Tax sharing under the Common Consolidated Corporate Tax Base: Measurement of the profit generating factors in the agriculture sector

This paper examines various configurations of the formula under the formulary apportionment methodology from the perspective of the explanatory power of the variability in profitability of multinational companies with the aim to identify the best-performing formula based on analytical evidence of panel microeconomic data. The considered configurations of the formula are based on the novel composition of the allocation formula indicated under the BEFIT proposal, preceding the CCCTB proposal, and traditionally used formulas, at the sub-national level, in Canada and the United States. The empirical analysis uses microeconomic panel data obtained from the Orbis database for 77,087 subsidiaries affiliated with 2,283 parent companies observed from 2011 to 2020. Utilising the correlated random effect approach, accounting for time-specific effects, including the time-constant explanatory variables such as economic activity, classified by NACE codes and the EU Member States' jurisdiction, this paper devises a novel formula configuration. Besides a novel configuration of the apportionment formula, consisting of sales, costs of employees, tangible and intangible assets, this paper estimates proportional weights of apportionment factors and concludes with policy recommendations.

Section: Fa Explanatory Power Of Variability In Profitability Of Comp...mentioning

confidence: 99%

Section: Fa Explanatory Power Of Variability In Profitability Of Comp...mentioning

confidence: 99%

Section: Datamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Novel Configuration of Formulary Apportionment Using the Correlated Random Effect Approach

Mlčúchová

2024

Panel Regression Model: A Tool for the Estimation of the Arm´s Length SME Profitability

Nerudová¹,

Solilová²,

Bohušová³

et al. 2017

Panel Regression Model: A Tool for the Estimation of the Arm´s Length SME ProfitabilityIn this paper we focus on transfer pricing issues of SME with aim to propose a methodological tool in the form of panel-regression model estimating arm´s length EBIT margin of industry where SME is operating, which is based on the Action Plan of the European Commission to ensure fair and effective corporate taxation, fulfilling the premise of simplicity and non-increasing the administrative burden and compliance costs of taxation. As a result separate panel regression models were determined for each industry sectors and EU Member States based on the variables, such as operating revenues, payroll, added value and tangible fixed assets. Those regression factors are able to statistically significantly explain the variability in the generation of EBIT margin in case of SME in EU 28, which is often used for transfer pricing purposes. Panel regression models can be used as a simple methodological tool to estimate the arm´s length SME profitability in the industry sector and the state where is SME operating. Moreover, it is able to identify possible distortion of transfer prices if SME is not generating arm´s length EBIT margin based on the model. Keywords:European union (EU), small and medium-sized entities (SME), transfer pricing rules, arm's length principle, regression model JEL Classification: F23, K33, G38 ÚvodSoučasné zdanění právnických osob neodpovídá realitě 21. století. Ta je silně ovlivněná globalizací, mobilitou výrobních faktorů a kapitálu, digitalizací, komplexnějšími obchodními modely a agresivním daňovým plánováním, které je umožněno existencí mezer mezi jednotlivými národními systémy korporátního zdaňování. Výsledkem výše uvedeného je současná eroze daňových základů a přesouvání zisků (BEPS) do jurisdikcí s nízkým daňovým zatížením. Jedná se o nadnárodní fenomén, proti němuž se snaží státy bojovat prostřednictvím mezinárodních platforem jako OECD nebo G20 a samozřejmě i EU. V případě převodních cen, které spadají do oblasti korporátního zdaňování, je současný systém pro daňové poplatníky a daňovou administrativu příliš složitý a těžce

Revenue Potential of the CCCTB in the European Union

Solilová¹,

Nerudová²

2018

Revenue Potential of the CCCTB in the European Union The non-existence of a link between reaching smart, sustainable and inclusive growth and the EU budget is resulting in the existence of sustainability gaps in the European Union. This research reveals that the introduction of the Common (Consolidated) Corporate Tax Base (hereinafter as C(C) CTB) could be an important contribution to close the existing sustainability gaps. To research the revenue potential of the C(C)CTB, a model based on a remittance system was designed. The system expects the replacement of the VAT-based own resource (resp. GNI-based own resource) through the transfer of a part of the corporate tax revenues from the C(C)CTB raised on the national level to the EU budget. The results of the research show that the C(C)CTB-based own resource would be able to fully replace the VAT-based own resource, with the only exception of Cyprus. However, the C(C)CTB-based own resource cannot be considered to be a sufficient resource to fully replace the GNI-base own resource.