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Retarding Short-Term Capital Inflows Through withholding Tax

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  • Howell H Zee

Abstract

This paper proposes a price-based measure to mitigate the destabilizing impact of the volatility of global capital movements on the domestic economy of a country pursuing sound economic policies. The measure is a withholding tax on all private capital inflows, with a credit and refund provision that operates within the administrative framework of the existing domestic tax system to relieve noncapital inflows from the tax. This withholding tax, which is substantially more difficult to evade than the much-discussed alternative of imposing non-remunerated reserve requirements, can be implemented with little additional costs to the taxpayers and the tax authorities.

Suggested Citation

  • Howell H Zee, 2000. "Retarding Short-Term Capital Inflows Through withholding Tax," IMF Working Papers 00/40, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:00/40
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    Cited by:

    1. Valpy Fitzgerald, 2002. "International Tax Co-operation and Capital Mobility," Oxford Development Studies, Taylor & Francis Journals, vol. 30(3), pages 251-266.
    2. Yap, Josef T., 2000. "Managing Capital Flows to Developing Economies: Issues and Policies," Discussion Papers DP 2000-41, Philippine Institute for Development Studies.
    3. Raghbendra Jha, 2004. "Innovative Sources of Development Finance: Global Cooperation in the Twenty-first Century," The World Economy, Wiley Blackwell, vol. 27(2), pages 193-214, February.

    More about this item

    Keywords

    Capital inflows; Capital flows; Taxes; withholding tax; Tobin tax; financial transactions tax; capital movements; short-term capital inflows; short-term capital;

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