Company tax coordination cum tax rate competition in the European Union

This paper reviews the recent theoretical literature that analyses
the European Union's policy to eliminate preferential corporate tax
regimes and the proposal to introduce a consolidated EU tax base
with formula apportionment for the taxation of multinational firms.
Since neither proposal includes a harmonisation of corporate tax
rates, a core issue is how tax competition between member states
will be affected by these partial coordination measures. The
conclusions from our review are supportive of the EU's ban on
preferential tax regimes, but the economic incentive effects of a
switch to formula apportionment are found to be ambiguous.