It has been long assumed that multinational taxpayers tend to shift profits to relatively low tax rate jurisdictions, for the purpose of reducing their global overall tax burden. Recently, research additionally shows the opposite: multinational taxpayers may shift profits to relatively high tax rate jurisdictions where there are loss-making affiliates. The proposed Common Consolidated Corporate Tax Base (CCCTB) system in the EU also provides the same opportunity of such »Shifting-To-Losses«strategy. This paper explains how the same scenarios can take place under the proposed CCCTB and suggests a practical solution: to adopt an annual quantitative restriction to the losses that could be offset every tax year.

Additional Metadata
Keywords Common Consolidated Corporate Tax Base (CCCTB), losses, Base Erosion and Profit Shifting (BEPS), un-harmonized tax rate, European Union, tax planning
Persistent URL hdl.handle.net/1765/130899
Journal UCPH Fiscal Relations Law Journal (FIRE Journal)
Citation
Chen, S. (2019). The Strategy of Shifting-to-Losses: The Case of Common Consolidated Corporate Tax Base (CCCTB) in the European Union. UCPH Fiscal Relations Law Journal (FIRE Journal). Retrieved from http://hdl.handle.net/1765/130899