The Effects of EU Formula apportionment on Corporate Tax Revenues

Devereux, Michael and Loretz, Simon (2007) The Effects of EU Formula apportionment on Corporate Tax Revenues. Centre for Business Taxation WP 07/06.

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Abstract

The European Commission proposes to replace the current system of taxing corporate income of separate accounting by a two-step 'consolidate and apportionment' procedure. This paper uses a large set of unconsolidated firm-level data to assess the likely impact on corporate tax revenues in each Member State. Taking pre-tax profit as given, overall tax revenues would be likely to drop by 2.5% if companies can choose whether to participate. By contrast, if they were forced to participate, total tax revenues would be likely to increase by more than 2%, leaving some European countries, and most notably Spain, Sweden and the United Kingdom better off. We investigate how sensitive these results are to the apportionment factors used.

Item Type: Other Working Paper
Keywords: Corporate Taxation; International Loss Consolidation; Apportionment Rules
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 24 May 2012 14:28
Last Modified: 15 Oct 2015 02:18
URI: http://eureka.sbs.ox.ac.uk/id/eprint/3391

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