Cash-Flow Tax

Christian Schutte and Parthasarathi Shome

No 1993/002, IMF Working Papers from International Monetary Fund

Abstract: The cash-flow tax has been proposed as an alternative to corporate income tax on grounds of clarity and simplicity in defining the tax base in the face of widespread departures from the comprehensive income tax in actual practice. Variants of the tax, with their advantages and disadvantages, demonstrate that it would require careful design. Simplicity is not an obvious property because of expectable administration problems related to tax avoidance and evasion through transfer pricing; to inflation adjustments; and to incompatibility with existing international tax regimes. Thus, the tax remains theoretically attractive but difficult to implement by a single--especially developing--country.

Keywords: WP; tax; corporate cash-flow tax; firm; revenue; cash flow; rate of return; host-country tax competition; foreign tax credit; shareholder--base CCFT; CCFT country; repatriation tax; tax competition; tax deductibility; tax authorities; tax profile; CCFT host country; Income tax systems; Income and capital gains taxes; Corporate income tax; Tax allowances; Cash-flow tax; Global (search for similar items in EconPapers)
Pages: 30
Date: 1993-01-01
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Citations: View citations in EconPapers (3)

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