The EU Proposal to Harmonise Corporate Income Tax. Implications for Austria
The existing system of separate accounting results in high compliance costs for multinationals and tax authorities and entails possibilities of international profit shifting. To counteract these problems, the European Commission has relaunched a proposal for a common consolidated corporate tax base (CCCTB). According to the proposal multinationals should calculate their tax base within the EU according to harmonised rules. In a second step the firm-wide tax base should be consolidated and apportioned to the member countries according to a fixed formula (formula apportionment). A comparison between the harmonised tax base and the current tax rules in Austria suggest that the static fiscal impact of the introduction of a harmonised tax base would be small. The consolidation and formula apportionment would result in a moderate reduction of tax revenues for Austria. In the long-run the introduction of a CCCTB would not fully eliminate tax competition, but rather significantly change its nature. Within the scope of the CCCTB the tax competition would shift from profits to apportionment factors.