<p><p>The European Commission proposes to replace the current system of taxing corporate income using separate accounting by a two-step 'consolidation 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 per cent if companies could choose whether to participate. By contrast, if they were forced to participate, total tax revenues would be likely to increase by more than 2 per cent, leaving some European countries - most notably, Spain, Sweden and the UK - better off. We investigate how sensitive these results are to the apportionment factors used.</p></p>
Authors
Michael Devereux
Research Associate University of Oxford and Oxford Centre for Business Taxation
Michael joined the IFS in 1982 and he has been a Research Fellow since 1990 and a Professor of Economics at the University of Oxford.
Simon Loretz
Journal article details
- DOI
- 10.1111/j.1475-5890.2008.00067.x
- Publisher
- Blackwell Publishing
- ISSN
- Print 0143-5671 Online: 1475-5890
- JEL
- H25, H87
- Issue
- March 2008
Suggested citation
Devereux, M and Loretz, S. (2008). 'The effects of EU formula apportionment on corporate tax revenues' (2008)
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