1/ 📉 Multinational companies in the EU are paying less tax now than they did a decade ago. But why?
Our new policy note reveals that the average effective tax rate of MNEs in the EU dropped 2.7 percentage points from 2014 to 2022.
🔎 For more insights: https://www.taxobservatory.eu/publication/the-new-face-of-corporate-tax-competition/
Our new policy note reveals that the average effective tax rate of MNEs in the EU dropped 2.7 percentage points from 2014 to 2022.
🔎 For more insights: https://www.taxobservatory.eu/publication/the-new-face-of-corporate-tax-competition/
Comments
It’s not just about countries cutting tax rates.
But the way countries define what counts as taxable profits, the tax base, is also changing 🔄
But now, the trend is different: countries are increasingly narrowing multinational taxable base to stay competitive.
📉 Tax rate cuts only explain about 0.9 points of the drop.
📉 But changes to what gets taxed — even after anti-avoidance rules — explain another 0.6 points.
That’s money that could’ve gone to public services — like schools 🏫, hospitals 🏥, or green investments ♻️.
💡 One reason is tax competition between Member States.
Reforms are more likely when a Member State’s effective tax rate is higher than the Union average
Evidence shows they’re redesigning incentive policies to stay compliant and competitive 🏛️
https://clayshentrup.medium.com/wealth-and-welfare-3582df67274d