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International Taxation and Cross-Border Banking

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  • Huizinga, H.P.
  • Voget, J.
  • Wagner, W.B.

    (Tilburg University, Center for Economic Research)

Abstract

This paper examines empirically how international taxation affects the volume and pricing of cross-border banking activities for a sample of banks in 38 countries over the 1998-2008 - period. Home country corporate income taxation of foreign-source bank income is found to reduce banking-sector FDI. Furthermore, such taxation is almost fully passed on into higher interest margins charged abroad. These results imply that international double taxation distorts the activities of international banks, and that the incidence of international double taxation of banks is on bank customers in the foreign subsidiary country. Our analysis informs the debate about additional taxation of the financial sector that has emerged in the wake of the recent financial crisis.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-066.

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Date of creation: 2011
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Handle: RePEc:dgr:kubcen:2011066

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Web page: http://center.uvt.nl

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Keywords: Cross-border banking; International taxation; Interest margins;

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References

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Citations

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Cited by:
  1. Bertay, Ata Can & Demirguc-Kunt, Asli & Huizinga, Harry, 2011. "Is the Financial Safety Net a Barrier to Cross-Border Banking?," CEPR Discussion Papers 8712, C.E.P.R. Discussion Papers.
  2. Gaëtan J.A. Nicodème, 2008. "Corporate Income Tax and Economic Distortions," CESifo Working Paper Series 2477, CESifo Group Munich.
  3. Timothy J. Goodspeed, 2012. "The Incidence of Bank Regulations and Taxes on Wages: Evidence from US States," CESifo Working Paper Series 4026, CESifo Group Munich.
  4. Copenhagen Economics, 2011. "Elasticities of Financial Instruments, Profits and Remuneration," Taxation Papers 30, Directorate General Taxation and Customs Union, European Commission.
  5. Jürgen Antony & Michiel Bijlsma & Adam Elbourne & Marcel Lever & Gijsbert Zwart, 2012. "Financial transaction tax: review and assessment," CPB Discussion Paper 202, CPB Netherlands Bureau for Economic Policy Analysis.
  6. Beck, T.H.L. & Huizinga, H.P., 2011. "Taxing banks – here we go again!," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5046881, Tilburg University.

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