H21 - Taxation and Subsidies: Efficiency; Optimal TaxationNávrat zpět

In accord with international transfer pricing regulations, the borrower's creditworthiness is the main factor to be reflected in valuation of cross-border loan transactions between associated enterprises. However, trouble invariably arises for small and medium-sized enterprises that do not have an assigned credit rating. The aim of this paper is to determine the most reliable predictors of a company's credit rating for European entities facing missing rating coverage for the purpose of transfer pricing. Based on 2015-2019 data sourced from the Orbis database, the study examines key financial ratios and non-financial information that could be instrumental in reconstructing a long-term rating category of a company assigned by Moody's Investors Service. The results identify interest coverage as the most useful predictor. Therefore, a law-approved and tax-acceptable approach to pricing of financial transactions between unrated parties (i.e., without credit rating) should preferably exploit interest coverage as a link to the otherwise missing ratings.

The paper presents the volume of debts incurred as part of non-insurance social security benefits in the Czech Republic from 2016 to 2020 and defines the structure of these debts by individual types of non-insurance social security benefits, where 25% is attributable to parental allowance, followed by housing allowance (17%) and subsistence allowance (20%). The analysis deals with the number of debts broken down into paid, collected, settled by other means, written off for uncollectibility or extinction of the right. The study works with unique data obtained by summarisation from the appli-cation programmes used by the Labour Office of the Czech Republic, which showed a continuous decrease in total identified claims by 46% between 2016 and 2020. An analysis of time series and a regression and correlation analysis are performed in the paper. These methods confirm a decreasing trend in the number of total debts and a decreasing proportion of paid debts over time, in contrast to the ratio of outstanding debts, which has been increasing over time. Lastly, they also identify variability in the structure of social security benefits, i.e., inconsistency in the share of individual benefits over the period under review. Social expenditures are fundamental to state spending, but addressing their potential misuse is a sensitive political issue. From an economic perspective, this paradoxical situation leads to overlooking potential resources that could be potentially available through the elimination of purposeful exploitation of the social system, leaving the question of the frequency of purposeful claiming unanswered. Any potential political decision to reduce social expenditures, without an economic evaluation of the frequency and volume of purposefully claimed benefits from the social system, may not be optimal.

The main objective of this paper is to analyse which factors have an impact on the allocation of Czech foreign direct investment (FDI) in EU countries. Multivariate panel regression with general macroeconomic variables and time dummy variables using Eurostat data for the period 2013-2019 was performed. Indicators of a tax system promoting and/or enabling aggressive tax planning, and other more general indicators were included in the model. This paper provides the opposite view by analysing the flow of FDI from a transition economy to more advanced economies. The results suggest that Czech FDI is placed in developed countries with lower statutory corporate income tax rates, and with which the Czech Republic has a larger volume of foreign trade. Furthermore, it is confirmed that the factors affecting allocation of Czech FDI in the EU are the distance between the capital cities and the existence of the so-called patent box regime.

This paper deals with the personal income tax gap in the Czech Republic and Slovakia. One of its sections specifically addresses the relation between the tax gap and various forms of tax evasion concerning the personal income tax, subsequently setting them in the context of its calculation. The key implication of this paper is the estimation and comparison of the personal income tax gap between the Czech Republic and Slovakia using the income method, broken down into specific types of tax evasion, namely (i) unreported income subject to payroll taxes, (ii) misreported tax base by self-employed individuals (i.e., sole proprietors of unincorporated businesses), and (iii) hidden employment. In line with the existing academic literature, a greater magnitude of the tax gap was found for income reported by self-employed persons (i.e., sole proprietors of unincorporated businesses) than for persons with income from dependent activities (i.e., employment and similar legal concepts).

The aim of the paper was to propose a progressive corporate taxation in the Czech Republic and to evaluate whether the introduction of the progressive corporate taxation could straighten the position of Czech taxpayers in the view of the tax burden and equity of taxation. We designed and evaluated a sliding progressive taxation with 5 tax bands. Panel regression was also applied to estimate the taxpayers' response to changes in the statutory tax rate. According to the proposed progressive corporate taxation, micro-enterprises would face 13.59% of tax burden, small enterprises 17.40%, medium-sized enterprises 20.18% and large entities 22.42%. The results show that increased fairness of taxation and a decreased regressive effect of taxation would be reached through the progressive corporate taxation. However, due to the increased mobility of profits, it is assumed that the fairer position may be disrupted and the progressive corporate taxation itself would only increase the tax collection, stabilization function and tax distribution function as a result.

There is growing interest in property prices and price trends at national and regional levels. The paper aims to find links between selected demand and supply determinants based on a panel regression of regional data during 2000-2017 and to contribute to further discussion of the role of these determinants. The main output of the paper is the identification of regional differences in the direction and strength of the influence of individual determinants on the flat price. Regional differences were identified in the mid-year population, the number of inhabitants per completed flat, the number of applicants per job, the amount of household disposable income and the divorce rate. In Prague, the first three determinants were significant. The validity of the research is limited by the fact that some potentially significant data are not statistically monitored and data aggregated at the level of regions do not reflect local conditions. The output of the analysis shows determinants that explain the price variability and indicates unused economic policy instruments.

