Veronika Solilová

Missing Data and its Impact on the CCCTB Determination

Abstract The impact of missing data on quantitative research can be serious. It could lead to biased estimates of parameters, loss of information, increased standard errors or decreased statistical power and weakened results of findings. The aim of the paper is to discuss three missing data methods: regression, imputation and multiple imputation; and their impact on the CCCTB determination and based on the results to identify the most suitable method which will lead to the least distortion. The results gained with the application of those methods are compared with those obtained from the complete data set.

Overall Approach of the EU in the Question of Emissions: EU Emissions Trading System and CO2 Taxation☆

Abstract The EU Emissions Trading System was established in 2005 as the cost-effective tools for cutting greenhouse gas emissions. Initially allowances were allocated free, but from 2013 auctioning is the main method of allocating allowances. Further, the European Commission proposed CO2-related taxation in a way that complements the EU ETS in order to establish a comprehensive and consistent CO2 price signal outside the EU ETS. The aim of the paper is to discuss the EU ETS system, its development in 2013, and its impacts on the proposed CO2-related taxation. Further there is mentioned position of the Czech Republic in this question.

Výnosový potenciál společného konsolidovaného korporátního základu daně v Evropské unii

The non-existence of a link between reaching smart, sustainable and inclusive growth and the EU budget is resulting in the existence of sustainability gaps in the European Union. This research reveals that the introduction of the Common (Consolidated) Corporate Tax Base (hereinafter as C(C)CTB) could be an important contribution to close the existing sustainability gaps. To research the revenue potential of the C(C)CTB, a model based on a remittance system was designed. The system expects the replacement of the VAT-based own resource (resp. GNI-based own resource) through the transfer of a part of the corporate tax revenues from the C(C)CTB raised on the national level to the EU budget. The results of the research show that the C(C)CTB-based own resource would be able to fully replace the VAT-based own resource, with the only exception of Cyprus. However, the C(C)CTB-based own resource cannot be considered to be a sufficient resource to fully replace the GNI-base own resource.

Safe Harbour as an Alternative Approach to Transfer Pricing of SMEs

This segment of the book contains the history of development of safe harbours from the perspective of transfer pricing issues, advantages and disadvantages of safe harbours, recommendations for the form and scope of safe harbours and the current situation of safe harbours in the European Union. The last part of the chapter includes our proposal on safe harbours as an alternative approach to the transfer pricing of SMEs in the European Union.

Compliance Costs of Transfer Pricing for SMEs

This segment of the book contains an analysis of compliance costs of taxation with respect to SMEs and transfer pricing issues as well as critiques of current approaches. The last part of the chapter includes a case study on the determination of compliance costs of transfer pricing with respect to SMEs in the Czech Republic, the Slovak Republic and Poland, which represent countries from the Visegrad Group, and the European Union, as based on the results of our questionnaire. To determine the compliance costs of transfer pricing, cost and time approaches were used.

Evaluating a Questionnaire on Transfer Pricing Issues of SMEs That Operate in the EU

This chapter evaluates a questionnaire regarding transfer pricing issues of SMEs that operate in the European Union. This questionnaire focuses on general transfer pricing concepts, such as transfer pricing methods, documentation, advance pricing agreements, a country-by-country report, the compliance costs of transfer pricing, the time needed for transfer pricing requirements and tools that decrease the compliance costs of transfer pricing. The evaluation is performed from several points of view. The evaluation is conducted first from the perspective of all EU Member States where SMEs operate, then from the perspective of parent companies and finally from the perspective of subsidiaries. Moreover, the questionnaire detects whether SMEs prefer to introduce simplified measurements for transfer pricing rules and specifies which type of measurement is preferred. In addition, the questionnaire determines whether SMEs prefer the implementation of a C(C)CTB system and whether they would welcome EU-comparable benchmarks for selected industries.

CCCTB as a Suitable Solution

This chapter analyses the impacts of the fundamental change in corporate taxation in the EU recently proposed by the EC especially in relation to small and medium-sized enterprises (SMEs). It begins by discussing the history of harmonization efforts of corporate taxation, the current situation of corporate taxation in the EU and the recent proposal of the Common Corporate Tax Base (CCTB) and Common Consolidated Corporate Tax Base (CCCTB) Directives. The core part of the chapter presents the results of research on the impacts of the introduction of the directive proposals on the performance of SMEs acting in the EU.

Transfer Pricing Rules for SMEs in the EU

The aim of this chapter is to provide the background of transfer pricing rules from both the theoretical and practical points of view. The arm’s length principle is considered a key pillar of the rules; therefore, great emphasis is placed on explaining these rules as well as their history and practical application. The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (hereafter TP Guidelines) provide guidance for applying the arm’s length principle to pricing for tax purposes and to cross-border transactions between associated enterprises; therefore, the chapter provides a detailed explanation of the TP Guidelines, particularly a comparability analysis, which is considered the core issue in the application of the arm’s length principle, transfer pricing methods, and documentation requirements and administrative approaches to transfer prices. However, TP Guidelines make no direct distinction between types or sizes of multinational enterprises; i.e., all enterprises, regardless of their size, are subject to the same principles and recommendations. Therefore, the chapter also focuses on transfer pricing rules in relation to SMEs, critical concerns in transfer pricing and compliance costs issues. The last part focuses on recommendations, namely, an introduction of safe harbour and common (consolidated) corporate tax base.

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 outfl ow or infl ow 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.

Panelový regresní model: nástroj pro odhad obvyklé rentability tržeb pro účely převodních cen v kontextu malých a středních podniků

In this paper we focus on transfer pricing issues of SME with aim to propose a methodological tool in the form of panel-regression model estimating arm´s length EBIT margin of industry where SME is operating, which is based on the Action Plan of the European Commission to ensure fair and effective corporate taxation, fulfilling the premise of simplicity and non-increasing the administrative burden and compliance costs of taxation. As a result separate panel regression models were determined for each industry sectors and EU Member States based on the variables, such as operating revenues, payroll, added value and tangible fixed assets. Those regression factors are able to statistically significantly explain the variability in the generation of EBIT margin in case of SME in EU 28, which is often used for transfer pricing purposes. Panel regression models can be used as a simple methodological tool to estimate the arm´s length SME profitability in the industry sector and the state where is SME operating. Moreover, it is able to identify possible distortion of transfer prices if SME is not generating arm´s length EBIT margin based on the model.