American nonprofit organizations receive favorable tax treatment, including tax exemptions and tax-deductibility of contributions, in return for their devotion to charitable purposes and restrictions not to distribute profits. Recent efforts to extend some or all of these tax benefits to for-profit companies making social investments, including the creation of the new hybrid nonprofit/for-profi...

The Estonian Tax and Customs Board (MTA) has identified that Estonia is losing over 220 million euros a year due to avoidance of value-added tax (VAT). The parliament proposed legislation that makes companies declare their purchase and sales invoices for automated risk analysis and fraud detection. The law was vetoed by the Estonian President on the grounds of confidentiality breach and unneces...

This paper investigates the effect of horizontal corporate group (keiretsu) affiliation on effective tax rates in Japan. After controlling for variables that affect corporate income taxes, keiretsu firms have lower effective tax rates than independent firms. These findings are attributed to political power and the unique corporate governance mechanism of keiretsu groups. Furthermore, horizontal...

A dividend imputation tax system provides shareholders with a credit (for corporate tax paid) that can be used to offset personal tax on dividend income. This paper shows how to infer the value of imputation tax credits from the prices of derivative securities that are unique to Australian retail markets. We also test whether a tax law amendment that was designed to prevent the trading of imput...

The tax gap is the difference between the tax collected and the tax that would be collected if all individuals and companies complied with both the letter and the spirit of the law. The letter of the law is the literal interpretation of tax legislation. The spirit of the law is the intention of Parliament in legislating on tax. In contrast to the letter of the law, which implies a literal legal...

We use the occasion of a change in tax policy that raised the tax rate for many of the listed companies in China to examine tax-induced earnings management (TEM) from the perspective of political connections. We find that when the tax rate increased, only those affected firms with politically connected management engaged in TEM. This suggests that, in addition to motivation for managing earning...