Prague Economic Papers 2018, 27(4):427-448 | DOI: 10.18267/j.pep.660

The CCCTB Allocation Formula Game: The Performance of Economics Sectors

Kateřina Krchnivá1, Danuše Nerudová2
1 Faculty of Business and Economics, Mendel University, Brno, Czech Republic (k.krchniva@gmail.com)
2 Faculty of Business and Economics, Mendel University, Brno, Czech Republic (d.nerudova@seznam.cz)

The implementation of the Common Consolidated Corporate Tax Base (hereinafter CCCTB) in the European Union will probably have an impact on tax revenues of the concerned states since the distribution of the group tax base shall reflect the capacity to earn income by individual group members. This is secured by the employing of the allocation formula containing three factors that shall reflect the profit generating process of individual companies. The paper analyses the explanatory power of the proposed CCCTB formula on the data sample of group companies with a link to the Czech Republic - either parent or subsidiary company in the group covered in dataset is tax resident of the Czech Republic. The obtained results are evaluated on the level of individual economic sector with the aim to verify if the proposed CCCTB formula is the most suitable for them, where the sufficiency of the explanatory power of the allocation formula was indicated based on the assigned change of distributed profit to the respective economic sector.

Keywords: common consolidated corporate tax base, formula apportionment, NACE sectors, profit
JEL classification: F23, H25, K34

Published: August 1, 2018  Show citation

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Krchnivá, K., & Nerudová, D. (2018). The CCCTB Allocation Formula Game: The Performance of Economics Sectors. Prague Economic Papers, 27(4), 427-448. doi: 10.18267/j.pep.660
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