Patterns of Tax Arbitrage and Decentralized Tax Autonomy
AbstractThe abolition of internal border controls in the European Union (EU) creates new opportunities of tax arbitrage for rational economic agents. Cross-border shopping and trade deflection become important sources of tax avoidance when tax rates differ across countries. The paper identifies arbitrage patterns for the value-added tax (VAT) proposals of the European Commission as well as a restricted origin regime within the EU. Since any of these regimes causes non-equivalence to the benchmark case of a global destination-bases VAT, calls for a further harmonization of European VAT rates are likely to remain. In contrast, a mixed VAT system which follows the origin principle within the EU but a common destination principle between the EU and the rest of the world, is shown to be equivalent to a pure destination regime. This mixed regime allows for maintaining nationally dispersed VAT rates, and it also reduces the required price adjustment vis-…-vis the rest of the world by an optimal selection of the common external tax.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 95-08.
Date of creation:
Date of revision:
Contact details of provider:
Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann).
If references are entirely missing, you can add them using this form.