The largest part of indirect taxes is excise duty and there are significant loses in tax revenues from illegal trade of such goods as cigarettes due to the fact they are taxed with a very high excise duty burden and therefore there is a very high level of smuggling and illegal trade in all European Union member states. The expansion of the illegal market to the eastern borders of the European Union has been driven by an increase in excise duties on cigarettes, with subsequent price rises. Some of the previous studies were trying to find the best methodology for measuring the tax gap but there were indicate some difficulties and no common approach to estimate excise duty gap on cigarettes in the European Union. The authors are used a top-down methodology to designed a methodology how to estimate the excise duty gap on cigarettes. The objective of this article is to present an overview study of tax gap estimations, calculate the excise duty gap on cigarettes in Latvia, discuss the best practice how to limit the tax gap and protect the legal market, as well as develop recommendations for improvement of tax administration. The problem of protecting the legal market by stoppage and reduction of cigarettes smuggling is on the agenda of the European Union.
Tax policy, tax progressivity, and income redistribution from higher to lower income earnings are effec-tive economic measures for reducing inequality. The aim of the paper is to elaborate principles of measurement of consumption tax impact on income inequality or level of consumption tax regressivity. The objectives are to compare methods for evaluation of income and consumption tax impact to income inequality and to find the possible solutions how to measure consumption tax impact to income inequality. As result was developed a specially designed method which can be used for evaluation of consumption tax impact to income inequality, as well as an appropriate measure-ment is recommended.
The purpose of the article is to examine the similarities and differences between transfer prices and customs values due to the importance of international trade. The transfer price is the price set in the transaction between two related companies if they operate from different countries or customs territories. In this case, the customs burden comes in between and impacts the prices. As price should be an arm’s length based on customs and transfer price perspective, some issues could arise as the rules are not identical from customs and transfer pricing perspective.
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