The Experts below are selected from a list of 16875 Experts worldwide ranked by ideXlab platform
Christian Keuschnigg - One of the best experts on this subject based on the ideXlab platform.
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the arm s length principle and distortions to multinational firm organization
2013Co-Authors: Christian Keuschnigg, Michael P DevereuxAbstract:To prevent profit shifting by manipulation of transfer prices, tax authorities typically apply the arm's length principle in Corporate Taxation and use comparable market prices to ‘correctly’ assess the value of intracompany trade and royalty income of multinationals. We develop a model of firms subject to financing frictions and offshoring of intermediate inputs. We find that arm's length prices systematically differ from prices set by independent agents. Application of the principle distorts multinational activity by reducing debt capacity and investment of foreign affiliates. Although it raises tax revenue and welfare in the headquarter country, welfare losses may be larger in the subsidiary location, leading to a loss in world welfare.
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Corporate Taxation debt financing and foreign plant ownership
2010Co-Authors: Peter Egger, Christian Keuschnigg, Wolfgang Eggert, Hannes WinnerAbstract:This paper compares domestically and foreign-owned plants with respect to their debt-to-assets ratio and analyzes to which extent the difference is systematically affected by Corporate Taxation. To derive hypotheses about influence of Corporate Taxation on a firm's debt financing we adapt a standard model of Taxation and financing decisions of firms for the case of international debt shifting activities of foreign-owned firms. We estimate the average difference between a foreign-owned and a domestically owned firm's debt ratio, treating the mode of ownership as endogenous. Using data from 32,067 European firms, we find that foreign-owned firms on average exhibit a significantly higher debt ratio than their domestically owned counterparts in the host country. Moreover, this gap in the debt ratio increases with the host country's statutory Corporate tax rate.
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Corporate Taxation and the welfare state
2008Co-Authors: Christian KeuschniggAbstract:The paper compares the impact of Corporate Taxation and social insurance on foreign direct investment (FDI) and unemployment. Four main results are derived: (i) the optimal size of the welfare state depends on the degree of risk-aversion and the unemployment rate as a measure of labor income risk. The unemployment rate partly reflects the country's exposure to globalization; (ii) Corporate Taxation and social insurance have equivalent effects on unemployment and outbound FDI; (iii) while an increase in the Corporate tax can raise Corporate tax revenue, it is rather likely to worsen the government's total fiscal stance. A Corporate tax cut can thus be self-financing due to fiscal increasing returns in the presence of a large public sector; (iv) a Corporate tax should be used to contribute to welfare state financing only in exceptional cases when job creation is excessive and unemployment is inefficiently low. These conditions are probably unlikely to hold in Europe's generous welfare states with high structural unemployment rates.
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Corporate Taxation and the welfare state
2008Co-Authors: Christian KeuschniggAbstract:The paper compares the impact of Corporate Taxation and social insurance on foreign direct investment (FDI) and unemployment. Four main results are derived: (i) the optimal size of the welfare state depends on the degree of risk-aversion and the unemployment rate as a measure of labor income risk. The unemployment rate partly reflects the country's exposure to globalization; (ii) Corporate Taxation and social insurance have equivalent effects on unemployment and outbound FDI; (iii) while an increase in the Corporate tax can raise Corporate tax revenue, it is rather likely to worsen the government's total fiscal stance. A Corporate tax cut can thus be self-financing due to fiscal increasing returns in the presence of a large public sector; (iv) a Corporate tax should be used to contribute to welfare state financing only in exceptional cases when job creation is excessive and the unemployment rate is inefficiently low. These conditions are probably unlikely to hold in Europe's generous welfare states with high structural unemployment rates.
