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

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).