Introduction

Abstract

AbstractThis chapter presents a brief overview of widespread phenomena that arose during the aftermath of certain financial crises, i.e., the problems of corporate tax base erosion and profit shifting. Governments (investing millions of EURs in the stabilization of financial systems) have started to care about whether corporations contribute a fair share to public budgets. Aggressive tax planning strategies used by corporations face strong criticism from governments and the public. Moreover, most profit shifting takes place within the framework of existing legal boundaries, which undermines the fairness and integrity of corporate tax systems. Due to these facts, the OECD initiated the Base Erosion and Profit Shifting (BEPS) action plan, which aims to equip governments with the domestic and international instruments needed to tackle base erosion and profit shifting. Based on a comprehensive analysis of current profit-shifting and tax base erosion techniques in the area of corporate taxation and on the results of empirical research, this work identifies profit shifting and base erosion in post-communist EU countries and presents estimations of losses in corporate tax revenues. However, taking into account the prominent roles of profit shifting and tax base erosion in the economy and related policy issues, this work also gives policy recommendations to achieve fair corporate taxation. This book is the result of a three-year project No. 18-14082S “Fair corporate taxation: Measurement of the impact of the corporate profit shifting on the budget of the Czech Republic” granted by the Czech Grant Agency.