An evaluation of the effects of the European Commission's proposals for the Common Consolidated Corporate Tax Base

Alex Cobham, Petr Janský, Chris Jones, Yama Temouri

    Research output: Contribution to journalArticlepeer-review

    2 Scopus citations

    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.

    Original languageBritish English
    Pages (from-to)29-50
    Number of pages22
    JournalTransnational Corporations
    Volume28
    Issue number1
    DOIs
    StatePublished - 30 Apr 2021

    Keywords

    • CCCTB
    • Common consolidated corporate tax base
    • Corporate taxation
    • European Union
    • Multinational enterprises
    • Profit shifting

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