CEU Electronic Theses and Dissertations, 2020
| Author | Cangosz, Ioannis |
|---|---|
| Title | The Tragedy of the Commons: The Impact of Tax Avoidance within the European Union. Is Hungary Becoming a New Tax Haven? |
| Summary | This paper aims to investigate the effects of international tax avoidance and profit shifting by multinational corporates within the European Union (EU), with a special focus on Hungary. Although, being legal procedures, tax avoidance technics hinder fair competition and harms both European citizens and enterprises, while European tax havens gain. Companies create complex cross-country structures to minimise their tax burden, with active participation of governments. According to a report by the European Parliament in 2019, after reducing its corporate income tax rate to a record low 9%, Hungary was declared to be a country with traits of a tax haven. This paper analyses whether inward Foreign Direct Investment (FDI) and Effective Tax Rates (ETR) are good proxies to estimate tax avoidance in EU level, furthermore, based on evidence it examines whether Hungary indeed can be named a tax haven. Findings suggest that FDI inward flows and ETRs are better proxies than statutory tax rates, however, due to lack of data availability, used previous studies show limitations and vary in results. Regarding Hungary, evidence show that, although Hungary provides beneficial structures to multinationals, it cannot be considered as a European tax haven, as corporate income tax estimations are misleading and multinationals rather receive state aid and tax allowance, if investments have real economic implications. |
| Supervisor | Rots, Eyno |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2020/cangosz_ioannis.pdf |
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