The tax depreciation decision potentially has significant impact on the profitability of firms and projects. Indeed, the depreciation method chosen for tax purposes affects the timing of tax payments, and, as a consequence, it also affects the after-tax net present value of investment projects....

This paper analyzes the consequences of incorporating a different rate for tax depreciation than for economic depreciation. Firms most often choose their tax depreciation rate in a strategic way. It would therefore be a coincidence if this optimization process leads to a tax depreciation rate...

The focus of this paper is on the e ect of a progressive tax system on optimal tax depreciation. By using dynamic optimization we show that an optimal strategy exists, and we provide an analytical expression for the optimal depreciation charges. Depreciation charges initially decrease over time,...

This paper uses a strategic tax compliance model to examine taxpayer reporting and tax authority audit strategies in an international setting with two tax authorities. The setting features both information asymmetry between the taxpayer and the tax authorities and tax law ambiguity. The latter...

We investigate the use of bilateral advance pricing agreements (BAPAs) to resolve transfer pricing disputes between a taxpayer and two tax authorities. BAPAs are designed to protect firms from double taxation while reducing expected compliance costs (audits costs plus BAPA implementation costs)....

A common justification for new or more intensified regulation of accounting firms and financial reporting is to restore and enhance public confidence. In this paper we examine whether confidence is indeed significantly damaged by financial reporting irregularities (‘irregularities' hereafter)...

As part of their regulatory strategy, authorities may request firms to periodically submit mandatory self-assessments. The effectiveness of such strategies depends on the quality of the information that firms provide. We conduct a field experiment to assess how official communications reflecting...

Prior studies have shown limited impact of the US bonus depreciation rules on firm investments during economic downturns. In this article we study the effects of a set of more flexible rules – discretionary tax depreciation (DTD) – introduced in the Netherlands during the 2009-2011 economic...

The ability to reduce current and future taxable income with prior years' taxable losses is highly relevant for explaining firms' effective and marginal tax rates. Compustat data on the tax loss carryforward (TLCF) are, however, often missing. We propose a method to impute estimated values for...

We characterize the effects of different methods of taxing multinational income on productive efficiency in a competitive equilibrium. The efficient outcome is achieved when every firm that produces and sells domestically faces the same tax rate as a multinational firm selling into the same...