Corporate Income Tax Competition and the Scope for National Tax Policy in the Enlarged Europe

AbstractGovernments of EU Member States have been reducing statutory corporate income tax rates (“CIT”) for several years. What encourages them to take part in tax competition? The article discusses several issues which are in favor of lower CIT rates. They are selected based on their relevance. The study is performed with use of data available from applicable statistical bodies/literature and is based on literature review (especially in cases where required data is not available). It seems that the commonly raised issue of rivalry for capital in the globalizing world economy with highly mobile capital could be only one of a number of reasons for CIT rate depression. Tax competition is fueled by the various sizes of the economies of EU countries as well. The following important rationale may include the aspiration of governments to curb the local shadow economy. There are also some issues of a more theoretical nature that explain decreasing CIT rates. They include: (i) the necessity to accommodate CIT rate levels from the perspective of double taxation of dividends, (ii) the requirement to consider political responsibility of CI or (iii) the need to manage a deadweight loss. As a result of these challenges EU Member States often broaden the legal CIT base to maintain government revenues.

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Zero Corporate Income Tax in Moldova: Tax Competition and its Implications for Eastern Europe

IMF Working Papers ◽

10.5089/9781451870619.001 ◽

2008 ◽

Vol 08 (203) ◽

pp. 1 ◽

Cited By ~ 6

Author(s):

Marcin Piatkowski ◽

Mariusz Jarmuzek ◽

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Keyword(s):

Eastern Europe ◽

Tax Competition ◽

Income Tax ◽

Corporate Income Tax

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System and tax policy and population policy

Stanovnistvo ◽

10.2298/stnv9802081r ◽

1998 ◽

Vol 36 (1-2) ◽

pp. 81-104

Author(s):

Bozidar Raicevic ◽

Brankica Gagic ◽

Danijel Pantic

Keyword(s):

Tax Policy ◽

Income Tax ◽

Population Policy ◽

Property Tax ◽

Personal Income ◽

The Other ◽

Corporate Income Tax ◽

Personal Income Tax ◽

Tax Systems ◽

Economic Capacity

System and tax policy may be used for numerous purposes. That is, especially, the case with contemporary tax systems which are, among other features, based at the synthetic (global) taxation of the economic capacity of the natural persons. Besides the basic, fiscal, many other goals, may be reached through the taxation, including those which fall in the scope of the population policy. In this paper, modern tendencies have been analysed in achieving the goals of the population policy, which provide solutions in respect of the following tax instruments: personal income tax, corporate income tax, property tax and turnover tax. It has been emphasized that relatively numerous and differentiated possibilities exist in respect of the annual personal income tax and far less, with the other forms of taxation.

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