The authors of the study analyse the solutions in the area of income taxes functioning in individual countries of Central and Eastern Europe (CEE) over a period of almost 30 years.
During such extended period, the key factors making a significant imprint on the tax systems of the CEE countries were: various paths of their transformation, thorough reforms of the public finance systems, membership in the EU and the necessity of tax harmonisation, financial crisis, international capital mobility, international tax competition and strong pressure of fiscal and short-term needs of the state budget. In all of the countries covered by the study, tax reforms were carried out with the intention of aligning the tax legislation to the modern level of their socio-economic development. Detailed characteristics of solutions in individual countries has confirmed that the present day system of direct taxes in the CEE countries comprises, in principle, diversified national tax systems.
Let us pay attention at least to:
- adoption of different fundamental principles of taxation: taxation of generated profits (income) versus taxation of profits paid to owners (Estonian and Latvian system);
- diversified relations between the balance sheet law and the tax law (relation between tax income and balance sheet profit, permanent differences, temporary differences);
- adoption of diverse principles with respect to the moment of emergence of tax revenues/ costs: the accrual basis versus the cash basis;
- adoption of diverse principles for calculating the basis of taxation (e.g. the definition of revenue earning costs, scope of exclusions, corrections via transfer pricing, system of deductions).