Positive Spillovers in International Corporate Taxation and the European Union

Abstract

The international spillover effects of specific domestic policies and practices have been subjected to increasing scrutiny from a range of international organizations, academia, and civil institutions with tax policy and practice both central in this discussion. Nevertheless, the extant international tax spillover analyses explore a limited set of spillover pathways or indicators that have been criticized in the literature for not being sufficiently inclusive. The focus of this article is on a newly launched index that includes a comprehensive set of plausible pathways in which spillovers occur. The Corporate TaxHaven Index (CTHI) explores twenty key tax spillover indicators under five categories and assesses sixty-four countries’ tax systems in order to identify policies that should be considered for corporate tax reform to mitigate cross-border tax spillovers. This article particularly aims to highlight international corporate tax spillover pathways in the European Union Member States’ domestic tax laws, regulations and documented administrative practices but limits its scope to domestic tax rules that dispense with positive spillovers. Finally, it analyses Member States’ current performance and concludes with recommendations for future tax reforms in the European Union. Tax spillovers, Corporate Tax Haven Index, transparency rules, public accountability, country by country reporting, mandatory disclosure rules, tax rulings, extractive contracts, anti-avoidance rules, controlled foreign company rules, deduction limitation.