Increased effciency through consolidation and formula apportionment in the European Union?

Devereux, Michael and Loretz, Simon (2008) Increased effciency through consolidation and formula apportionment in the European Union? Centre for Business Taxation WP 08/12.

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Abstract

This paper assesses the efficiency properties of recent corporation tax re- form proposals of the European Union to introduce international loss consolidation and formula apportionment. We extend the effective tax rate methodology of Devereux and Griffith (1999) to allow for a potential loss and use a large firm level data set to identify the distortions under the current system and following proposed tax reforms. We assess the efficiency of the overall tax system using the two concepts of capital export neutrality and market neutrality. Allowing international loss consolidation in the current system would signify a movement away from both notions of efficiency. A common consolidated tax base with formula apportionment system would move the system towards market neutrality, while improving capital export neutrality only little.

Item Type: Other Working Paper
Keywords: Corporate Taxation; International Loss Consolidation; Apportionment Rules; Common Consolidated Tax Base;
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 24 May 2012 11:00
Last Modified: 15 Oct 2015 02:18
URI: http://eureka.sbs.ox.ac.uk/id/eprint/3362

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