Direct Taxation

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper provides an updated overview of tax incentives for business investment. It begins by noting that tax competition is likely to be a major force driving countries' tax reforms, and discusses tax incentives as a possible response to this. This is complemented by other arguments for and against tax incentives, and by an illustrative analysis of different incentives using effective tax rates. Findings from the empirical literature on tax incentives are also presented. Based on the overview of theoretical and empirical findings, the paper then suggests a matrix of criteria to determine the usefulness of different tax incentives depending on a country's circumstances.

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Most often, harmonization in the fiscal field concerned indirect taxation, and was aimed at assuring that national tax system do not interfere with the freedom of movement of goods, services, persons and capitals. There is no need to harmonize most part of direct taxation rules, as they are strictly enforceable the EU member states and they are thus an attribute of these states sovereignty. In the field of direct taxation, the community acquis mainly concerns the profit (company) tax and the capital tax and less the natural persons income tax.

This article is discussing comparative approaches to the  definitions of the e-commerce and e-payment. The  international taxation systems, direct and indirect taxation, entity isolation and "arm's length principle" applied to entity
isolation problem, resident-based and source-based taxation, destination and origin principles are the general tax concepts and issues covered in the content of article. Recognition of  server as a permanent establishment and "nexus" issues with regard to taxation of e-commerce is researched in context of different tax jurisdictions. Article points out the essence of electronic signature in e-commerce taxation as a solution to identification of taxpayer, jurisdiction to tax, and goods subject to taxation. In addition, the possible framework for establishing e-signature system is supported by both legal and technological suggestions which was provided in the article.

As European Union is a politic-economic union and one of the shared competence of the member states is economic cohesion, the union policies in terms of economy are required some regulations through a common alignment on behalf of member states. One of the ways through cohesion is coordination on tax policy strategies of European countries. The tax policy in EU consists of two components, direct taxation, which remains the sole responsibility of member states, and indirect taxation, which affects free movement of goods and the freedom to provide services. Even though the indirect taxes are mostly needed to a common cohesion between member countries, a need for coordination on direct taxation has recently occured as well. The aim of this study is to clarify EU’s sanctions on direct taxation through a common cohesion within the member states, and to evaluate the regulations constructed through EU policies on direct taxation in Turkey as a candidate member state. In this study, it is concluded that the EU policy on direct taxation is mostly concerned about the income and corporate taxes; and Turkey as a candidate member constitutes new regulations based on EU sanctions on taxation policy.