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What do we know about corporate tax competition?

  • Michael Devereux


    (Oxford University Centre for Business Taxation)

  • Simon Loretz


    (University of Bayreuth)

We review the empirical literature on competition in source-based taxes on corporate income. Drawing an analogy to the competition models for the goods market indicates how evidence for the existence of tax competition can be provided, and highlights that tax competition can take many forms. With this in mind we classify the empirical literature, and highlight the importance of the measurement of tax rates and openness. Using measures based on the statutory tax system, there is evidence for tax competition mostly in the European Union. In contrast to the view of Gordon (1992) small countries appear to be the leader of the tax competition game.

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Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 1229.

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Date of creation: 2012
Date of revision:
Handle: RePEc:btx:wpaper:1229
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