. Third, the authors believe that this topic offers clear policy implications and would be of particular interest to regulators.

The Quality Effect of Auditing on Tax Compliance: Evidence from Tunisian Context

Taxation is the subject of complex and evolving regulations. it has become one of the major concerns of any business to better manage its finance, the responsible for corporate governance give an importance to the fiscal in the strategy and management of the company. In recent years, the importance of taxation in the financial and accounting environment is motivated to study the impact of control and transparency of infomation affected by audit quality. We study a sample of 19 companies between 2013 and 2017, the result shows that audit quality improves tax compliance in the Tunisian context while measuring tax evasion by the difference between the statutory tax rate and the effective tax rate. This study finds that tax evasion in Tunisian firms may have decreased with better audit quality.

Penyesuaian Lapisan dan Tarif PPh Orang Pribadi: Agresif atau Progresif?

In 2022, Indonesia would apply changes in tax brackets and rates for personal income tax. This adjustment is based on the Article 17 Paragraph 1 Tax Harmonization Law Number 7 of 2021. The government tries to accommodate the needs of the community through formulating process of this regulation. In particular, it provides convenience to the lower-middle income community and encourages an even distribution of income. People belonging to the high wealth income will be subject to the highest tariffs that have just been set through this law. Through a qualitative descriptive method in which data collection is carried out by taking from literature review; law, articles, books, and website, the author tries to analyze changes in brackets and rates of personal income tax. This study presents illustrations of the calculation to explain the difference in the amount of income tax payable before and after the implementation of the Tax Harmonization Law. In addition, the analysis of the principles of equity and democracy on the adjustment of layers and tax rates is elaborated in this paper. The results obtained explain that with the application of the new tax rate, taxpayers get a tax burden relief because the tax expense is lower due to the broadening of income range. However, wealthy taxpayers will pay more taxes because of the higher tax rates. This condition proves that the new tax rate supports vertical fairness in the taxation system. In addition, the implementation of regulations related to tax rates adjustment provides evidence that the implementation of democracy has been implemented. The adjustment of tax brackets and rates has a positive impact on the community and the government so that the allocation of tax revenues can run optimally to support the welfare of the community.

Fiscal Policy and Optimal Taxation in Sierra Leone: Testing for Tax Smoothing Hypothesis

This paper empirically investigate whether the budget imbalances in Sierra Leone over the review period is consistent with optimal tax policy. The procedure involves testing if tax smoothing hypothesis hold for Sierra Leone. In this regard, three different empirical approaches were performed. Firstly, I examine the random walk property of the tax rate. The null hypothesis of non-stationarity of tax rate could not be rejected, which implies the tax rate follows random walk. Second, I examined whether changes in tax rate is predictable by regressing changes in tax rate by its own lagged values. The result shows that tax rate is unpredictable, as changes in tax cannot be determined by its lagged values. Finally, a VAR model was employed to examine whether tax rate can be predicted by its own lagged values together with changes in the government spending rate and the growth rate of real GDP. The results indicate that all the variables employed were found not be significant is predicating the tax rate. Overall, all the empirical estimations support the existence of tax smoothing over the sample period and that the budget inbalances over the review period is consistent with optimal tax policy.

Research on the Individual Income Tax-Deferred Commercial Endowment Insurance from the Perspective of Fairness

In order to alleviate the pressure of the basic endowment insurance system, China has implemented the policy of individual income tax-deferred commercial endowment insurance (IITDCEI) and actively explored the development path of individual supplementary endowment insurance. At present, the same tax rules are adopted for different income groups. Considering that people's income gap is large, different income groups enjoy different degrees of tax preference under this policy, which may cause social injustice and increase the gap between the rich and the poor. Based on this, we propose a new optimization scheme by adjusting the tax rate and the maximum premium limit of the insurance amount so as to coordinate the interests of low-, medium-, and high-income subjects and balance the degree of tax preference among the three subjects. At the same time, we also change the two parameters of the predetermined interest rate and retirement age, and compare the changes of the tax preference under the old and new schemes, and provide corresponding countermeasures for the implementation of the IITDCEI policy.

ANALISIS PENGARUH PERENCANAAN PAJAK TERHADAP NILAI PERUSAHAAN PADA PERUSAHAAN SEKTOR PERTANIAN YANG TERDAFTAR DI BURSA EFEK INDONESIA

Penelitian ini bertujuan untuk melihat dan menganalisa pengaruh perencanaan pajak terhadap nilai perusahaan pada perusahaan pertanian yang terdaftar di Bursa Efek Indonesia. Perencanaan Pajak dalam penelitian ini diukur dengan Effective Tax Rate (ETR) sebagai variabel independen dan Nilai Perusahaan diukur dengan Price Earning to Ratio (PER) sebagai variabel dependen. Sampel dalam penelitian ini berjumlah 15 perusahaan pertanian yang terdaftar Bursa Efek Indonesia periode tahun 2015-2019.Teknik analisis data dalam penelitian ini adalah analisis data kuantitatif menggunakan software statistik 20. Berdasarkan pengujian hipotesis dalam penelitian ini hasil temuan penelitian dapat disimpulkan bahwa Pengujian yang telah dilakukan ini menunjukkan bahwa H1 diterima dan H0 ditolak artinya perencanaan pajak berpengaruh positif dan signifikan terhadap nilai perusahaan nilai t-hitung 2,022 sedangkan t-tabel 1,993, t-hitung > dari t-tabel dengan tingkat signifikasi 0,047 sehingga dapat disimpulkan bahwa variabel perencanaan pajak berpengaruh positif dan signifikan terhadap nilai perusahaan.

