Tax dumping is the practice by which a territory offers tax benefits to its taxpayers through tax deductions or rebates.
A tax cut is not considered tax dumping itself. On the other hand, tax dumping can be considered the fact of lowering taxes disproportionately in relation to the average of the country where it is applied.
Tax dumping can cause some territories to have difficulties collecting their taxes compared to others in the face of this tax competition. Situation that reduces the sustainability of public services in the affected territory in this economic rivalry.
Below we highlight the usual taxes within tax dumping practices:
In some countries of the European Union, companies have been relocating in recent years due to the tax advantages offered by other states such as the Netherlands, Luxembourg or Ireland.
This type of tax dumping causes multinationals to settle in these territories and bill there for the income generated in all markets.
Companies like Google or Apple have settled in capitals like Dublin by having a reduced tax policy compared to other European cities.
One of the main causes focuses on the tax burden. In the case of Ireland it is 12.5% compared to 25% that it would have in Spain.
According to reports from the Center for Economic Studies of the UPV, experts in the field defend that companies should choose the country in which the tax burden is lower as it is a completely legal practice.
According to the criteria of The Trust Project