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Dissecting the EU’s Recent Anti-Tax Avoidance Measures: Merits and Problems

Author

Listed:
  • Richard Collier
  • Seppo Kari
  • Olli Ropponen
  • Martin Simmler
  • Maximilian Todtenhaup
Abstract
Profit-shifting activities by multinational enterprises (MNEs) is widespread. Academics and policymakers agree that such activity should be curbed by diminishing the opportunities that exist within the international tax system The EU has legislated to reduce the scope for such activity, with a central tool being the Anti-Tax Avoidance Package. In this EconPol policy report, the authors argue that while elements of the package are likely to raise the minimum standards of anti-tax avoidance measures in Europe, they still leave scope for tax-planning. At the same time, the measures may lead to double taxation. They will also make the tax code more complex and distort firms’ decisions, generating social costs as a result. The balance between benefits and costs is not satisfactory. The authors discuss the pros and cons of other instruments like withholding taxes and formulary apportionment. While these measures would be of some help, in the long term, a fundamental reform of the international tax system is necessary.

Suggested Citation

  • Richard Collier & Seppo Kari & Olli Ropponen & Martin Simmler & Maximilian Todtenhaup, 2018. "Dissecting the EU’s Recent Anti-Tax Avoidance Measures: Merits and Problems," EconPol Policy Reports 8, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpr:_8
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    References listed on IDEAS

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    2. Nora Paulus, 2020. "The Impact of CFC-Rules on Tax Competition," DEM Discussion Paper Series 20-17, Department of Economics at the University of Luxembourg.
    3. Fateme Kaghazloo & Ana Clara Borrego, 2022. "Designing a Model of the Factors Affecting Tax professionals' Tax noncompliant behaviour using The ISM Approach," Public Organization Review, Springer, vol. 22(4), pages 1099-1120, December.
    4. Künnapas Kaido, 2020. "Dysfunctionality from the Sovereignty Conflict in the ATAD GAAR," TalTech Journal of European Studies, Sciendo, vol. 10(1), pages 97-122, June.
    5. Vitols, Sigurt, 2021. "Board Level Employee Representation and Tax Avoidance in Europe," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Ahead-of-, pages 1-1.
    6. Ropponen, Olli, 2021. "Interest Limitation Rules and Business Cycles: Empirical Evidence," ETLA Working Papers 90, The Research Institute of the Finnish Economy.

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