Is Taxation Affecting The Attractiveness Of Central And Eastern Europe Countries For Fdi?
The target of this paper is to determine whether taxation affects the attractiveness of Central and Eastern Europe (CEE) countries for foreign investors. In this scope, the paper analyzes the impact of taxation for the location decision of foreign direct investment (FDI) in CEE countries both in 2007 and 2010. A taxation index investing the effect of multiple host country taxes is developed in order to draw the attractiveness matrix for the countries taken into account. The taxation level comprises the corporate income tax rate, representing direct taxation, the value-added tax (VAT) and the social security contributions expressing indirect taxation and finally the ease of paying taxes, as provided in Doing Business report. The results indicate that relieving the burden of paying taxes by tackling the taxation issue is a mean for improving the FDI attractiveness of a country. Still, there are other factors that have higher influence on FDI inflows. The main finding is that there is no perfect correspondence between the shifts in taxation rankings and the FDI inflows performance.
Volume (Year): 1 (2012)
Issue (Month): (March)
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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.:
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"Infrastructure endowment and corporate income taxes as determinants of Foreign Direct Investment in Central- and Eastern European Countries,"
LICOS Discussion Papers
19307, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Christian Bellak & Markus Leibrecht & Jože P. Damijan, 2009. "Infrastructure Endowment and Corporate Income Taxes as Determinants of Foreign Direct Investment in Central and Eastern European Countries," The World Economy, Wiley Blackwell, vol. 32(2), pages 267-290, 02.
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