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Company Taxes in the European Union: Criteria and Options for Reform

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  • Sijbren Cnossen

Abstract

In 1992, the Ruding Committee, appointed by the European Commission to examine the need for company tax (CT) harmonisation in the European Union (EU), presented its findings and recommendations.2 Although the Committee concluded that differences in CTs distort the workings of the internal market — differences which most likely would not be eliminated by market forces or tax competition — it none the less proposed to leave the CTs in the EU essentially the same as it had found them, replete with their widely diverging domestic and cross-border treatment of different kinds of returns and different kinds of recipients of the various returns. As argued below, however, differential treatment will perpetuate the distortions inherent to the current CTs and erode the taxing authority of source states. A minimum statutory CT rate of 30 per cent, proposed by the Ruding Committee, and the adoption of the (draft)

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  • Sijbren Cnossen, 1996. "Company Taxes in the European Union: Criteria and Options for Reform," Fiscal Studies, Institute for Fiscal Studies, vol. 17(4), pages 67-97, November.
    • Handle: RePEc:ifs:fistud:v:17:y:1996:i:4:p:67-97
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    1. Michael Devereux, 2004. "Debating Proposed Reforms of the Taxation of Corporate Income in the European Union," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(1), pages 71-89, January.
    2. Stéphane Guimbert, 2002. "Réformes de la fiscalité du capital en Europe," Revue Française d'Économie, Programme National Persée, vol. 16(4), pages 113-169.
    3. Lenka Janíčková, 2012. "Tax Harmonization - the Possible Way out of the Crisis? [Daňová harmonizace - možná cesta z krize?]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2012(1), pages 64-81.
    4. Andreas Haufler, 1999. "Prospects for co-ordination of corporate taxation and the taxation of interest income in the EU," Fiscal Studies, Institute for Fiscal Studies, vol. 20(2), pages 133-153, June.
    5. Zodrow, George R, 2003. "Tax Competition and Tax Coordination in the European Union," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 651-671, November.
    6. Sijbren Cnossen, 2002. "Tax Policy in the European Union: A Review of Issues and Options," CESifo Working Paper Series 758, CESifo.
    7. Seppo Kari & Jouko Ylä-Liedenpoha, 2002. "Classical Corporation Tax as a Global Means of Tax Harmonization," CESifo Working Paper Series 665, CESifo.
    8. Manzo, Marco & Monteduro, Maria Teresa, 2010. "From IRAP to CBIT: tax distortions and redistributive effects," MPRA Paper 28070, University Library of Munich, Germany.
    9. Srđan Đinđić, 2013. "Taxation And Forms Of Organising Business Activities," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 58(196), pages 133-156, January –.
    10. Sanz Labrador, Ismael & Sanz-Sanz, José Félix, 2013. "Política fiscal y crecimiento económico: consideraciones microeconómicas y relaciones macroeconómicas," Macroeconomía del Desarrollo 5367, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Huizinga, Harry & Nielsen, Soren Bo, 2003. "Withholding taxes or information exchange: the taxation of international interest flows," Journal of Public Economics, Elsevier, vol. 87(1), pages 39-72, January.
    12. Huizinga, Harry & Nielsen, Søren Bo, 2008. "Must losing taxes on saving be harmful?," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1183-1192, June.
    13. Serhan Cevik & Fedor Miryugin, 2018. "Does Taxation Stifle Corporate Investment? Firm‐Level Evidence from ASEAN Countries," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(3), pages 351-367, September.
    14. Kayis-Kumar, Ann, 2015. "Thin capitalisation rules: A second-best solution to the cross-border debt bias?," MPRA Paper 72031, University Library of Munich, Germany.
    15. John Isaac, 1997. "A comment on the viability of the allowance for corporate equity," Fiscal Studies, Institute for Fiscal Studies, vol. 18(3), pages 303-318, August.
    16. Johannes Becker & Clemens Fuest, 2005. "Does Germany Collect Revenue from Taxing Capital Income?," CESifo Working Paper Series 1489, CESifo.
    17. Cnossen, S., 2002. "Tax policy in the European Union : a review of issues and options," Research Memorandum 023, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    18. Hans-Werner Sinn, 1997. "Deutschland im Steuerwettbewerb (Germany Faces Tax Competition)," CESifo Working Paper Series 132, CESifo.
    19. George Zodrow, 2006. "Capital Mobility and Source-Based Taxation of Capital Income in Small Open Economies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(2), pages 269-294, May.
    20. Luis Ferruz & Cristina Ortiz & Luis Vicente, 2007. "Persistent taxation on EU investment fund unitholders," Journal of Asset Management, Palgrave Macmillan, vol. 8(4), pages 238-248, November.
    21. John W. Diamond & George R. Zodrow & Thomas S. Neubig & Robert J. Carroll, 2014. "The Dynamic Economic Effects of a US Corporate Income Tax Rate Reduction," Working Papers 1405, Oxford University Centre for Business Taxation.
    22. Dickescheid, Thomas, 2002. "Steuerwettbewerb und Direktinvestitionen," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 16, number urn:isbn:9783161477348, May.
    23. Stefano Micossi & Paola Parascandolo & Barbara Triberti, 2003. "Efficient Taxation of Multi-national Enterprises in the European Union," Bruges European Economic Policy Briefings 5, European Economic Studies Department, College of Europe.

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