Keywords
nominal tax rate
effective tax rate
tax harmonization
Abstract
Corporate taxes are important for this study since differences in rates can lead to distortions in economic competition and relocation of capital to countries with better tax conditions. The goal of this article is to verify whether countries with lower corporate taxes are catching those with higher rates. To achieve this objective, we conduct an analysis of the development of nominal and effective tax rates in EU member states for the period from 2004 to 2022. Afterward, we tested the relationship of these tax rates for corporate taxation using the Beta convergence model, observing the speed of convergence and examining whether the differences decrease over time. The results of the analysis demonstrate that the significant decline in nominal and effective tax rates during the observed period indicates an effort to enhance tax competitiveness and stimulate economic activity through tax measures.
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