The Tax Treatment of Interest Expenditures of Multinational Enterprises
AbstractThis paper analyses the national tax treatment of interestexpenditures of multinational enterprises in a non-cooperative world. It is shown that the international tax systemgenerally leads to distortions in the capitaldecisions of multinational firms. In contrast to the existingliterature on the tax treatment of the expendituresof multinationals, it is found that the form and size of distortionscan differ per country depending on the stakea country has in the multinational. Furthermore, internationalisationof the firm's operations and ownership isdemonstrated to lead to less generous interest deduction rules ofindividual countries and in the limit mayresult in no deduction allowance at all.
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 InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-047/3.
Date of creation: 09 Jun 2000
Date of revision:
Contact details of provider:
Web page: http://www.tinbergen.nl
International Investment; Multinational Firms; Optimal Taxation; Interest Expenditures; R&D Expenditures;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-07-27 (All new papers)
- NEP-FIN-2000-07-27 (Finance)
- NEP-PUB-2000-07-27 (Public Finance)
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.:
- Kenneth A. Froot & James R. Hines, Jr., 1995.
"Interest Allocation Rules, Financing Patterns, and the Operations of U.S. Multinationals,"
NBER Working Papers
4924, National Bureau of Economic Research, Inc.
- Kenneth A. Froot & James R. Hines, Jr., 1995. "Interest Allocation Rules, Financing Patterns, and the Operations of U.S. Multinationals," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 277-312 National Bureau of Economic Research, Inc.
- Rosanne Altshuler & Jack Mintz, 1995.
"U.S. interest-allocation rules: Effects and policy,"
International Tax and Public Finance,
Springer, vol. 2(1), pages 7-35, February.
- Rosanne Altshuler & Jack Mintz, 1996. "U.S. Interest Allocation Rules: Effects and Policy," Departmental Working Papers 199410, Rutgers University, Department of Economics.
- Rosanne Altshuler & Jack Mintz, 1994. "U.S. Interest Allocation Rules: Effects and Policy," NBER Working Papers 4712, National Bureau of Economic Research, Inc.
- Huizinga, Harry, 1992.
"The tax treatment of R&D expenditures of multinational enterprises,"
Journal of Public Economics,
Elsevier, vol. 47(3), pages 343-359, April.
- Huizinga, H.P., 1992. "The tax treatment of R&D expenditures of multinational enterprises," Open Access publications from Tilburg University urn:nbn:nl:ui:12-155142, Tilburg University.
- Alan J. Auerbach, 1984.
"Taxation, Corporate Financial Policy and the Cost of Capital,"
NBER Working Papers
1026, National Bureau of Economic Research, Inc.
- Auerbach, Alan J, 1983. "Taxation, Corporate Financial Policy and the Cost of Capital," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 905-40, September.
- Barbara J. Spencer & James A. Brander, 1982.
"International R&D Rivalry and Industrial Strategy,"
518, Queen's University, Department of Economics.
- Spencer, Barbara J & Brander, James A, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 707-22, October.
- Huizinga, H.P., 1989.
"National tax policies towards product-innovating multinational enterprises,"
1989-34, Tilburg University, Center for Economic Research.
- Huizinga, Harry, 1991. "National tax policies towards product-innovating multinational enterprises," Journal of Public Economics, Elsevier, vol. 44(1), pages 1-14, February.
- Huizinga, H., 1989. "National Tax Policies Towards Product-Innovating Multinational Enterprises," Papers 8934, Tilburg - Center for Economic Research.
- Feldstein, Martin & Hartman, David, 1979. "The Optimal Taxation of Foreign," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 613-29, November.
- Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).
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.