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Policy Forum: Effective Tax Rates for Multinationals--The Role of Tax Incentives and Tax Planning

Author

Listed:
  • W. Steven Clark

    (International Monetary Fund (IMF), Washington, DC)

  • Alexander Klemm

    (International Monetary Fund (IMF), Washington, DC)

Abstract

Effective (marginal and average) tax rates (ETRs) are frequently used in the analysis and design of tax policies affecting investment, and this article provides various recent examples. The article addresses issues that arise when ETRs are calculated in an international context, such as for cross-border investments. It explains concretely how tax incentives and tax-planning strategies can be included in the calculation of ETRs. It then discusses typical difficulties in their interpretation, many of which become more severe in an international context. In particular, the range of ETRs for a given country rises, and both levels and country rankings depend on assumptions about tax and non-tax parameters.

Suggested Citation

  • W. Steven Clark & Alexander Klemm, 2015. "Policy Forum: Effective Tax Rates for Multinationals--The Role of Tax Incentives and Tax Planning," Canadian Tax Journal, Canadian Tax Foundation, vol. 63(1), pages 133-148.
    • Handle: RePEc:ctf:journl:v:63:y:2015:i:1:p:133-148
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    Citations

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    Cited by:

    1. Ligia Alba Melo-Becerra & Javier Ávila Mahecha & Jorge Enrique Ramos-Forero, 2021. "Corporate Taxation and Investment: Evidence from a Context of Frequent Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 237(2), pages 3-31, June.
    2. Ligia Alba Melo-Becerra & Javier Ávila Mahecha & Jorge Enrique Ramos-Forero, 2017. "The effect of corporate taxes on investment: Evidence from the Colombian firms," Borradores de Economia 1001, Banco de la Republica de Colombia.

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