Efficient taxation of multi-national enterprises in the European Union. Bruges European Economic Policy (BEEP) Briefing 5/2003

Current arrangements for multi-national company taxation in EU are plagued by severe conceptual and administrative problems, leading to high compliance costs, considerable uncertainty and ample room for abuse. Integration is amplifying these difficulties. There are two possible approaches in designing an efficient trans-border corporate tax system for the European Union. The first is to consolidate the EU-wide operations of MNEs, using an agreed common base as the reference variable, and then to apportion this total tax base using some presumptive indicators of activity in each tax jurisdiction – hence, implicitly, of the likely benefits stemming from each location. The apportionment formula should respect requisites of neutrality between productive factors and forms of corporate financing. A radically different approach is also available that offers considerable advantages in terms of efficiency, simplicity and decentralisation, including full administrative autonomy of national tax authorities. It entails abandoning corporate income as the relevant tax base and taxing at a moderate rate some agreed measure of business activity such as company value added, sales or employment. These are the variables usually considered in formula apportionment, but they would apply directly without having first to go through the complications of EU-wide consolidation based on a common-base definition. Reference to a broad base, with no exemptions or deductions, would allow to set low statutory rates.

Cartels: the Probability of Getting Caught in the European Union. Bruges European Economic Research (BEER) Papers 12/March 2008

In 1991, Bryant and Eckard estimated the annual probability that a cartel would be detected by the US Federal authorities, conditional on being detected, to be at most between 13 % and 17 %. 15 years later, we estimated the same probability over a European sample and we found an annual probability that falls between 12.9 % and 13.3 %. We also develop a detection model to clarify this probability. Our estimate is based on detection durations, calculated from data reported for all the cartels convicted by the European Commission from 1969 to the present date, and a statistical birth and death process model describing the onset and detection of cartels.