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Is VAT also a corporate tax? Untangling tax burdens and benefits for companies

Roxan, Ian (2020) Is VAT also a corporate tax? Untangling tax burdens and benefits for companies. LSE Law, Society and Economy Working Papers (02/2020). Department of Law, London School of Economics and Political Science, London, UK.

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Identification Number: 10.2139/ssrn.3555142


The Great Financial Crisis has increased concerns about whether corporations are paying a ‘fair’ amount of tax in different countries. This begs the question of what a ‘fair’ amount of tax is. The question is complicated by the continuing lack of clarity about the economic incidence of corporate income tax. Recently, it has been argued that the location of the sales revenue (turnover) of a corporation is relevant in determining the fair allocation. Of course, in many countries there is already a tax based on sales, value-added tax (VAT), also called goods and services tax (GST). This paper explores an illustration, arising from a series of cases before the European Court of Justice, of how VAT can impose a burden on corporations. The illustration raises issues of principle for VAT, but also offers lessons about how we tax corporations, particularly given proposals such as for digital sales taxes in the EU and the idea of a destination-based cash-flow tax included in legislative proposals in the US in 2016. This article explores the puzzles raised by the illustration and shows how it can throw light not only on the nature of VAT but also on the incidence of corporate income tax.

Item Type: Monograph (Working Paper)
Official URL:
Additional Information: © 2020 The Author
Divisions: Law
Subjects: K Law > KD England and Wales
H Social Sciences > HJ Public Finance
H Social Sciences > HD Industries. Land use. Labor
Date Deposited: 02 Dec 2019 12:03
Last Modified: 15 Sep 2023 23:48

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