The Revenue Consequences of Using a Common Consolidated Corporate Tax Base to Determine Taxable Income in the EU Member States

Oestreicher, Andreas; Koch, R.

doi:10.1628/001522111x574191

Cited by 31 publications

(15 citation statements)

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“…Fuest et al (2007) as well as Devereux and Loretz (2008) analysed the effects of formula apportionment on the size of the tax base in Germany and in EU member states, respectively. Oestreicher and Koch (2011) investigated the key elements that factor into the tax-revenue consequences for different EU member states. Cline et al (2011) studied revenue as well as macroeconomic effects of an EU-wide CCCTB.…”

Section: Literature Reviewmentioning

confidence: 99%

Deductibility of Provisions under the CCCTB Proposal and Its Effects on Companies: The Case of Poland

Leszczyłowska¹

2015

EFAJ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The aim of the paper is to empirically examine the scale and the distribution of the tax advantage which emerges when provisions for future liabilities are deductible from taxable earnings, as proposed in the CCCTB concept. The paper concentrates on Poland -a country for which the expected economic effects of this proposal are still controversial and ambiguous. The results are also relevant for other European countries in which provisions are currently treated in a different way for financial and for tax accounting purposes. The analysis is based on the information from financial statements of 250 companies from the period 2007 -2012. The microsimulation method in a multi-period setting is implemented. The results show that in case provisions are deductible for tax purposes the tax due decreases by 5,6 % or and by 9,8 % on average, depending on the liquidity situation of companies. The tax advantage is distributed differently among companies. The majority of taxpayers is expected to gain from the reform. Only for single companies there is an increase in tax, induced by the existing, restricted tax loss carry forward rules. The median change in CIT amounts to -1 % and -2 %. Terms of use: Documents in EconStor may

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Section: Literature Reviewmentioning

confidence: 99%

Deductibility of Provisions under the CCCTB Proposal and Its Effects on Companies: The Case of Poland

Leszczyłowska¹

2015

EFAJ

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“…Becker and Fuest (2010) show that even if formula apportionment can solve the problem of corporate income shifting in the EU, income shifting to a non-member country will become more severe. Ostereicher and Koch (2011) provide a detailed discussion of the implications of this suggestion for tax revenues. Further, Switzerland, an important host of foreign income lying in the heart of Europe, is not a member of the EU; see table (3).…”

Section: Tax Havens and Europementioning

confidence: 98%

Money at the Docks of Tax Havens: A Guide

Hebous

2014

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“…Anand and Sansing (2000) show that single jurisdictions have incentives to deviate from a harmonised formula to increase their welfare. See also Oestreicher and Koch (2011), pp. 83 ff, for a discussion.…”

Section: The Importance Of the Apportionment Formula Under Utmentioning

confidence: 99%

“…12 EC (2011), p. 6. 13 See Fuest, Hemmelgarn and Ramb (2007), Devereux and Loretz (2008), and Oestreicher and Koch (2011). concept and derives ETRs for the discussed scenarios. Section 4 analyses and discusses the results on the basis of a numeric analysis.…”

Section: Introductionmentioning

confidence: 99%

Can formula apportionment really prevent multinational enterprises from profit shifting? The role of asset valuation, intragroup debt, and leases

2018

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract The European Commission has been supporting a transition from a system of separate accounting to a system of formula apportionment. In 2011, it presented a proposal for a council directive on a Common Consolidated Corporate Tax Base (CCCTB). Formula apportionment is often considered more resistant to profit shifting and assumed to reduce compliance costs. We use a dynamic model of tax accounting based on neoclassical investment theory and effective tax rates to determine whether, and to what extent, formula apportionment mitigates the efficiency of typical profit-shifting measures. We focus on the roles of transfer pricing and intragroup debt financing (through loans and leases) under both separate accounting and formula apportionment. Our results show that instead of eliminating tax planning strategies, the proposed system will simply induce a shift from manipulating reported profits to influencing the apportionment key. Inside the European Union, the CCCTB may be able to render thin capitalisation rules and transfer pricing documentation redundant. However, formula apportionment invites new forms of tax planning involving manipulating the book value of assets rather than profit shifting. Terms of use: Documents in

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The Revenue Consequences of Using a Common Consolidated Corporate Tax Base to Determine Taxable Income in the EU Member States

Cited by 31 publications

References 1 publication

Deductibility of Provisions under the CCCTB Proposal and Its Effects on Companies: The Case of Poland

Deductibility of Provisions under the CCCTB Proposal and Its Effects on Companies: The Case of Poland

Money at the Docks of Tax Havens: A Guide

Can formula apportionment really prevent multinational enterprises from profit shifting? The role of asset valuation, intragroup debt, and leases

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