TY  - EJOU
AU  - Bustos-Contell, B. Elisabeth
AU  - Climent-Serrano, C. Salvador
AU  - Labatut-Serer, L. Gregorio
TI  - Tax Incentives: An Effective Mechanism to Achieve EU Harmonization?
T2  - Journal of Business Accounting and Finance Perspectives

PY  - 2020
VL  - 2
IS  - 2
SN  - 2603-7475

AB  - For decades, European Union (EU) wide corporate tax harmonization has been sought to eradicate business relocation for tax reasons. It is hoped that this harmonization will ensure that companies pay taxes in the countries where they operate. One mechanism that countries use to achieve this harmonization is tax incentives. Yet each country establishes its own incentive structure, according to its statutory tax rate. This study analyzes the effective tax burden in the initial 15 EU member states between 2006 and 2014 to identify significant differences that prevent tax harmonization across these countries. The statutory and effective tax rates are used to evaluate the tax burden. The net tax incentives and disincentives are also considered. The analysis shows that between 2006 and 2014, these 15 member states used tax incentives to close the gaps among these countries’ tax burdens. Countries with above-average effective tax rates offered greater tax incentives than countries with below-average effective tax rates. However, though these tax policies reduced the gap in the tax burden, harmonization of the effective tax rate was not achieved during the study period.
KW  - effective tax rate
KW  - incentives
KW  - tax burden
KW  - tax harmonization
DO  - 10.35995/jbafp2020012