H32 - Fiscal Policies and Behavior of Economic Agents: FirmReturn

The goal of this paper is to examine the methodology, used by authors Mackie-Mason and Gordon for measuring effects of corporate tax on business organization form, which is connected to issue of double taxation, in the United States and find out, if the same approach can be applied on business environment in the Czech Republic. Eventually recommend changes for this methodology to be more suitable for this environment taking into account its specific factors.

The aim of the paper is to empirically examine the scale and the distribution of the tax advantage which emerges when provisions for future liabilities are deductible from taxable earnings, as proposed in the CCCTB concept. The paper concentrates on Poland - a country for which the expected economic effects of this proposal are still controversial and ambiguous. The results are also relevant for other European countries in which provisions are currently treated in a different way for financial and for tax accounting purposes. The analysis is based on the information from financial statements of 250 companies from the period 2007 - 2012. The microsimulation method in a multi-period setting is implemented. The results show that in case provisions are deductible for tax purposes the tax due decreases by 5,6 % or and by 9,8 % on average, depending on the liquidity situation of companies. The tax advantage is distributed differently among companies. The majority of taxpayers is expected to gain from the reform. Only for single companies there is an increase in tax, induced by the existing, restricted tax loss carry forward rules. The median change in CIT amounts to -1 % and -2 %.

The paper concentrates on tax aspects of merger with a special attention to cross-border ones. Despite the fact that Directive, which set the conditions for mergers, business investment and exchange rate of shares, was issued 24 years ago, unified treatment of tax aspects hasn't been reached yet. This paper is based on research of tax rules transposed from Tax Merger Directive, 83 into law systems of EU member states. This Directive was used for tax treatment of domestic mergers as for cross-border ones. Although the Directive has been transposed, there are differences in tax treatment among member states. The paper shows inability of solving the problem by Directive as coordination of the tax and legal regime of several jurisdictions are usually not adapted to each other and examples when the European Court of Justice is asked for treatment. Different approaches to discussed issues are presented in the paper.