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Foreign Ownership and Corporate Income Taxation: An Empirical Evaluation

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  • Huizinga, Harry
  • Nicodeme, Gaetan

Abstract

Economic integration in Europe has not led to a ‘race to the bottom’ regarding corporate income taxes. This Paper documents trends in the foreign ownership of companies in Europe and examines whether foreign ownership has exerted a positive influence on corporate income tax levels. Using company-level data, we document that foreign ownership share in Europe stood at around 21.5% in the year 2000. The estimation suggests that a one percentage point increase in foreign ownership increases the average corporate income tax rate between 0.5-1%. Further international economic integration is likely to lead to higher foreign ownership shares with a concomitant positive influence on corporate taxation levels.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3952.

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Date of creation: Jun 2003
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Handle: RePEc:cpr:ceprdp:3952

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Keywords: corporate taxation; foreign ownership; tax competition;

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References

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