Decision model and analysis for investment interest expense deduction and allocation

Lee, Zu Hsu; Deng, Shuai; Lin, Beixin; Yang, James G.S.

doi:10.1016/j.ejor.2008.12.012

Cited by 3 publications

(1 citation statement)

References 41 publications

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“…This result is consistent with Graham and Tucker (2006) who claims that debt and non-debt tax burden could substitute each other. The research of Lee, Deng, Lin, and Yang (2010) identified the optimal tax strategy for investors using mathematical analysis and modelling and showed that (for certain income structures) the tax savings by deducting one-dollar investment interest expense (subset of a debt) may be more than the tax rate on the dollar of investment income that is offset. Martinez and Ramalho (2014) pointed out the indicator of debt per assets as one of the key indicators to measure the tax aggressiveness of Brazilian firms.…”

Section: Literature Reviewmentioning

confidence: 99%

Debt/Asset Ratio as Evidence of Profit-Shifting Behaviour in the Slovak Republic

Ištok

Kanderová

2019

Technological and Economic Development of Economy

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Companies use different methods and techniques to transfer taxable profits to tax havens. The paper aims at analysing the influence of the relocation of the registered office of Slovak companies in tax havens in relation to the leverage ratio and the ratio of debt per sales and to verify the use of debt by Slovak firms in the transfer of profits. In evaluating these indicators, we chose two approaches. We first analysed the change of indicators only for those firms that transferred their seat to lower tax jurisdiction. The analysis is complemented by a different view, when the selected indicators are compared to a group of businesses with a link to tax havens and with no link to tax havens. Our empirical results clearly indicate the tendency that firms in Slovakia benefit from the possibility of transferring profits to lower tax jurisdictions via debt channels. The median values of debt ratio after the transfer of the registered office to tax havens increased by 7.8%. The median value of the tracking indicator is 1.2 times higher for firms with tax haven links than for companies without links to tax havens.

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Section: Literature Reviewmentioning

confidence: 99%

Debt/Asset Ratio as Evidence of Profit-Shifting Behaviour in the Slovak Republic

Ištok

Kanderová

2019

Technological and Economic Development of Economy

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A decomposition algorithm for computing income taxes with pass-through entities and its application to the Chilean case

2017

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Income tax systems with "pass-through" entities transfer a firm's incomes to the shareholders, which are taxed individually. In 2014, a Chilean tax reform introduced this type of entity and changed to an accrual basis that distributes incomes (but not losses) to shareholders. A crucial step for the Chilean taxation authority is to compute the final income of each individual, given the complex network of corporations and companies, usually including cycles between them. In this paper, we show the mathematical conceptualization and the solution to the problem, proving that there is only one way to distribute incomes to taxpayers. Using the theory of absorbing Markov chains, we define a mathematical model for computing the taxable incomes of each taxpayer, and we propose a decomposition algorithm for this problem. This allows us to compute the solution accurately and with the efficient use of computational resources. Finally, we present some characteristics of the Chilean taxpayers' network and computational results of the algorithm using this network.

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Optimal tax depreciation with loss carry-forward and backward options

Kulp

Hartman

2011

European Journal of Operational Research

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Decision model and analysis for investment interest expense deduction and allocation

Cited by 3 publications

References 41 publications

Debt/Asset Ratio as Evidence of Profit-Shifting Behaviour in the Slovak Republic

Debt/Asset Ratio as Evidence of Profit-Shifting Behaviour in the Slovak Republic

A decomposition algorithm for computing income taxes with pass-through entities and its application to the Chilean case

Optimal tax depreciation with loss carry-forward and backward options

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