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For this purpose, the European Commission made a non-binding Recommendation that Member States should consider using the EU list of non-cooperative jurisdictions for tax purposes that includes only non-EU countries.
See IMF (2020a). IMF (2020b) estimates an overall global fiscal cost of 12 percent of global GDP.
This paper takes as a given that it is desirable to tax corporations. Reasons to do so are the desire to tax corporate rents or redistribute some income. While this could be achieved with greater taxation of dividends, a share of these flows to nonresidents. Furthermore, absent corporate income taxes, individuals could avoid personal income taxes by choosing to incorporate. For a detailed discussion see IMF (forthcoming) and Bastani and Waldenström (2020).
Papers that discuss these channels include a surge in profitability due to globalization (Becker and Fuest 2007), a rising share of the financial sector in the economy (Devereux and others 2002), and incentives for businesses to incorporate (De Mooij and Nicodème 2008).
CGOS measures the return on corporate investment before tax, depreciation, and interest deductions. CGOS is used as proxy for corporate profits.
See Devereux and Griffith (2003) for the derivation of AETRs and empirical evidence.
De Mooij and others (2020) report that SPEs in Luxembourg spend almost 3 percent of GDP on salaries and purchases of business services.
Feld and Heckemeyer (2011) report similar results.
Heckemeyer and Overesch (2017) combine 25 of these studies in a meta-analysis, producing an average “consensus” estimate of the semi-elasticity of 0.8. Beer, de Mooij, and Liu (2020a) expand the list of studies, improve on the empirical strategy, and obtain a larger semi-elasticity of 1.0. Moreover, they find that the elasticity is rising over time and that a semi-elasticity of 1.5 best reflects the current value.
Figures vary across countries. Nicodème, Caiumi, and Majewski (2018) report that the CIT rate cuts between 1995 and 2015 lowered revenues by 0.81 percent of GDP in the EU 28 and that changes to the base overcompensate the rate effect.
The 2006 Directive recasts the 1977 Directive (77/388/EEC of 17 May 1977) on the harmonization of the laws of the Member States relating to turnover taxes.
The OECD impact assessment assumes a carve-out of 10 percent on payroll and deprecation of tangible assets (OECD 2020): https://www.oecd.org/tax/beps/tax-challenges-arising-from-digitalisation-economic-impact-assessment-0e3cc2d4-en.htm
The original proposals include only three factors (assets, employment, and sales). The data factor was proposed in 2018; see the European Parliament legislative resolution of 15 March 2018: https://www.europarl.europa.eu/doceo/document/TA-8-2018-0087_EN.html
In 2018, France and Germany issued a common position paper on the CCCTB, suggesting some modifications to the proposed common base, such as eliminating the notional deduction for equity and the super deduction for R&D and postponing the cross-border loss relief. It also suggested making the common base mandatory for all companies.
These simulated effects of the CCCTB package include R&D deductions and an allowance for growth and investment (“AGI,” which provides an allowance for corporate equity).
Under the EU “Enhanced Cooperation” procedure, a subset of a minimum of nine Member States can establish advanced integration without the involvement of other member countries: https://eur-lex.europa.eu/summary/glossary/enhanced_cooperation.html