Common Consolidated Corporate Tax Base (Ccctb) versus Canons of Taxation*

By Iwin-Garzynska, Jolanta | Journal of Economics & Management, January 1, 2014 | Go to article overview

Common Consolidated Corporate Tax Base (Ccctb) versus Canons of Taxation*


Iwin-Garzynska, Jolanta, Journal of Economics & Management


Introduction

Financial crisis faced by the European Union has revealed a problem of tax systems that are in operation in the Member States. Difficulties encountered by enterprises stem from different guidelines on calculating corporate income tax and the impossibility of consolidating financial statements for tax purposes. This problem is faced not only by transnational corporations, but all entities (legal persons) conducting activity in the European Union.

One of the main objectives to be accomplished by the European Union law is to remove barriers to the functioning of domestic market and particularly enhance the competitiveness of enterprises. In this context, the concept of Common Consolidated Corporate Tax Base (CCCTB) has been developed. Its role in a comprehensive reform of tax law is undeniable. The reform is to improve the competitiveness of the EU enterprises. CCCTB concept may become a new quality in tax system. After several years of efforts, on 16 March 2011 the European Commission approved a proposal for the directive on a Common Consolidated Corporate Tax Base.

The article is aimed at presenting the essence of CCCTB in the theory of corporate finance and its relevance to firms, based on the survey of companies operating in Poland and other Member States. Table 1 presents structural characteristics of Polish enterprises participating in the survey.

Limited liability companies constituted the majority of respondents participating in the survey. This is due to the fact that this form of business activity is most popular among entities that have legal personality. Another reason behind such a conclusion is that small enterprises, namely employing up to 49 persons, represented the highest percentage of respondents. Furthermore, questionnaires were mainly filled in by chief financial officers. In small companies they are responsible for tax issues. Nevertheless, this is favourable in the context of the survey and its representativeness. So is the period of activity which, in the case of most respondents, exceeded 5 years, i.e. was rather long. Table 2 presents structural characteristics of enterprises operating in the Member States that have responded to the survey.

Unlike Polish companies, the majority of EU entities were joint stock companies. These are large entities and firms employing more than 250 persons represented the highest percentage of respondents. Questionnaires were mainly filled in by chief financial officers, i.e. employees responsible for tax issues. In the companies under discussion, accounting and taxes are separate departments. The latter are managed by chief financial officers since tax payment has a direct effect on firm's liquidity and financial standing.

According to the judgment of the Court of Justice of the European Union, "Although direct taxation falls within their competence, the Member States must nonetheless exercise that competence consistently with Community law" (Judgment of the Court, 1995; 1991). This is a recommendation for Common Consolidated Corporate Tax Base.

1. Canons of taxation in the financial essence of tax and CCCTB concept

Taxation system, composed by various tax titles, should be based on certain cannons. These are fundamental rules that govern tax issues in the enterprise, the state and the EU. An important aim is to seek effective income tax system and thereby include the tax cannons in the concept of CCCTB.

Canons of taxation are not a closed catalogue. This is the knowledge that is not subject to change. It represents phenomena emerging in social and economic reality (Gomulowicz, 2001, p. 12). Therefore, regardless of political and financial situation of the European Union, the concept of CCCTB should be developed in line with fundamental cannons of taxation and implemented in such a fashion in the future.

Adam Smith is considered one of the best known authors of taxation principles. It was him who formulated four canons of taxation, namely canon of equality, canon of certainty, canon of convenience and canon of economy. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Common Consolidated Corporate Tax Base (Ccctb) versus Canons of Taxation*
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.