MANDATORY CCCTB IMPLEMENTATION IN THE EUROZONE AND ITS IMPACT ON CORPORATE TAX REVENUES IN THE CZECH REPUBLIC

The European Commission has been attempting to coordinate the corporate taxation systems of the EU Member States since 1962. One of the most ambitious projects in the history of the harmonization effort was introduced on 16 March 2011, when the European Commission published, after more than ten years of work, the text of the CCCTB Directive proposal. The directive proposal suggests the consolidation regime and the allocation formula with three equally weighted factors – sales, labour and assets, i.e. the consolidated tax base should be shared among the members of the group based on those micro factors. That tax-sharing mechanism as a new allocation rule has raised much discussion and will defi nitely have an impact on EU Member States’ budgets. The aim of the paper is to research the impact of mandatory CCCTB implementation in the Eurozone on tax bases in the Czech Republic and consequently on Czech corporate tax revenues, and to identify whether the implementation of the system in the Eurozone will result in the outflow or inflow of tax bases from/to the Czech Republic. The research is based on empirical data from the Amadeus and Bankscope databases covering 2,424 parent companies with 3,860 Czech subsidiaries. In order to verify the results of the research, a sensitivity analysis was also performed. The research revealed that mandatory implementation of the CCCTB system in the Eurozone would have negative impact on the tax bases currently generated and located in the Czech Republic. As a result of this fact, the Czech Republic would lose between 0.87% and 8.84% of the corporate tax liability recorded in 2011.