IDEAS home Printed from https://ideas.repec.org/a/ecr/col070/11008.html
   My bibliography  Save this article

A proposal for unitary taxes on the profits of transnational corporations

Author

Listed:
  • Mold, Andrew

Abstract

Foreign direct investment (FDI); in developing countries has been increasing at an unprecedented rate, and the profitability of the operations of the investing firms in poor regions like Sub-Saharan Africa is extraordinarily high. Yet at the same time there is growing evidence that transnational corporations (TNCs); are paying less and less in terms of tax. The developing countries in particular have suffered from this —it has been estimated that developing country governments lose at least US$35 billion a year of revenue through tax avoidance practices. This paper presents empirical evidence and a proposal for applying a unitary tax system on the profits of TNCs. Such a system would eliminate one of the most powerful mechanisms at the disposal of TNCs for illegally avoiding tax payments—transfer pricing. The paper concludes by arguing that a proposal for a unitary tax system on a worldwide basis may be sufficient to unblock the negotiations on a multilateral investment code.

Suggested Citation

  • Mold, Andrew, 2004. "A proposal for unitary taxes on the profits of transnational corporations," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    • Handle: RePEc:ecr:col070:11008
    Note: Includes bibliography
    as

    Download full text from publisher

    File URL: http://repositorio.cepal.org/handle/11362/11008
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Douglas Shackelford & Joel Slemrod, 1998. "The Revenue Consequences of Using Formula Apportionment to Calculate U.S. and Foreign-Source Income: A Firm-Level Analysis," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(1), pages 41-59, February.
    2. Mr. Vito Tanzi, 2000. "Globalization and the Future of Social Protection," IMF Working Papers 2000/012, International Monetary Fund.
    3. Zee, Howell H. & Stotsky, Janet G. & Ley, Eduardo, 2002. "Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries," World Development, Elsevier, vol. 30(9), pages 1497-1516, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liudmila V. Polezharova & Aleksandra M. Krasnobaeva, 2020. "E-Commerce Taxation in Russia: Problems and Approaches," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 6(2), pages 125-143.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexander Klemm & Stefan Parys, 2012. "Empirical evidence on the effects of tax incentives," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 393-423, June.
    2. Markéta Mlčúchová, 2024. "Novel Configuration of Formulary Apportionment Using the Correlated Random Effect Approach," Politická ekonomie, Prague University of Economics and Business, vol. 2024(1), pages 73-101.
    3. World Bank, 2005. "Dominica : OECS Fiscal Issues, Policies to Achieve Fiscal Sustainability and Improve Efficiency and Equity of Public Expenditures," World Bank Publications - Reports 8681, The World Bank Group.
    4. Abdramane Camara, 2023. "The Effect of Foreign Direct Investment on Tax Revenue," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 168-190, March.
    5. Hines Jr., James R., 2010. "Income misattribution under formula apportionment," European Economic Review, Elsevier, vol. 54(1), pages 108-120, January.
    6. Abdramane Camara, 2019. "The effect of foreign direct investment on tax revenue in developing countries," Working Papers hal-03188025, HAL.
    7. Mr. Manuk Ghazanchyan & Mr. Alexander D Klemm & Yong Sarah Zhou, 2018. "Tax Incentives in Cambodia," IMF Working Papers 2018/071, International Monetary Fund.
    8. Nguyen-Thanh, David & Strupat, Christoph, 2012. "Is the Burden Too Small? – Effective Tax Rates in Ghana," Ruhr Economic Papers 389, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Glenn P. Jenkins & Abdallah Othman & Edna Armendariz & Anastasiya Yarygina, 2025. "Systematic Review Of Evidence On The Impact Of Tax Incentives In Latin American And Caribbean Countries," Development Discussion Papers 2025-05, JDI Executive Programs.
    10. Theodore Kahn & Zack Zimbalist, 2022. "Public investment versus government consumption: how FDI shocks shape the composition of subnational spending in Mexico," Review of International Political Economy, Taylor & Francis Journals, vol. 29(2), pages 502-537, March.
    11. repec:col:000093:012622 is not listed on IDEAS
    12. Nathan M. Jensen & Michael G. Findley & Daniel L. Nielson, 2020. "Electoral Institutions and Electoral Cycles in Investment Incentives: A Field Experiment on Over 3,000 U.S. Municipalities," American Journal of Political Science, John Wiley & Sons, vol. 64(4), pages 807-822, October.
    13. Wildasin, David E., 2010. "State Corporation Income Taxation: An Economic Perspective on Nexus," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(4), pages 903-924, December.
    14. Martini, Jan-Thomas & Niemann, Rainer & Simons, Dirk, 2014. "Management incentives under formula apportionment: Tax-induced distortions of effort and compensation in a principal-agent setting," arqus Discussion Papers in Quantitative Tax Research 168, arqus - Arbeitskreis Quantitative Steuerlehre.
    15. Dietrich, Maik, 2009. "Entscheidungswirkungen einer europaweit harmonisierten Konzernbesteuerung [Impacts of European Group Taxation]," MPRA Paper 59870, University Library of Munich, Germany.
    16. repec:prg:jnlpol:v:preprint:id:1411 is not listed on IDEAS
    17. repec:idq:ictduk:13711 is not listed on IDEAS
    18. Odd-Helge Fjeldstad, 2013. "Taxation and Development: a Review of Donor Support to Strengthen Tax Systems in Developing Countries," WIDER Working Paper Series wp-2013-010, World Institute for Development Economic Research (UNU-WIDER).
    19. International Finance Corporation & Multilateral Investment Guarantee Agency & World Bank, 2009. "A Handbook for Tax Simplification," World Bank Publications - Reports 28206, The World Bank Group.
    20. Paul Masson, 2000. "Fiscal policy and growth in the context of European integration," Working Paper Research 07, National Bank of Belgium.
    21. Lei Zhang & Yuyu Chen & Zongyan He, 2018. "The effect of investment tax incentives: evidence from China’s value-added tax reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 913-945, August.
    22. repec:vuw:vuwscr:19143 is not listed on IDEAS
    23. Kostas Axarloglou & Frank G. Meanor, Jr., 2006. "Taxation and Ownership Structure in Supplying Foreign Markets," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 685-698, Fall.
    24. Levin, Mark (Левин, Марк) & Matrosova, Kseniya (Матросова, Ксения), 2017. "Development and Analysis of Economic Models of Innovation Incentives [Разработка И Исследование Экономических Моделей Стимулирования Инновационных Процессов]," Working Papers 061713, Russian Presidential Academy of National Economy and Public Administration.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecr:col070:11008. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Biblioteca CEPAL (email available below). General contact details of provider: https://edirc.repec.org/data/eclaccl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.