THE EFFECTIVE LEVEL OF CORPORATE INCOME TAX IN THE EUROPEAN COUNTRIES

Year 2012, Volume: 4 Issue: 1, 31 - 39, 01.06.2012

Adam Adamczyk

Abstract

Despite of the fact that European Union economy is the subject to integration
process, there has been no harmonization of corporate income taxation. No
compulsion to adapt to common tax law requirements makes that many,
especially new member states of EU, tends to use corporate income tax to attract
capital flows. The tax competition often takes a form of so called “race to the
bottom” and consists in reducing tax rates. At the same time fiscal authorities
usually broaden their tax bases in favor to increase the neutrality of the corporate
income tax. The main goal of this article is to measure the combined effect of
reducing statutory tax rates and broadening of tax bases in selected Member
States.

Keywords

corporate income taxation, effective tax rate, tax competition