The paper deals with the estimation of the Value Added Tax Gap in the Czech Republic during the years 2009-2014. In the introduction, the term of Value Added Tax Gap and related terms are defined following available approaches and different methods of the Value Added Tax Gap estimation are presented. In the analytical part of the paper, the Czech Value Added Tax Gap is measured using three applicable methods - the decomposition of the gap on the VAT, the identification of transactions subject to VAT and the adjustment of GDP. In this part the exact procedure for possible replication of the research is declared and the comparsion of the results reached for the Czech Republic using different methods of Value Added Tax Gap estimation is carried out.

This paper uses a parametric statistical simulation (Monte Carlo) model to investigate and com-pare the effective lifetime tax burden on variable incomes for private-sector employees in the Czech Republic, Slovakia, Poland and Hungary, based on current rates and calibrated against actual income distributions. It is shown that the existing Czech system is highly inefficient, lacking horizontal as well as vertical equity, and this is aggravated by increased income volatility. On the other hand, higher income risk in all countries, except Hungary using flat tax, results in less progression than expected, primarily due to the existence of a minimum wage, which effectively serves as insurance, and which the dynamic model captures as a system feedback. This finding may contribute to a reassessment of existing assumptions on the detrimental effect of progressive tax systems on the incentives of individuals to undertake risky decisions, such as investments in human capital.

The paper shows the fundamental problems in the area of investment funds in terms of tax burden with special regard to closed-end real estate funds. Based on the characteristics of administrative costs, the study shows that closed-end real estate funds do not behave as investment funds. The study proves that closed-end real estate funds behave more like businesses that are hiding behind investment funds. This conclusion is confirmed on the basis of extensive research, by collecting data from annual reports of independent auditors of all types of funds. More than 51 percent of closed-end real estate funds indicate very high administrative costs and profit reduction by more than half. More than 17 percent of funds decrease their taxable income through higher administrative costs, and thus reduce their tax base to zero or to an absolute minimum. The study points out that if there was a tax-neutral environment in the area of the investment funds in the Czech Republic and investment funds paid 19% tax on corporate income, tax revenues for the state budget would increase by CZK 784 million per year.

Investors' decisions are not based only on the statutory tax rate in the country, but also on a range of other aspects, such as depreciation of fixed assets, treatment of foreign source income, property taxes paid by firms, as well as treatment of dividends paid by companies and taxes on wealth and capital gains at the level of individuals. These aspects are incorporated into the model created by the Centre for European Economic Research (ZEW). This model provides a comprehensive look at the issue of tax competition, therefore the paper deals with describing and explaining its construction. The benefit is description of the effective average tax rate (EATR) in the Slovak conditions, evaluation of its development and changes by the different types of assets and the ways of financing, as well as forecasting its level based on the change in the corporate income tax rate. The indicator, which represents the level of capital taxation, is complicated to determine. EATR means the significant progress on this issue.

The paper presents methods and results of tax compliance costs (TCC) in the Czech Republic and uses the econometric analysis to show which factors affect their size at the level of individual taxpayers. The results of the author's measurement of the TCC for the Czech Republic are following (% of tax revenue): VAT 4,5; CIT 5,5; PIT on employees 3,0; PIT on self-employed 34,4; SSC 1,5-3,5. The econometric analysis of the factors affecting the level of TCC shows the regressive character of these costs. However the decreasing of a relative value of TCC gradually slows down for large taxpayers. The analyses also show statistical signifi cance of the relationship between TCC and costs for external tax advisory. Hiring external actors is therefore more expensive than similar activities ensured by own employees (in- house service). Firms that consider the tax system is complex have on an average higher relative TCC than others. The opposite relationship was identifi ed for tax administration: fi rms that are less satisfi ed with administrators have lower relative TCC.

There are currently held tough discussions among economists and policy makers on the most appropriate form of taxation that would be fair, simple, enough incentive to wage work and entrepreneurship and withal also providing sufficient revenue for the state to fund the services provided to citizens. In this debate two opposing views on the basic form of this system stand against each other, namely, whether it should tax the income in a progressive manner, as is the case with tax systems applied today in most countries, or in a proportional manner, which has been introduced in a limited extent in several countries, especially in Central and Eastern Europe. This article provides a brief description of the basic characteristics of both these approaches and summarizes the main arguments presented by their proponents and opponents. The next section describes the different variants of a proportional system, also known as a flat tax system, some of which currently exist only in the yet unrealized proposals, and in the end, then compare their pros and cons.

In this paper we are presenting an analysis of shift of tax burden from income onto consumption. The analyzed consumption tax is value added tax, while destination principle is applied. The result of analysis is finding that the contemporary tax policy in the Czech Republic is suboptimal from the point of view of tax burden distribution between production factors and consumption. Theoretical findings are confirmed by analysis of data from European countries. Every percentage above the EU27 average of consumption taxes share on total tax quota results into increase of GDP growth by 0,04% to 0,05% p.a. The Czech political "elite" determines the fiscal policy to be popular and recent surveys confirmed Czechs' dislike towards consumption taxes, especially value added tax. Therefore the huge cost of the Czech tax system - high taxation of wages and low value added tax - can be viewed also as agency cost.