Debates on harmonizing the corporate tax base in the European Union (EU) have been taking place since 1962. This issue was brought back again on the EU agenda at the threshold of EU enlargement in 2004. Currently, Germany and France, the main pushers for corporate tax harmonization, propose to consolidate only the corporate tax base stating that this measure has nothing to do with harmonizing corporate tax rates, the idea fiercely opposed by all new EU entrants.

 

The aims of this study are the following:

 

a)      to present a classification of tax harmonization opportunities and to elicit if harmonization of a corporate tax base is to be treated as tax harmonization;

b)      to work out if the proposed harmonization of the corporate tax base would be able to achieve the goals and solve the problems targeted by harmonization;

c)      to evaluate the impact of harmonization of the corporate tax base;

d)      to give recommendations as to how the goals, attached to harmonization of the corporate tax base, can be attained by alternative tools.

 

The following material will provide a definition of tax harmonization and display the ways it could be implemented, as well as the stages and the degrees of tax harmonization. It will look into the goals set for corporate tax harmonization and discuss their justification and relevance. The study will also analyze the arguments used to vindicate the proposed consolidation of the corporate tax base as the only suitable measure to reach these goals and will evaluate its appropriateness, effectiveness and potential negative implications. At the end of this document generalised implications of tax harmonisation, conclusions and recommendations will be provided.