An Evaluation of the Effects of the European Commission’s Proposals for the Common Consolidated Corporate Tax Base

22 Pages Posted: 18 Aug 2021

See all articles by Alex Cobham

Alex Cobham

Tax Justice Network

Petr Jansky

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies

Chris Jones

Aston University - Aston Business School

Yama Temouri

Aston University

Date Written: February 15, 2021

Abstract

This paper evaluates the Common Consolidated Corporate Tax Base (CCCTB) recently proposed by the European Commission. We find that if the CCCTB is introduced as it is currently proposed (including loss consolidation), then it is likely to impose large tax revenue costs of about one fifth of the corporate tax base. Second, we show that an application of the CCCTB proposals at only the European Union (EU) level would overlook the extent of profit shifting out of the EU and could lock in further unnecessary revenue losses. Third, major EU profit-shifting countries such as Luxembourg, Ireland and the Netherlands may experience significant revenue losses. Based on our analysis, the main policy recommendation is to consider extending the approach to a worldwide system, which would simultaneously deal with profit shifting within and out of the EU, and appears to offer the best prospect for revenue-positive, welfare-enhancing reform. For this to be viable, an immediate priority is to collate cross-country-comparable data and provide precise assessments of the range of policy scenarios.

Keywords: Common Consolidated Corporate Tax Base, CCCTB, corporate taxation, profit shifting, European Union, multinational enterprises

JEL Classification: F23, H25, H32

Suggested Citation

Cobham, Alex and Jansky, Petr and Jones, Chris and Temouri, Yama, An Evaluation of the Effects of the European Commission’s Proposals for the Common Consolidated Corporate Tax Base (February 15, 2021). Transnational Corporations Journal, Vol. 28, No. 1, 2021, Available at SSRN: https://ssrn.com/abstract=3693251

Alex Cobham

Tax Justice Network ( email )

38 Stanley Avenue
Chesham, Bucks HP5 2JG
United Kingdom

HOME PAGE: http://taxjustice.net

Petr Jansky (Contact Author)

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies ( email )

Opletalova St. 26
Prague, 11000
Czech Republic

HOME PAGE: http://ies.fsv.cuni.cz/en/staff/jansky

Chris Jones

Aston University - Aston Business School

Aston Triangle
Birmingham, B47ET
United Kingdom

Yama Temouri

Aston University ( email )

Aston Triangle
Birmingham, B4 7ET
United Kingdom

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