Journal of Tax Research
Year:2009 | Volume:NEW SERIES - 17 | Issue:5 (53)|Papers Count:9

The present paper seeks to explore the factors involved in the difference between the taxable income declared by business corporations and the taxable income assessed by tax authorities. To this end, data of business corporations’ performance (data of the fiscal years 2005 and 2006 being recorded in their statuary books) were gathered from tax cases filed with West Tehran Tax Affairs Head Office and, through making use of relevant statistical methods and software, were put under investigation. The findings obtained indicate that there is a significant difference between the declared and assessed taxable incomes. Moreover, the factors involved in this difference are all, in isolation, significant. In order to show the degree of importance of each factor, the proportion of each variable in the overall difference were calculated and Freidman Test was used.

This paper aims at presenting a theoretical explanation of economic factors involved in the emergence and development of tax evasion in the VAT system. According to the model proposed here, it is inferred that an increase in the cost payments subject to VAT will result in an increase of tax evasion or a decrease of tax compliance. Moreover, an increase in the probability of being caught or an increase in the sanction rate (as for cases where the tax files are not investigated) will result in an increase of tax compliance level and a result, in a decrease of tax evasion. The findings obtained, having supported theoretically, can help the Iranian VAT authorities in adopting a variety of appropriate policies to prevent tax evasion.

Fiscal policies have an effective and dynamic role in the process of economic development. They are an almost inseparable part of countries’ economic processes. The efficiency of fiscal policies is a function of proper arrangement and combination of fiscal policy instruments namely, the government revenues and expenditures as well as their flexibility and their being effective on economic goals. In Iran, however, fiscal policies are not sufficiently efficient due to the significant role of oil revenues in the government budget and insufficient tax revenues alongside with inflexibility of government expenditures. The inefficiency of fiscal policies has, in its turn, back grounded the role of tax revenues in decreasing the government budget deficits. This study aims at examining the relationship between budget deficit fluctuations and tax revenues using a structural VAR approach. By imposing long-run restrictions on a VAR model, four structural shocks have been identified: oil income shock, real product shock, tax shock and government expenditure shock. The results show that an impulse in the tax revenue decreases the economic growth (a result which is in line with economic theory) but this negative effect converges to zero in the long-term. Positive impulses both in the oil income and the real product increase the tax revenue levels. Moreover, the government expenditure shock leads to an increase in tax revenues after three periods of time. The results of accumulative impulse response functions show that positive shocks both in oil income and tax revenue decrease the budget deficit levels but the decreasing effect of an oil income shock on the budget deficit is larger than the tax revenue. A variance decomposition of variables shows that real product shocks and tax revenue shocks are the main sources of fluctuation of tax revenues; but government expenditures shock dose not have an important role in explaining tax revenue changes. The high degree of dependency of the government budget on oil revenues, unimportant role of taxes in budget deficit changes and great effects of structural factors in budget deficit fluctuations are main outcomes inferred from the variance decomposition of budget deficit.

In this paper, depreciation allowances stipulated in the Iranian tax laws are compared with those of some selected countries. Buildings, some assets used in the energy sector and intangible assets were selected among fixed assets for comparison purposes. The rationale behind selecting the above-mentioned assets consists of such issues as the large share of buildings in the total assets of most firms, the large share of the energy sector in the Iranian economy as well as the overall importance of intangible assets and their being neglected in most studies. It is difficult to compare depreciation allowances on a cross-country basis due to the diversity of calculation methods. In order for the comparison to be possible, the nominal percents of asset recovered costs in periods of 5 and 10 years were used, instead of rates or methods of depreciation. The results show that as compared with most of countries in question, the Iranian tax laws provide more incentives in cases of such assets as buildings, patents and licenses and weaker incentives for the energy sector assets and goodwill. The findings also indicate that the high inflation rates in Iran could reduce the incentive effects of depreciation allowances. The paper has ended up in the presentation of some policy recommendations and some proposals for the adjustment of depreciation rules in Iran.

The present paper aims at exploring how to develop legal requirements for improving the access to banking information and for the exchange of tax and banking information. To this end, I have resorted to a library work within a comparative framework wherein I have briefly studied the relevant guidelines issued by OECD and have tried to investigate the current Iranian banking and taxation systems from the viewpoint of information exchange in order to compare these systems against international standards. Research findings obtained have finally resulted in some recommendations for improving the existing procedures in Iran.

The present research aims at exploring the impacts of replacing VAT for company income tax (CIT) in non-producing companies of Golestan Province. To this end, the taxable income of a sample of 283 companies was extracted and the valueadded of each company was estimated through the accumulative method bearing in mind four rates of 1.5, 3, 7, and 10. Since the research data was not normal, we have made use of non-Parametric Wilcoxon Test and Friedman Test. The findings indicate that the replacement of VAT (with rates of 1.5, and 3) for CIT in nonproducing companies will result in a decrease in the provincial tax revenues while the replacement of CIT with two VAT rates of 7 and 10 will lead to an increase in tax revenues. So, if the government decides to substitute the modern, revenue generating and transparent system of VAT for the current system of CIT, it is recommended to use VAT rates of 7 and 10, the latter being internationally supported.

Nowadays, money laundering is considered as one the major financial crimes in the world and consists of converting or transferring a property for the purpose of concealing its illegal source or of assisting any persons engaged in committing such crimes. Tax evasion is a sub-category of money laundering and, in many countries, both tax evasion and money laundering are pervasive. So, tax system reform is one of the most important strategies for fighting against money laundering. In the Iranian economy, too, there has been an increasing focus on fighting against money laundering since a few years ago. In addition to the approval of the Act for Fighting against Money Laundering by Islamic Consultative Assembly in 2007, the implementation of some tax plans and laws have already assisted or will assist the realization of this goal. Among these plans and laws, one may refer to the implementation of VAT system, the obligation imposed on the issuance of invoices, Tax Automation Reform Administration (TARA) plan, and the assessment of feasibility of reintroducing the aggregate income tax system.