Minimum Corporate Income Tax: When Fallacies Lead to Failures
4 May 2022
The European Union is debating a directive that would place a minimum effective corporate income tax (CIT) of 15 percent on large-scale company groups. The directive is expected to address tax challenges caused by digitalization and ensure that companies pay “a fair share of tax.” In a nutshell, it suggests a move towards building an international tax conglomerate for raising additional tax revenue.
CIT is known as a tax that damages economic growth and welfare more than other taxes. Globalisation pressures have led to reductions in the rates of CIT globally, making taxation more business-friendly and more efficient. Yet, regulators are now taking an unprecedented effort to preserve the existing CIT model and limit tax competition. The proposed measures raise serious concerns and involve multiple unintended consequences.
This briefing was first featured on Brussels Report.
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