Tax Avoidance, Tax Risk, and Corporate Governance: Evidence from Korea

This study examines the association between the effective corporate tax rate and the volatility of future effective corporate tax rates in Korean companies. We analyzed the effect of corporate governance on the association between tax avoidance and tax risk. Our sample is comprised of all the firms listed on the Korea Composite Stock Price Index market. We measure each firm’s tax avoidance as GAAP ETR, Cash ETR, and BTD, and use the corporate governance rating of the Korea Corporate Governance Service to measure corporate governance. Our results show that the volatility of the effective corporate tax rate and the effective corporate tax rate would have a significant negative association. Our results show that tax risk decreases when the corporate tax avoidance level increases and the tax risk increases when the corporate tax avoidance level decreases. In addition, we find that the better the corporate governance structure, the higher the level of supervision and control of managers, thereby mitigating the impact of tax evasion on future corporate tax risk. The findings of this study regarding tax avoidance and corporate governance are important for investors because tax risk can significantly affect investor welfare.

Pengaruh Fixed Asset Intensity, Karakter Eksekutif, dan Leverage terhadap Penghindaran Pajak

This study aims to examine whether the intensity of fixed asset, executive character, and leverage have an effect on tax avoidance. Tax avoidance is an activity to avoid paying taxes legally in accordance with the provisions of the legislation carried out by the company in order to be able to pay the minimum tax possible to the state treasury. Population in this study were manufacture companies listed in Indonesia Stock Exchange (IDX) during the period 2017 to 2020. The sampling technique used purposive sampling and obtained 54 companies, so that the total sample obtained for 4 years was 216 research samples. This study used quantitative method and the analysis by data panel regression. Tax avoidance proxy by cash effective tax rate (CETR) which is cash paid in cash for pay taxes. Partially shows that the intensity of fixed assets has no effect on tax avoidance, executive character has a significant positive effect on tax avoidance, and leverage has no effect on tax avoidance. While the results of this study indicate that the intensity of fixed assets, executive character, and leverage simultaneously have a significant effect on tax avoidance with the value of Prob (F-statistic) 0.000000. Result of Adjusted R-square shows of fixed Asset intensity, executive character, and leverage have a significant effect on tax avoidance is 0.3343 or 33.43%.

Pengaruh Pengungkapan Tanggung Jawab Sosial Perusahaan, Kepemilikan Keluarga, dan Tata Kelola Perusahaan Terhadap Penghindaran Pajak

Perpajakan adalah hal penting yang dapat menambah pendapatan negara tetapi mengurangi pendapatan perusahaan atau pajak. Oleh karena itu, penghindaran pajak dilakukan oleh manajemen perusahaan untuk memaksimalkan pendapatan perusahaan mereka. Penelitian ini dilakukan atas dasar untuk memeriksa efek dari pengungkapan tanggung jawab sosial perusahaan, kepemilikan keluarga, dan tata kelola perusahaan pada penghindaran pajak. Rasio penghindaran pajak perusahaan dalam penelitian ini diproksi dengan Effective Tax Rate (ETR) dengan membagi jumlah beban pajak dengan pendapatan sebelum pajak. Pengungkapan tanggung jawab sosial perusahaan di proksi dengan indeks GRI dengan jumlah indikator 91 item pengungkapan, kepemilikan keluarga diproksi dengan persentase atas kepemilikan keluarga dalam satu perusahaan dan tata kelola perusahaan diproksi dengan indikator GG sebesar 15 item. 136 perusahaan di Bursa Efek Indonesia (BEI) periode 2016-2020 dipilih sebagai sampel penelitian memakai teknik purposive sampling. data yang digunakan dalam analisis ini adalah data panel yang diproses menggunakan SPSS dan Eviews. SPSS digunakan untuk mendeteksi data outlier yang kemudian akan diregresi menggunakan Eviews. Hasil uji menunjukkan kepemilikan keluarga dan pengungkapan tanggung jawab sosial perusahaan memiliki efek signifikan dan positif pada penghindaran pajak sementara variabel tata kelola perusahaan tidak punya efek pada penghindaran pajak. Kata kunci: Tata Kelola Perusahaan, Pengungkapan Tanggung Jawab Sosial Perusahaan, Kepemilikan Keluarga, Penghindaran Pajak