Basque Economic Agreement and Business Taxation

Basque Economic Agreement and Business Taxation

The fiscal impact of the creation of the Joint Committee on benefit tax (1927-1933)

Mikel Erkoreka

The Joint Committee on benefit tax was set up in 1927 with the aim of ensuring the strict and systematised fulfilment of the principle of territoriality in the collection of the tax on benefits within the Basque Economic Agreement system. The creation of the Joint Committee altered substantially the Basque fiscal scenario. The Joint Committee converted all the companies that it affected into tax points of connection between the Basque and Spanish tax systems. The purpouse of this article is to quantify the fiscal and budgetary implications of the creation of the Joint Committee on benefit tax. The article demonstrates that in fiscal and budgetary terms, the introduction of the Joint Committee benefited mainly the Spanish Ministry of Finance.