Using income reported under IFRS for the purpose of determining CCCTB

Even though there are many means of business taxation in the Czech Republic and the European Union, there have never been a way of taxing a group of companies as a whole without having to tax each of them separately. The European Commission has proposed a way of group taxation by unificating the adjustments to a consolidated income recognized under IFRS into the common consolidated corporate tax base (CCCTB) which is supposed to be divided among the group members based on a certain formula and taxed in their respective country of residence. The practical part of this thesis considers the suitability of IFRS for these purposes and the potential changes in the tax liabilities of the concerned parties. I have come to a conclusion that the proposals of said directives do not regulate the adjustments very thoroughly, since those are primarily taken from the companies‘ accounting ledgers. That could be the reason why the consolidated income is not very different from the CCTB whilst its division among the group members is mostly dependent on the factors in the division formula that may be easily manipulated. There is a minimal disparity between the overall group tax liability with and without the application of CCCTB directives whereas the individual taxes change heavily which results in disparity of tax revenues in the respective countries of residence and it might be the cause of the initial failure of the whole concept.