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Welcome Home to Japan: Repatriation of Foreign Profits by Japanese Multinationals

Listed author(s):
  • Tajika, Eiji
  • Nakatani, Ryota

The empirical literature suggests that repatriation decisions of U.S. multinational corporations are influenced by taxes. Although the U.S. and Japan adopt the same foreign tax credit system, we have found no evidence that corporate taxes have significantly affected dividend repatriation of Japanese multinationals. Instead, we have found that almost half of Japanese foreign affiliates pay dividends and their average marginal dividend payout rate is about twenty percent. The results also suggest that the repatriation behavior varies across industries and countries. Furthermore, parent companies' financial status is found to influence the profit remittance of their foreign affiliates.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/16994/1/070econDP08-04.pdf
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Paper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 2008-04.

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Length: 32 p.
Date of creation: Mar 2008
Handle: RePEc:hit:econdp:2008-04
Note: March 31, 2008
Contact details of provider: Phone: +81-42-580-8000
Web page: http://www.econ.hit-u.ac.jp/

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  1. James R. Hines, Jr. & R. Glenn Hubbard, 1989. "Coming Home to America: Dividend Repatriations by U.S. Multinationals," NBER Working Papers 2931, National Bureau of Economic Research, Inc.
  2. Altshuler, Rosanne & Grubert, Harry, 2001. "Where Will They Go if We Go Territorial? Dividend Exemption and the Location Decisions of U.S. Multinational Corporations," National Tax Journal, National Tax Association, vol. 54(4), pages 787-809, December.
  3. Power, Laura & Silverstein, Gerald, 2007. "The Foreign Source Income Repatriation Patterns of US Parents in Worldwide Loss," National Tax Journal, National Tax Association, vol. 60(3), pages 537-549, September.
  4. Rosanne Altshuler & Harry Grubert, 2001. "Repatriation Taxes, Repatriation Strategies and Multinational Financial Policy," NBER Working Papers 8144, National Bureau of Economic Research, Inc.
  5. Desai, Mihir A. & Hines, James R. Jr., 2004. "Old Rules and New Realities: Corporate Tax Policy in a Global Setting," National Tax Journal, National Tax Association, vol. 57(4), pages 937-960, December.
  6. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2002. "Dividend Policy inside the Firm," NBER Working Papers 8698, National Bureau of Economic Research, Inc.
  7. Rosanne Altshuler & T. Scott Newlon & Joel Slemrod, 1993. "The Effects of U.S. Tax Policy on the Income Repatriation Patterns of U. S . Multinational Corporations," NBER Chapters, in: Studies in International Taxation, pages 77-116 National Bureau of Economic Research, Inc.
  8. repec:ntj:journl:v:54:y:2001:i:n._4:p:829-51 is not listed on IDEAS
  9. Desai, Mihir A. & Foley, C. Fritz & Hines, James R. Jr., 2001. "Repatriation Taxes and Dividend Distortions," National Tax Journal, National Tax Association, vol. 54(4), pages 829-851, December.
  10. Alan Auerbach & Michael P Devereux & Helen Simpson, 2007. "Taxing corporate income," Working Papers 0705, Oxford University Centre for Business Taxation.
  11. repec:ntj:journl:v:54:y:2001:i:n._4:p:771-86 is not listed on IDEAS
  12. Fritz Foley, C. & Hartzell, Jay C. & Titman, Sheridan & Twite, Garry, 2007. "Why do firms hold so much cash? A tax-based explanation," Journal of Financial Economics, Elsevier, vol. 86(3), pages 579-607, December.
  13. Desai, Mihir A. & Hines, James R. Jr., 2003. "Evaluating International Tax Reform," National Tax Journal, National Tax Association, vol. 56(3), pages 487-502, September.
  14. Peter J. Mullins, 2006. "Moving to Territoriality? Implications for the United States and the Rest of the World," IMF Working Papers 06/161, International Monetary Fund.
  15. Eika Yamaguchi, 2004. "Recent Characteristics of Royalties and License Fees in Japan's Balance of Payments," Bank of Japan Working Paper Series 04-E-5, Bank of Japan.
  16. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2001. "Repatriation Taxes and Dividend Distortions," NBER Working Papers 8507, National Bureau of Economic Research, Inc.
  17. Brandon Julio & David L. Ikenberry, 2004. "Reappearing Dividends," Journal of Applied Corporate Finance, Morgan Stanley, vol. 16(4), pages 89-100.
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