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Author (up) Barrera, J.; Moreno, E.; Varas, S. doi  openurl
  Title A decomposition algorithm for computing income taxes with pass-through entities and its application to the Chilean case Type
  Year 2020 Publication Annals Of Operations Research Abbreviated Journal Ann. Oper. Res.  
  Volume 286 Issue 1-2 Pages 545-557  
  Keywords Income taxes; Markov processes; Networks; Algorithms  
  Abstract Income tax systems with “pass-through” entities transfer a firm's income to 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 income to taxpayers. Using the theory of absorbing Markov chains, we define a mathematical model for computing the taxable income of each taxpayer, and we propose a decomposition algorithm for this problem. This approach allows us to compute the solution accurately and to efficiently use computational resources. Finally, we present some characteristics of Chilean taxpayers' network and the computational results of the algorithm using this network.  
  Address [Barrera, Javiera; Moreno, Eduardo] Univ Adolfo Ibanez, Fac Engn & Sci, Santiago, Chile, Email:;  
  Corporate Author Thesis  
  Publisher Springer Place of Publication Editor  
  Language English Summary Language Original Title  
  Series Editor Series Title Abbreviated Series Title  
  Series Volume Series Issue Edition  
  ISSN 0254-5330 ISBN Medium  
  Area Expedition Conference  
  Notes WOS:000511564300023 Approved  
  Call Number UAI @ eduardo.moreno @ Serial 1102  
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