Corporate tax rates as a determinant for FDI in the EU

Abstract

In the beginning of the establishment of the EU, the aim was of it the harmonization of taxes. Corporate tax rates are used in each country of the EU and influence especially foreign direct investments. This paper is focused on the development of statutory corporate tax rates in the last 16 years (1995-2011) with emphasis on the original EU-15 members and new EU-12 countries. The objective is to verify the hypothesis that there is competition rather than harmonization in statutory corporate tax rates in the EU. To do so, statistical methods are used, especially standard deviation, coefficient of variance and linear regressive analysis.