Foreign (in)direct investment and corporate taxation
AbstractThis paper investigates the role of corporate taxation with respect to a multinational's investment decision, in which the multinational can pursue either a direct or an indirect investment strategy. The latter involves at least three corporate entities and opens up enhanced opportunities for international tax planning. The existence of preferential tax treatment for conduit or intermediate corporate entities presumably changes the role of corporate taxation in destination countries, because it supports multinationals in avoiding taxes. The empirical findings of this study are consistent with theoretical predictions and suggest that tax effects differ, depending on the investment regime. The endogeneity of the structural choice - direct versus indirect - is taken into account by a switching regression approach. --
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Bibliographic InfoPaper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2008,15.
Date of creation: 2008
Date of revision:
multinational company; business taxes; firm-level data; switching regression;
Other versions of this item:
- Georg Wamser, 2011. "Foreign (in)direct investment and corporate taxation," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 44(4), pages 1497-1524, November.
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
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