Abstract
The purpose of this paper is to answer the question whether, despite the differentiation of the corporate income tax in the European Union, there are similarity patterns allowing for the harmonization of the bases of this tax. The analysed CIT static data both quantitative and qualitative concerns the years 2018 and 2020. The method of hierarchical cluster analysis allowed a grouping of EU countries according to their similarities. It also indicated the greatest tax differences between EU member states. In turn the affinity analysis made it possible to distinguish groups of countries which are similar in terms of CIT with the simultaneous identification of a pattern. Results show that despite significant differences in tax rates some EU states show convergence in tax bases. The geographical criterion still plays an important role in determining CIT structure and tax incentives are one of the tools that may be used in the approximation of the bases.
Highlights
The European Union (EU) is a common market with free movement of goods, services, persons and capital
The paper is structured as follows: Section 1 presents the theoretical background and the literature review of tax harmonization; Section 2 presents the legal framework for direct taxes harmonization in EU; Section 3 delivers the outcomes of the research on tax harmonization organised by the European Commission; Section 4 presents the research method and the results obtained from the selected CIT characteristics comparison; The paper ends with discussion points and conclusions
According to the results presented in European Commission (2016), Common Consolidated Corporate Tax Base (CCCTB) with an formula apportionment (FA) based on three equivalent items would give the possibility to allocate fairly companies’ income to the place of profit generation
Summary
The European Union (EU) is a common market with free movement of goods, services, persons and capital It is an area of different corporate tax systems. The awareness of the differences and similarities between EU states gives a greater chance for tax approximation. This is the right time for such questions as the European Commission is pushing for the abolition of unanimous voting on taxes which has been blocking such harmonization for years. The paper is structured as follows: Section 1 presents the theoretical background and the literature review of tax harmonization; Section 2 presents the legal framework for direct taxes harmonization in EU; Section 3 delivers the outcomes of the research on tax harmonization organised by the European Commission; Section 4 presents the research method and the results obtained from the selected CIT characteristics comparison; The paper ends with discussion points and conclusions
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