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The Tax Sensitivity of Debt in Multinationals: A Review

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  • Guttorm Schjelderup

Abstract

The OECD in its BEPS Action Plan Four addresses tax base erosion by profit shifting through the use of tax deductible interest payments. Their main concern is interest deductions between outbound and inbound investment by groups. Studies of multinational firms show that the tax sensitivity of debt is more modest than one would expect given the incentives for profit shifting. The purpose of this paper is to review existing literature and add to knowledge on multinational firm behavior that pertains to the use of debt.

Suggested Citation

  • Guttorm Schjelderup, 2016. "The Tax Sensitivity of Debt in Multinationals: A Review," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 23(1), pages 109-121, February.
  • Handle: RePEc:taf:ijecbs:v:23:y:2016:i:1:p:109-121
    DOI: 10.1080/13571516.2015.1115661
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    1. repec:taf:ijecbs:v:23:y:2016:i:3:p:263-286 is not listed on IDEAS
    2. repec:kap:itaxpf:v:24:y:2017:i:5:d:10.1007_s10797-016-9432-1 is not listed on IDEAS

    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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