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Tax competition strategies in corporate income tax - The case of EU countries

Author

Listed:
  • Beata Guziejewska
  • Wojciech Grabowski
  • Szymon Bryndziak

Abstract

The process of globalization, which is ongoing in a variety of dimensions, the ever-increasing mobility of capital and production factors as well as the fiscal problems in many European countries make the debate over tax competition still relevant today. The article discusses the problem of tax competition in the corporate income tax in the context of inward foreign direct investment in the Member States of the European Union. The advantages and disadvantages of tax competition as well as its consequences for the revenues from corporate income tax and for the inward foreign direct investment have been presented for the years 2000-2013. On the basis of an analysis of the literature and a general statistical analysis, the authors identified and described three strategies of tax competition: aggressive, moderate and conservative. Furthermore, rankings of the countries were created on the basis of two elements, namely: changes to FDI and the share of CIT revenues in GDP. The authors have also estimated parameters of the dynamic panel model in order to find relations between the corporate income tax and the ratio of FDI to GDP and have found differences between crisis period and stable period and differences in results for two groups of countries (new members of the EU and old ones).

Suggested Citation

  • Beata Guziejewska & Wojciech Grabowski & Szymon Bryndziak, 2015. "Tax competition strategies in corporate income tax - The case of EU countries," Business and Economic Horizons (BEH), Prague Development Center, vol. 10(4), pages 253-271, January.
  • Handle: RePEc:pdc:jrnbeh:v:10:y:2015:i:4:p:253-271
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    Cited by:

    1. Martina Helcmanovská & Alena Andrejovská, 2021. "Tax Rates and Tax Revenues in the Context of Tax Competitiveness," JRFM, MDPI, vol. 14(7), pages 1-13, June.
    2. Bizņa Valentīna & Jurušs Māris & Laizāns Tālis & Šnikvalds Roberts, 2018. "Assessment of Impact of Corporate Income Tax Suspension on Financial Performance of Businesses," Economics and Business, Sciendo, vol. 32(1), pages 172-181, September.
    3. Neba Bhalla & Rakesh Kumar Sharma & Inderjit Kaur, 2023. "Effect of Goods and Service Tax System on Business Performance of Micro, Small and Medium Enterprises," SAGE Open, , vol. 13(2), pages 21582440231, June.

    More about this item

    Keywords

    Tax competition; tax competition strategies; foreign direct investment; corporate income tax; tax rates;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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