Declining Effective Tax Rates of Multinationals: The Hidden Role of Tax Base Reforms
Jules Ducept () and
Sarah Godar
Additional contact information
Jules Ducept: EU Tax - EU Tax Observatory, Université Paris-Saclay
Working Papers from HAL
Abstract:
This paper documents the rise of corporate tax-base narrowing measures in the EU using a novel dataset covering both tax rate and tax base reforms implemented between 2014 and 2022. Our findings indicate a shift away from the 'cut rate -broaden base' approach, as governments increasingly align corporate taxation with industrial policy objectives. We show that EU tax competition exerts downward pressure on high-tax countries, while the likelihood of tax cuts also varies with the political orientation of governments. Using financial accounts from more than 40,000 affiliates, we find that the average effective tax rate of multinational enterprises in the EU has declined more rapidly than the statutory rate and estimate that tax base reforms account for 24% of this decline. The estimated revenue cost of all reforms combined amounts to 3.5% of total corporate tax revenue collected from the sample firms. These revenue losses should be carefully weighed against the anticipated benefits of tax reforms.
Keywords: Effective Tax Rates; Multinationals; Tax Competition; Corporate Income Tax; Tax Reform; Political Orientation; European Union (search for similar items in EconPapers)
Date: 2025-04
Note: View the original document on HAL open archive server: https://pse.hal.science/hal-05046793v1
References: Add references at CitEc
Citations:
Downloads: (external link)
https://pse.hal.science/hal-05046793v1/document (application/pdf)
Related works:
Working Paper: Declining Effective Tax Rates of Multinationals: The Hidden Role of Tax Base Reforms (2025) 
Working Paper: Declining Effective Tax Rates of Multinationals: The Hidden Role of Tax Base Reforms (2025) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05046793
Access Statistics for this paper
More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().