Is Taxation Affecting The Attractiveness Of Central And Eastern Europe Countries For Fdi?
AbstractThe target of this paper is to determine whether taxation affects the attractiveness of Central and Eastern Europe (CEE) countries for foreign investors. In this scope, the paper analyzes the impact of taxation for the location decision of foreign direct investment (FDI) in CEE countries both in 2007 and 2010. A taxation index investing the effect of multiple host country taxes is developed in order to draw the attractiveness matrix for the countries taken into account. The taxation level comprises the corporate income tax rate, representing direct taxation, the value-added tax (VAT) and the social security contributions expressing indirect taxation and finally the ease of paying taxes, as provided in Doing Business report. The results indicate that relieving the burden of paying taxes by tackling the taxation issue is a mean for improving the FDI attractiveness of a country. Still, there are other factors that have higher influence on FDI inflows. The main finding is that there is no perfect correspondence between the shifts in taxation rankings and the FDI inflows performance.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Constantin Brancusi University, Faculty of Economics in its journal Constatin Brancusi University of Targu Jiu Annals - Economy Series.
Volume (Year): 1 (2012)
Issue (Month): (March)
foreign direct investment; corporate income tax rate; indirect taxation; Central and Eastern Europe;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christian Bellak & Markus Leibrecht & Jože P. Damijan, 2009.
"Infrastructure Endowment and Corporate Income Taxes as Determinants of Foreign Direct Investment in Central and Eastern European Countries,"
The World Economy,
Wiley Blackwell, vol. 32(2), pages 267-290, 02.
- Christian Bellak & Markus Leibrecht & Joze P. Damijan, 2007. "Infrastructure endowment and corporate income taxes as determinants of Foreign Direct Investment in Central- and Eastern European Countries," LICOS Discussion Papers 19307, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Dana Hajkova & Giuseppe Nicoletti & Laura Vartia & Kwang-Yeol Yoo, 2006. "Taxation, Business Environment and FDI Location in OECD Countries," OECD Economics Department Working Papers 502, OECD Publishing.
- Madies, Thierry & Dethier, Jean-Jacques, 2010.
"Fiscal competition in developing countries : a survey of the theoretical and empirical literature,"
Policy Research Working Paper Series
5311, The World Bank.
- Thierry Madiès & Jean-Jacques Dethier, 2012. "Fiscal Competition In Developing Countries: A Survey Of The Theoretical And Empirical Literature," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1250013-1-1.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ecobici Nicolae).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.