--- res: bibo_abstract: - When taxes on capital or wealth are levied, in most countries companies have to be assessed in terms of their market value (MV). Estimating the MV of private companies for tax purposes is a challenging task for tax authorities as MVs are not available. In this study, I empirically analyse to what extent an accounting-based tax valuation method for private companies, a simplified residual income model, succeeds in matching the MV. I refer to the mandatory Standardised Combination Model that is a special case of methods commonly used in several countries. In the absence of market prices for private companies, I use a sample of small German public companies as a proxy. I validate this approach using a sensitivity analysis that involves matching the sample of public companies with that of private companies. The results imply that the mandatory Standardised Combination Model leads to a severe unequal treatment not only between public and private companies but also among private companies across and within industries. Furthermore, I simulate the effects of variation in the key parameters and highlight their impact on the approximation quality of the Standardised Combination Method. The findings are relevant to tax reform discussions as well as to tax policy-makers and practitioners in many countries.@eng bibo_authorlist: - foaf_Person: foaf_givenName: Jens foaf_name: Müller, Jens foaf_surname: Müller foaf_workInfoHomepage: http://www.librecat.org/personId=1245 bibo_issue: '1' dct_date: 2014^xs_gYear dct_language: eng dct_subject: - Challenge of Assessing - Tax Purposes dct_title: The challenge of assessing the market value of private companies using a standardised combination method for tax purposes--Lessons to be learnt from past experience@ ...