scholarly journals Corporate Income Tax Rates in the EU Member States: Why Lower Means Better

e-Finanse ◽  
2018 ◽  
Vol 14 (3) ◽  
pp. 32-48 ◽  
Author(s):  
Andrzej Karpowicz
Keyword(s):  
Tax Competition ◽  
Income Tax ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Political Responsibility ◽  
Member States ◽  
Eu Member States ◽  
Use Of Data ◽  
Globalizing World ◽  
Mobile Capital

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.

scholarly journals Possibilities of harmonization of direct taxes in the EU

2017 ◽  
Vol 14 (2) ◽  
pp. 191-199 ◽  
Author(s):  
Adela Feranecová ◽  
Eva Manová ◽  
Marek Meheš ◽  
Jana Simonidesová ◽  
Slavomíra Stašková ◽  
...  
Keyword(s):  
Income Tax ◽  
Slovak Republic ◽  
Complex Problem ◽  
Corporate Income Tax ◽  
Corporate Tax ◽  
Tax Base ◽  
Member States ◽  
Eu Member States ◽  
Tax Harmonization ◽  
The Eu

Currently, indirect taxes in the EU are highly harmonized, however, harmonization of direct taxes is still a very complex problem. Many EU member states refuse to give up their tax sovereignty, which would become considerably limited because of the har¬monization of direct taxes. Today, attention is paid to the harmonization of the tax base of corporate income tax, while a number of ways are under consideration. The European Council has issued a draft of Directive for a common consolidated tax base of corporate income tax in 2011 and updated in 2012. This draft must be approved by all member states, but some of them, however, have expressed on the draft in negative way. Because of the severity of this problems, the authors decided to focus on this topic within this article, which deals with the calculation of the tax base by the laws of the Slovak Republic and by Common Consolidated Corporate Tax Base (CCCTB); and evaluate whether the tax harmonization of direct taxes would be advantageous for the particular business.

scholarly journals Why the EU-15 Maintains Higher CIT Rates than the New Member States?

2014 ◽  
Vol 42 (1) ◽  
pp. 98-120
Author(s):  
Andrzej Karpowicz
Keyword(s):  
European Union ◽  
Comparative Analysis ◽  
Income Tax ◽  
Western Europe ◽  
Corporate Income Tax ◽  
The European Union ◽  
Member States ◽  
New Member States ◽  
Eu Member States ◽  
The Eu

Abstract The European Union is not a homogenous area. This lack of homogeneity extends to taxes, which vary across jurisdictions. On average, Western Europe imposes significantly higher taxes on capital than New Member States, which joined the Community in 2004 and 2007. Often this fact is simply taken for granted. However, there are several arguments that can explain this variance. Although several of these arguments are well known and have been researched, they have not been assessed in combination, or used in a comparative analysis of corporate income tax (CIT) rates between EU member states. Because of interest in harmonizing CIT throughout the EU, the roots of divergent CIT is of particular and timely value. Therefore, this article we attempts to demonstrate the differences in CIT rates in the EU-15 and New Member States. In so doing the general characteristics of these country grouping is identified, and then discussed in the context of the taxation theory.

Taxation in a mixed economy: the case of China

2017 ◽  
Vol 34 (1) ◽  
pp. 49-61 ◽  
Author(s):  
Davidson Sinclair ◽  
Larry Li
Keyword(s):  
Income Tax ◽  
Central Government ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Government Ownership ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

scholarly journals Taming Tax Competition with a European Corporate Income Tax

2018 ◽  
Vol 128 (4) ◽  
pp. 575 ◽  
Author(s):  
Fabien Candau ◽  
Jacques Le Cacheux
Keyword(s):  
Tax Competition ◽  
Income Tax ◽  
Corporate Income Tax

scholarly journals Beneficial ownership of income as an antiabusive measure in Serbian Tax Law

2020 ◽  
Vol 59 (88) ◽  
pp. 217-232
Author(s):  
Miloš Vasović
Keyword(s):  
Income Tax ◽  
Corporate Income Tax ◽  
Tax Law ◽  
Tax Rates ◽  
Double Taxation ◽  
Current Function ◽  
Tax Rate ◽  
Treaty Shopping ◽  
Beneficial Ownership ◽  
The One

The Serbian Corporate Income Tax Act contains a provision on the beneficial ownership of income (hereinafter: the BO provision), which is one of the conditions for the application of the preferential tax rate on income tax after tax deduction, which is envisaged in Treaties for the avoidance of Double Taxation on income and capital (hereinafter: Double Taxation Treaties/ DTTs). The subject matter of research in this paper is the term "beneficial ownership", which is not defined in the Corportate Income Tax Act. It may ultimately lead to abusing the preferential tax rates from the DTTs in tax planning and "treaty shopping" through the use of conduit companies. Tax experts have different opinions on the legal nature of the BO provision, which is given the function of an anti-abusive measure (on the one hand) and a rule for the attribution of income (on the other hand). The author analyzes the current function of the BO provision envisaged in the Serbian Serbian Corporate Income Tax Act (CITA), and its inadequate application. The author advocates for enacting the BO provision as an anti-abusive measure, and examines the possible application of the BO provision in domestic tax law, with reference to Articles 10, 11, and 12 of the DTTs that Serbia contracted with other states, as well as Articles 10-12 of the OECD Model-Convention on Income and Capital (2017) and Commentaries on these articles. Such an application of the BO provision may preclude "treaty shopping". In final remarks, the author points out why the BO provision should be envisaged as an anti-abusive measure in Serbian tax law.

2. Ontario's Corporate Income Tax: An Analysis of Effective Tax Rates

1993 ◽  
pp. 43-79
Author(s):  
David Sabourin ◽  
Stephen Gribble ◽  
Michael Wolfson
Keyword(s):  
Income Tax ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Effective Tax Rates

scholarly journals Strategic Tax Competition in Switzerland: Evidence from a Panel of the Swiss Cantons

2009 ◽  
Vol 10 (1) ◽  
pp. 91-114 ◽  
Author(s):  
Lars P. Feld ◽  
Emmanuelle Reulier
Keyword(s):  
Tax Competition ◽  
Income Tax ◽  
Fiscal Federalism ◽  
Income Taxes ◽  
International Taxation ◽  
Tax Rates ◽  
Ceteris Paribus ◽  
Empirical Results ◽  
Production Factors ◽  
Swiss Cantons

Abstract Tax competition is discussed as a source of inefficiency in international taxation and in fiscal federalism. Two preconditions for the existence of such effects of tax competition are that mobile factors locate or reside in jurisdictions with - ceteris paribus - lower tax rates, and that taxes are actually set strategically in order to attract mobile production factors. It is well known from studies about Swiss cantonal and local income tax competition that Swiss taxpayers reside where income taxes are low. In this paper, empirical results on strategic tax setting by cantonal governments are presented for a panel of the Swiss cantons from 1984 to 1999. Completing the evidence on Swiss tax competition, income tax rates in cantons are the lower, the lower the tax rates of their neighbors.

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