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What makes countries negotiate away their corporate tax base?

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  • Martin Hearson

Abstract

Qualitative case studies suggest that the outcomes of tax treaty negotiations are determined by power politics and negotiating capability. In contrast, quantitative studies have tended to depart from a model that implies absolute gains, full rationality, and perfect information on the part of both treaty signatories. This paper bridges the gap by replicating two existing quantitative studies, introducing new, more sophisticated data. New fiscal data are drawn from the ICTD Government Revenue Dataset, while treaty content is measured using the ActionAid Tax Treaties Dataset.

Suggested Citation

  • Martin Hearson, 2017. "What makes countries negotiate away their corporate tax base?," WIDER Working Paper Series wp-2017-122, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2017-122
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    References listed on IDEAS

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    3. Hearson, Martin, 2016. "Measuring Tax Treaty Negotiation Outcomes: the ActionAid Tax Treaties Dataset," Working Papers 11206, Institute of Development Studies, International Centre for Tax and Development.
    4. Peter Egger & Mario Larch & Michael Pfaffermayr & Hannes Winner, 2006. "The impact of endogenous tax treaties on foreign direct investment: theory and evidence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(3), pages 901-931, August.
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    9. Thomas Rixen & Peter Schwarz, 2009. "Bargaining over the Avoidance of Double Taxation: Evidence from German Tax Treaties," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(4), pages 442-471, December.
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    11. Hearson, Martin, 2016. "Measuring tax treaty negotiation outcomes: the Actionaid tax treaties dataset," LSE Research Online Documents on Economics 67869, London School of Economics and Political Science, LSE Library.
    12. Hearson, Martin, 2015. "Tax treaties in sub-Saharan Africa: a critical review," LSE Research Online Documents on Economics 67903, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Beer,Sebastian & Loeprick,Jan, 2018. "The Cost and Benefits of Tax Treaties with Investment Hubs : Findings from Sub-Saharan Africa," Policy Research Working Paper Series 8623, The World Bank.
    2. Tony Addison & Miguel Niño†Zarazúa & Jukka Pirttilä, 2018. "Fiscal Policy, State Building and Economic Development," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 161-172, March.
    3. Tony Addison & Miguel Niño†Zarazúa & Jukka Pirttilä, 2018. "Fiscal Policy, State Building and Economic Development," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 161-172, March.
    4. Sebastian Beer & Jan Loeprick, 2021. "Too high a price? Tax treaties with investment hubs in Sub-Saharan Africa," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(1), pages 113-153, February.

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