Taxation and the international strategy of Japanese multinational enterprises
AbstractThis paper analyzes the effect of statutory tax rates on the location of Japanese capital in emerging countries. Considering the fact that the difference between Japan and foreign tax rates can engender transfer pricing manipulation to diminish tax liabilities, and that some firms are more able to manipulate transfer pricing, such as wholly-owned ventures and high technology affiliates, we investigate the sensitivity of Japanese capital to foreign tax rates by distinguishing wholly-owned ventures from joint-ventures and high R&D affiliates from low R&D affiliates. Based on country, parent firm and sector characteristics an investment equation is estimated on a sample of 3774 Japanese affiliates in 49 emerging countries. We obtain a greater semi-elasticity between investment and the statutory tax rate for wholly-owned affiliates and R&D intensive parents. We interpret these results as indirect evidence for abusive transfer pricing to be one of the determinants of FDI flows.
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 HAL in its series PSE Working Papers with number halshs-00590421.
Date of creation: Jun 2006
Date of revision:
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00590421
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
international taxation ; Japanese investments ; transfer pricing ; ownership structure ; technology intensity ; tax sparing;
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.:
- Céline Azémar & Rodolphe Desbordes & Jean-Louis Mucchielli, 2007.
"Do tax sparing agreements contribute to the attraction of FDI in developing countries?,"
International Tax and Public Finance, Springer,
Springer, vol. 14(5), pages 543-562, October.
- Céline Azémar & Rodolphe Desbordes & Jean-Louis Mucchielli, 2004. "Do tax sparing agreements contribute to the attraction of FDI in developing countries ?," Cahiers de la Maison des Sciences Economiques, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1) bla04047, Université Panthéon-Sorbonne (Paris 1).
- Jenkins, Glenn P & Wright, Brian D, 1975. "Taxation of Income of Multinational Corporations: The Case of the United States Petroleum Industry," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 1-11, February.
- Paul Collier & Jan Willem Gunning, 1998.
"Explaining African economic performance,"
Economics Series Working Papers
WPS/1997-02.2, University of Oxford, Department of Economics.
- Head, Keith & Ries, John & Swenson, Deborah, 1995.
"Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States,"
Journal of International Economics, Elsevier,
Elsevier, vol. 38(3-4), pages 223-247, May.
- Keith Head & John Ries & Deborah Swenson, 1994. "Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States," NBER Working Papers 4767, National Bureau of Economic Research, Inc.
- Forestier, Emmanuel & Grace, Jeremy & Kenny, Charles, 2002. "Can information and communication technologies be pro-poor?," Telecommunications Policy, Elsevier, Elsevier, vol. 26(11), pages 623-646, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.