International tax efficiency considerations of contemporary corporate income tax reform

Gaber, Stevan and Gruevski, Ilija (2012) International tax efficiency considerations of contemporary corporate income tax reform. In: From Liberalization to Globalization: Challenges in the Changing World. First International Conference on Business, Economics and Finance, 1 (1). Faculty of Economics, Goce Delcev University - Stip, Macedonia, pp. 552-564.


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In international context, corporate taxes represent one of the major limiting factors of the international capital flows. High corporate tax rates might distort the investment decision on the international projects, and as a consequence, limit the international efficiency level. The corporate tax system can affect the company’s behavior in a number of ways: it might influence the choice of the sources of finance in favor of debt or retained earnings; high tax rates can trigger tax planning activities to shift taxable income from affiliates in high tax countries to affiliates in low tax countries; next, corporate tax can seriously affect market dynamics on mergers and acquisitions as well as the legal organizational form chosen by the firm; and it can also promote tax evasion as well as reduce the capital mobility, etc. In order to eliminate these negative effects, national countries might implement different tax measures, and therefore improve their corporate income tax efficiency level. These international tax efficiency considerations are part of the contemporary corporate income tax reform and they include some certain measures with great potential for this purpose such as: lower statutory tax rates, integration of corporate income and personal income taxation, introduction of the alternative corporate tax systems (the “Cash flow corporate tax system” and the “Сomprehensive business income tax system– CBIT”), implementation of the thin capitalization rules as well as the transfer pricing rules, etc. The article’s objective is to present the latest trends of the contemporary tax reform from an international corporate tax efficiency aspect. More precisely, the intention is to introduce the measures that might effectively decrease the possibilities for corporate income tax distortion in international context. Generally, the basic methodology is consisted of the analytical, comparative and the narrative method. For the purpose of better illustration on the conclusions, diagrams and scenario analysis will be used adequately.

Item Type: Book Section
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Economics
Depositing User: Stevan Gaber
Date Deposited: 11 Dec 2012 13:54
Last Modified: 11 Dec 2012 13:54

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