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Is there regional tax competition? Firm Level Evidence for Belgium

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  • VANDENBUSSCHE, Hylke
  • CRABBE, Karen
  • JANSSEN, Boudewijn

Abstract

This is the first Paper that looks at regional tax competition within one single country. In many countries in Europe, regions within a country differ substantially in their economic development and attractiveness to firms. Belgium is a typical example of a country where the economic situation of its three regions is very different. Our findings are indicative of regional tax competition, with a lower Effective Tax Rate (ETR) in the peripheral region of Wallonia than in Flanders. In addition to location variables, our empirical model explaining firm level heterogeneity in ETRs includes firm characteristics, sector membership and variables capturing statutory tax breaks.
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  • VANDENBUSSCHE, Hylke & CRABBE, Karen & JANSSEN, Boudewijn, 2005. "Is there regional tax competition? Firm Level Evidence for Belgium," LIDAM Reprints CORE 1891, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1891
    DOI: 10.1007/s10645-005-1988-6
    Note: In : De Economist, 153, 257-276, 2005
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    1. Schjelderup, Guttorm & Ulltveit-Moe, Karen Helene & Kind, Hans Jarle, 2004. "Trade and Multinationals: The Effect of Economic Integration on Taxation and Tax Revenue," CEPR Discussion Papers 4312, C.E.P.R. Discussion Papers.
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    5. Nicodeme, Gaetan, 2002. "Sector and size effects on effective corporate taxation," MPRA Paper 15781, University Library of Munich, Germany.
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    Cited by:

    1. Karen Crabbé & Karolien De Bruyne, 2013. "Taxes, Agglomeration Rents and Location Decisions of Firms," De Economist, Springer, vol. 161(4), pages 421-446, December.
    2. Jean Hindriks & Susana Peralta & Shlomo Weber, 2014. "Local Taxation of Global Corporation: A Simple Solution," Annals of Economics and Statistics, GENES, issue 113-114, pages 37-65.
    3. BEUSELINCK, Christof & DELOOF, Marc, "undated". "Bussiness groups, taxes and accruals management," Working Papers 2006015, University of Antwerp, Faculty of Business and Economics.
    4. Jaafar, Aziz & Thornton, John, 2015. "Tax Havens and Effective Tax Rates: An Analysis of Private versus Public European Firms," The International Journal of Accounting, Elsevier, vol. 50(4), pages 435-457.
    5. Bilitis Schoonjans & Philippe Van Cauwenberge & Catherine Reekmans & Gudrun Simoens, 2011. "A Survey of Tax Compliance Costs of Flemish SMEs: Magnitude and Determinants," Environment and Planning C, , vol. 29(4), pages 605-621, August.
    6. Annelies Roggeman & Isabelle Verleyen & Philippe Van Cauwenberge & Carine Coppens, 2014. "Impact of a Common Corporate Tax Base on the effective tax burden in Belgium," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(3), pages 530-543, June.
    7. C. Dembour, 2008. "Competition for Business Location: A Survey," Journal of Industry, Competition and Trade, Springer, vol. 8(2), pages 89-111, June.
    8. Beuselinck, C.A.C. & Deloof, M., 2006. "Business Groups, Taxes and Accruals Management," Discussion Paper 2006-46, Tilburg University, Center for Economic Research.
    9. Beuselinck, C.A.C. & Deloof, M., 2006. "Business Groups, Taxes and Accruals Management," Other publications TiSEM 46f42485-43d5-4cc6-9d56-c, Tilburg University, School of Economics and Management.
    10. Richard Baldwin & Toshihiro Okubo, 2009. "Tax Reform, Delocation, and Heterogeneous Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 741-764, December.
    11. Stamatopoulos, Ioannis & Hadjidema, Stamatina & Eleftheriou, Konstantinos, 2019. "Explaining corporate effective tax rates: Evidence from Greece," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 236-254.
    12. Stamatopoulos, Ioannis & Hadjidema, Stamatina & Eleftheriou, Konstantinos, 2016. "Explaining Corporate Effective Tax Rates Before and During the Financial Crisis: Evidence from Greece," MPRA Paper 73787, University Library of Munich, Germany.
    13. Ilke Van Beveren, 2007. "Footloose Multinationals in Belgium?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(3), pages 483-507, October.
    14. Sven Stö & Christian Traxler, 2005. "Tax Evasion and Auditing in a Federal Economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 515-531, August.

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    More about this item

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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