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Incidence of the WTO Anti-Discrimination Rules on Corporation Income Taxation


  • Hatice Jenkins

    () (Assistant Professor)

  • Glenn Jenkins

    () (Professor)


Many countries with free trade zones or export processing zones now exempt from corporate income taxation the income of firms exporting from these areas. The WTO has attempted to eliminate this exemption through its rules to promote the non-discrimination of fiscal systems with respect to export production. In particular, these rules do not allow countries to exempt the income of firms exporting from Free Trade Zones from corporate income taxation. This paper examines both theoretically as well as empirically the incidence of removing this corporate income tax exemption. The empirical analysis is carried out for the case of the Dominican Republic. The findings indicate that in the case of the Dominican Republic the removal of the corporate income tax exemption would inflict a burden on labour equal to about 6 times the amount of additional corporate tax revenue collected from the companies operating in its free trade zones.

Suggested Citation

  • Hatice Jenkins & Glenn Jenkins, 2007. "Incidence of the WTO Anti-Discrimination Rules on Corporation Income Taxation," Working Papers 1123, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:1123

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    References listed on IDEAS

    1. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
    2. Glenn P. Jenkins & Chun-Yan Kuo & Keh-Nan Sun, 2003. "Taxation and Economic Development in Taiwan," American Journal of Economics and Sociology, Wiley Blackwell, vol. 62(4), pages 734-735, October.
    3. Michael Daly, 2006. "WTO Rules on Direct Taxation," The World Economy, Wiley Blackwell, vol. 29(5), pages 527-557, May.
    4. Jane Gravelle & Kent Smetters, 2001. "Who Bears the Burden of the Corporate Tax in The Open Economy?," NBER Working Papers 8280, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item


    WTO; tax incidence; Free Trade Zones; corporate taxation;

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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