Recent trends in corporate income tax
AbstractThe article describes the recent international developments regarding the corporate income tax and the way in which the Belgian government is trying to respond. For this purpose, it begins by discussing the various indicators which measure the tax burden on corporate profits. Next, it illustrates the trend towards declining statutory corporate tax rates throughout Europe in the last two decades. It is highly likely that the downward trend in nominal rates will persist in the near future. But these nominal rate cuts seem to have been accompanied by an at least equivalent expansion of the tax base, so that government revenues generated by the corporate income tax have actually increased overall. Belgium is following the international trend towards lower nominal rates and a wider tax base. The corporate income tax reform which took effect on 1 January 2003 aimed to eliminate the difference between the Belgian nominal rate and the EU-15 average. The most recent reform introduced the venture capital allowance from the 2007 tax year. This innovative measure reduces the discrimination between the tax treatment of equity capital and borrowings. The differential between the Belgian rate and the EU average has however since 2003 widened again to around 4 to 5 percentages points and will – in the absence of new measures – probably continue to increase in the near future. Finally, the article focuses on the European coordination of corporate income tax. The existence of twenty-seven different corporate income tax systems in the EU entails substantial cost for multinationals. At the same time, there is the fear that tax competition may erode the tax proceeds. Both the EC and a number of committees of experts have therefore published reports in the recent decades, proposing a high degree of corporate income tax harmonisation. So far, these initiatives have not succeeded. More specific initiatives, such as directives aiming to abolish tax distortions in the case of cross-border activities and measures to combat harmful competition have been more successful. The EC is now concentrating on achieving a common consolidated tax base for multinationals.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by National Bank of Belgium in its journal Economic Review.
Volume (Year): (2007)
Issue (Month): I (June)
Contact details of provider:
Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: http://www.nbb.be/
More information through EDIRC
corporate tax; tax competition; EU tax coordination;
Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eggert, Wolfgang & Haufler, Andreas, 2006.
"Company tax coordination cum tax rate competition in the European Union,"
Discussion Papers in Economics
902, University of Munich, Department of Economics.
- Wolfgang Eggert & Andreas Haufler, 2006. "Company-Tax Coordination cum Tax-Rate Competition in the European Union," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(4), pages 579-601, December.
- Wolfgang Eggert & Andreas Haufler, 2006. "Company Tax Coordination cum Tax Rate Competition in the European Union," Ifo Working Paper Series Ifo Working Papers No. 28, Ifo Institute for Economic Research at the University of Munich.
- Harry Huizinga & Luc Laeven, 2006.
"International profit shifting within multinationals: a multi-country perspective,"
European Economy - Economic Papers
260, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Huizinga, Harry & Laeven, Luc, 2008. "International profit shifting within multinationals: A multi-country perspective," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1164-1182, June.
- repec:ner:ucllon:http://discovery.ucl.ac.uk/15006/ is not listed on IDEAS
- Ruud A. de Mooij & Sjef Ederveen, 2006. "What a difference does it make? Understanding the empirical literature on taxation and international capital flows," European Economy - Economic Papers 261, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- European Commission, 2006. "Taxation trends in the European Union: 2006 edition," Taxation trends 2006, Directorate General Taxation and Customs Union, European Commission.
- Nicodeme, Gaetan, 2006. "Corporate Tax Competition and Coordination in the European Union: What do we know? Where do we stand?," MPRA Paper 107, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.