The effect of EU enlargement on the efforts towards corporate tax harmonisation

Abstract

The objective of this dissertation is to analyse the relationship between the enlargement of the European Union and efforts towards corporate tax harmonisation. Although this issue is widely discussed in literature, often in terms of arguments for an against, and the concept of taxation at European level has been compared and analysed in depth, there is little of note when it comes to the socalled enlargement effect on the debate. As such, a comparison of Member States was carried out in order to note identifying factors in their positions on the matter and whether the year of accession plays a role, seeking to answer the main research question: Does the enlargement of the EU increase the likelihood of the adoption of a common European tax policy? This brought several other questions to the fore, namely: what are the main cleavages between Member States for and against harmonisation, and their arguments? Is a ‘race to the bottom’ occurring among EU states? What has been the progress in terms of harmonisation thus far? Are Mediterranean and Eastern Member States less likely to favour harmonisation? Are older Member States more likely to favour harmonisation? What effect will Brexit have on the debate? This dissertation aims to answer these key questions by applying international tax theory, regime theory and federalist theories in order to illuminate the primary positions of states in the debate. In essence, it seems likely that the enlargement effect is indeed present and the more the states join the bloc, the less likely it is that tax harmonisation efforts will succeed. The Member States joining the bloc seem predominantly less likely to favour such measures and more likely to employ competitive tax policy in order to boost their own revenue.