Integrating Islamic Principles of Taxation within China – An Analysis of its Impact on Corporate Earnings
Abstract
Taxation represents a cornerstone for corporations to optimize their taxation expenditures and minimize their impact on their earnings. Corporations aim to optimize their earnings distributions to minimize the overall amount of tax paid. The Islamic taxation system differs substantially from conventional tax systems across the globe in terms of the scope and purpose of the taxes. The article evaluates the impact of Islamic taxation on the earnings and taxation levels of major corporations in China. The results indicate that interest earnings and expenditure concerning income are major distinguishing factors for Islamic compliance. The conclusions were then integrated into an artificial intelligence framework to estimate the taxation amounts and compare them with the total tax paid by the corporations. The results indicated that corporations may pay overall slightly higher rates but that for the majority of corporations, the taxation levels will remain identical. Amongst others, those corporations with significant interest expenditures may experience higher taxation if those expenditures are not set off by other expenditures or Islamic-compliant costs associated with liabilities. The results indicate the opportunities for corporations to optimize their taxation bases within China.
References
- Allami, A. (2009). Zakat as islamic taxation and its application in the contemporary Saudi legal system. J. Islamic St. Prac. Int'l L., 5(83).
- Aziz, M. A., & Abdullah, M. H. (2013). The Comparison between Zakat (Islamic Concept of Taxation) and Income Tax: Perceptions of Academician in the State of Perak, Malaysia. International Conference on Business, Economics, and Accounting, 8.
- Chen, Z., He, Y., Liu, Z., Serrato, J. C., & Xu, D. Y. (2021). The structure of business taxation in China. Tax Policy and the Economy, 35(1), 131-177.
- Coşgel, M., Miceli, T., & Ahmed, R. (2009). Law, state power, and taxation in Islamic history. Journal of Economic Behavior & Organization, 71(3), 704-717.
- Kuran, T. (2020). Zakat: Islam’s missed opportunity to limit predatory taxation. Public Choice, 182(3), 395-416.
- Li, J. (1991). Taxation in the People's Republic of China. Greenwood Publishing Group.
- Liu, J., Bai, J., Deng, Y., Chen, X., & Liu, X. (2021). Impact of energy structure on carbon emission and economy of China in the scenario of carbon taxation. Science of the Total Environment, 762, 143093.
- Liu, Q., & Lu, Y. (2015). Firm investment and exporting: Evidence from China's value-added tax reform. Journal of International Economics, 97(2), 392-403.
- Mansor, N. A., Mohd Fatzel, F. H., Shamsudin, S. M., & Khair Anwar, I. S. (2019). Zakat versus taxation: an overview of the implementation in Malaysia. Islamic Development Management, 329-337.
- Revkin, M. R. (2020). What explains taxation by resource-rich rebels? Evidence from the Islamic State in Syria. The Journal of Politics, 82(2), 757-764.
- Shemesh, A. B. (1958). Taxation in Islam . Brill Archive.
- Sun, C., Zhan, Y., & Du, G. (2020). Can value-added tax incentives of new energy industry increase firm's profitability? Evidence from financial data of China's listed companies. Energy economics, 86, 104654.
- Weiss, A. M. (1986). Islamic reassertion in Pakistan: The application of Islamic laws in a modern state. Syracuse University Press.
- Yan, X. (2009). No Taxation without Representation: China's Taxation History and its Political-Legal Transitions. Hong Kong LJ, 39, 515.
