Tax Policy Assessment Challenges: The Case of the Slovenian Interest Tax Shield

Published date01 July 2017
Date01 July 2017
© 2017 Wiley Periodicals, Inc.
Published online in Wiley Online Library (
DOI 10.1002/jcaf.22279
Tax Policy Assessment Challenges:
The Case of the Slovenian
Interest Tax Shield
Tatjana Jovanovic´ and Maja Klun
is viewed as the
“increasing inter-
nationalisation of
markets for goods
and services, means
of production,
financial systems,
competition, cor-
porations, technol-
ogy and industries”
(Kumar & Quinn,
2012). Consequently,
the world’s economy
is facing increased
mobility of individu-
als, companies, and
financial transac-
tions. Businesses and
individuals enjoy a
greater supply of
various types of
goods and services.
Additionally, there
are several chances to
choose the location
for investments or
place for employment
and retirement. The
world’s globalization
affects the whole area
of economic policy,
having a strong influ-
ence on national
tax systems. From
the national taxa-
tion point of view,
globalization causes
mobility of tax bases
in individual sectors
of taxpayers and
corporations as well,
especially as far as
multinational compa-
nies are concerned.
also called inter-
national market
integration, affects
national government
fiscal policy, and
therefore the recent
policy debates focus
on international
fiscal competition.
The tax competi-
tion literature that is
most popular in this
research area high-
lights the phenomena
Globalization affects national government fiscal
policy; therefore, the recent policy debates focus
on international fiscal competition. The national
tax policies pay special attention to multinational
companies, which are highly mobile and able to
avoid taxes. The trend of tax rate cutting and tax
base broadening (“the race to the bottom”) means
that tax completion is one of the most important
topics in the professional public. There are two
main instruments to avoid the multinational com-
panies’ profit shifting; decreasing the corporate
tax rates or the implementation of anti-avoidance
rules. While tax policy implementation affects mul-
tiple stakeholders, a thorough, empirically tested
and publicly aligned impact assessment procedure
should be carried out. The main idea of this article
is to analyze the procedure of impact assessment
for tax policy in Slovenia, focusing mainly on the
example of the interest tax shield, verifying the
impact of the tax policy (thin capitalization rule)
implemented in 2005 and offering recommenda-
tions for future tax policy. The results revealed
that the Slovenian procedure for impact assess-
ment concerning tax policy is used to fulfill formal
compliance requirements. Such a declaratory and
theoretical level of usage cannot contribute to
effective results for tax policy. This turned out to
Refereed (Double-Blind
Peer Reviewed)

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