Conclusion
The corporate tax policy of the new EU member states does create pressures for some of the old member states to reduce their corporate taxes, in particular statutory corporate tax rates. But reacting to this pressure by enforcing mimimum tax rates in the EU would be counterproductive. It would slow down the economic catching up process in eastern Europe and question the competitiveness of the entire EU as a location for investment compared to other countries and regions in the world economy. There are potential benefits from more coordination in the field of corporate taxation, but this coordination should aim at removing tax obstacles to border-crossing investment and at reducing the compliance costs of the tax system. This requires targeted measures in the area of tax base coordination. Introducing minimum corporate tax rates, in contrast, would be harmful for both high and low tax countries in the EU.
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Comparisons of effective tax burdens, which take into account both tax rates and tax bases, also lead to the result that the corporate tax burden in eastern Europe is lower than in the old EU member countries, see e.g. ZEW/Ernst&Young: Company Taxation in the New EU Member States, Frankfurt a.M. and Mannheim 2003.
See Code of Conduct Group: Report of the Code of Conduct Group to the ECOFIN Council, Press Release Nr. 4901/99, Brussels, 29.02.2000.
M. Keen: Preferential regimes can make tax competition less harmful, in: National Tax Journal, Vol. LIV, No. 4, 2001, pp. 757–762.
See Commission of the European Communities: Taxation in the Internal Market, COM(2001), 582final.
See J. Mintz: Corporate tax harmonization in Europe: It’s all about compliance, in: International Tax and Public Finance, Vol. 11, 2004, pp. 221–234.
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Fuest, C., Fuest, W. A minimum corporate tax rate would be harmful for both high and low tax countries. Intereconomics 39, 183–186 (2004). https://doi.org/10.1007/BF03032108
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DOI: https://doi.org/10.1007/BF03032108