İslami Vergilendirme İlkelerinin Çin'e Entegre Edilmesi - Kurumsal Kazançlar Üzerindeki Etkisinin Analizi
Abstract
Vergilendirme, şirketlerin vergi harcamalarını optimize etmeleri ve kazançları üzerindeki etkilerini en aza indirmeleri için önemli bir unsuru temsil etmektedir. Şirketler, ödenen toplam vergi miktarını en aza indirmek için kazanç dağıtımlarını optimize etmeyi amaçlamaktadır. İslami vergi sistemi, vergilerin kapsamı ve amacı bakımından dünya genelindeki geleneksel vergi sistemlerinden önemli ölçüde farklılık göstermektedir. Bu makale, İslami vergilendirmenin Çin'deki büyük şirketlerin kazançları ve vergilendirme düzeyleri üzerindeki etkisini değerlendirmektedir. Sonuçlar, faiz kazançlarının ve gelirle ilgili harcamaların İslami uyum için önemli ayırt edici faktörler olduğunu göstermektedir. Ayrıca araştırma bulguları, vergilendirme tutarlarını tahmin etmek ve bunları şirketler tarafından ödenen toplam vergi ile karşılaştırmak için bir yapay zeka çerçevesine entegre edilmiştir. Sonuçlara göre, şirketlerin genel olarak biraz daha yüksek oranlar ödeyebileceği, ancak şirketlerin çoğunluğu için vergilendirme seviyelerinin aynı kalacağı görülmüştür. Buna ek olarak, önemli faiz harcamaları olan şirketler, bu harcamaların diğer harcamalarla veya yükümlülüklerle ilişkili İslami uyumlu maliyetlerle mahsup edilmemesi durumunda daha yüksek vergilendirme ile karşılaşabilirler. Araştırmadan elde edilen sonuçlar, şirketlerin Çin'deki vergilendirme matrahlarını optimize etme fırsatlarına da işaret etmektedir.
References
- Allami, A. (2009). Zakat as islamic taxation and its application in the contemporary Saudi legal system. J. Islamic St. Prac. Int'l L., 5(83).
- Aziz, M. A., & Abdullah, M. H. (2013). The Comparison between Zakat (Islamic Concept of Taxation) and Income Tax: Perceptions of Academician in the State of Perak, Malaysia. International Conference on Business, Economics, and Accounting, 8.
- Chen, Z., He, Y., Liu, Z., Serrato, J. C., & Xu, D. Y. (2021). The structure of business taxation in China. Tax Policy and the Economy, 35(1), 131-177.
- Coşgel, M., Miceli, T., & Ahmed, R. (2009). Law, state power, and taxation in Islamic history. Journal of Economic Behavior & Organization, 71(3), 704-717.
- Kuran, T. (2020). Zakat: Islam’s missed opportunity to limit predatory taxation. Public Choice, 182(3), 395-416.
- Li, J. (1991). Taxation in the People's Republic of China. Greenwood Publishing Group.
- Liu, J., Bai, J., Deng, Y., Chen, X., & Liu, X. (2021). Impact of energy structure on carbon emission and economy of China in the scenario of carbon taxation. Science of the Total Environment, 762, 143093.
- Liu, Q., & Lu, Y. (2015). Firm investment and exporting: Evidence from China's value-added tax reform. Journal of International Economics, 97(2), 392-403.
- Mansor, N. A., Mohd Fatzel, F. H., Shamsudin, S. M., & Khair Anwar, I. S. (2019). Zakat versus taxation: an overview of the implementation in Malaysia. Islamic Development Management, 329-337.
- Revkin, M. R. (2020). What explains taxation by resource-rich rebels? Evidence from the Islamic State in Syria. The Journal of Politics, 82(2), 757-764.
- Shemesh, A. B. (1958). Taxation in Islam . Brill Archive.
- Sun, C., Zhan, Y., & Du, G. (2020). Can value-added tax incentives of new energy industry increase firm's profitability? Evidence from financial data of China's listed companies. Energy economics, 86, 104654.
- Weiss, A. M. (1986). Islamic reassertion in Pakistan: The application of Islamic laws in a modern state. Syracuse University Press.
- Yan, X. (2009). No Taxation without Representation: China's Taxation History and its Political-Legal Transitions. Hong Kong LJ, 39, 515.
Details
| Primary Language | English |
|---|---|
| Subjects | Economics |
| Journal Section | Research Article |
| Authors | |
| Early Pub Date | May 7, 2023 |
| Publication Date | June 30, 2023 |
| Published in Issue | Year 2023 Volume: 8 Issue: 1 |
JOEEP is published as two issues per year June and December and all publication policies and processes are conducted according to the international standards. JOEEP accepts and publishes the research articles in the fields of economics, political economy, fiscal economics, applied economics, business economics, labour economics and econometrics. JOEEP, without depending on any institution or organization, is a non-profit journal that has an International Editorial Board specialist on their fields. All “Publication Process” and “Writing Guidelines” are explained in the related title and it is expected from authors to Show a complete match to the rules. JOEEP is an open Access journal.