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exports foreign direct investment and the costs of Corporate Taxation
2008Co-Authors: Christian KeuschniggAbstract:Depending on the definition of the tax base, the statutory Corporate tax rate implies rather different measures of effective average and marginal tax rates. This paper develops a model of a monopolistically competitive industry with extensive and intensive business investment and shows how these margins respond to changes in average and marginal Corporate tax rates. Intensive investment refers to the size of a firm's capital stock. Extensive investment refers to the firm's production location and reflects the trade-off between exports and foreign direct investment as alternative modes of foreign market access. The paper derives comparative static effects of the Corporate tax and shows how the cost of public funds depends on the elasticities of the extensive and intensive investment responses.
Clemens Fuest - One of the best experts on this subject based on the ideXlab platform.
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why is Corporate tax revenue stable while tax rates fall evidence from firm level data
2020Co-Authors: Clemens Fuest, Felix Hugger, Susanne WildgruberAbstract:While Corporate tax rates in OECD countries declined over the last decades, revenues from Corporate Taxation relative to GDP remained remarkably stable. This paper uses a comprehensive firm-level dataset to provide an explanation for this rate-revenue puzzle in Corporate Taxation. Focusing on the period 1995-2016, we show that the reduction in Corporate tax rates was counterbalanced by a pronounced increase in Corporate profits before taxes. We decompose the rise in profits into changes in EBITDA, depreciation, and financial profits. On average, these three factors contributed almost equally to the tax base expansion, albeit differently across sectors, countries, and firm sizes.
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Corporate income tax coordination in the european union
2010Co-Authors: Michael P Devereux, Clemens FuestAbstract:The globalisation of economic activity and the growing importance of multinational corporations have far-reaching consequences for national tax policies. Since 1995, the average Corporate tax rate in the EU has fallen from 35% to 23%. In addition, differences and incompatibilities between the national systems of Corporate income Taxation distort investment, complicate the tax system and give rise to conflicts between taxpayers and tax authorities as well as between tax authorities of different countries. Given this, there is a widespread view that greater coordination of Corporate Taxation is required. Recently, the European Commission proposed introducing a Common Consolidated Corporate Tax Base (CCCTB) in Europe. This article discusses the economic advantages and the drawbacks of the CCCTB concept.
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Corporate Taxation and foreign direct investment flows
2010Co-Authors: Dieter Endres, Clemens Fuest, Christoph SpengelAbstract:The analysis in the preceding sections has focused on describing the tax burden faced by different types of foreign investment in the Asia-Pacific Region. In this section, we discuss the interaction between Corporate tax burdens and actual foreign direct investment flows. In recent decades, governments across the world have become increasingly concerned about the impact of taxes on international investment flows. High tax countries fear that the tax burden on Corporate investment may lead to a relocation of economic activity to countries with lower taxes. Some countries have actively pursued a low tax strategy with the objective to attract investment from other countries. In Europe, the significant decline in Corporate income tax rates which occurred during the last two decades is widely seen as reflecting the forces of Corporate tax competition. In East Asia, governments are at least as concerned about attracting foreign direct investment as governments in other regions. The location of foreign direct investment depends on a large number of factors. Next to taxes, these include the proximity to clients or suppliers, the availability of key inputs like qualified employees or financial services, regulations, political stability of a country and many more. But the particular importance of taxes is due to the fact that taxes can be changed relatively easily and quickly whereas other important factors like e.g. proximity to markets or the availability of qualified employees can either not be changed at all or only in the long term.
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quality versus quantity the composition effect of Corporate Taxation on foreign direct investment
2007Co-Authors: Johannes Becker, Clemens FuestAbstract:This paper studies Corporate Taxation in a model where foreign investment of firms may affect the profitability of the investor firm’s domestic activities. In this framework, Corporate taxes distort the quality, not just the quantity of foreign direct investment flows. High-tax countries may see their tax revenues decrease in response to inbound foreign direct investment. Our results also imply that empirical studies on international profit shifting may overestimate the role of profit shifting. Observed profitability differences between high and low tax countries may be due to project selection. Empirical evidence in support of the main hypotheses is provided using aggregate investment and tax revenue data from a sample of OECD countries.
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Why is there Corporate Taxation? The Role of Limited Liability Revisited
2007Co-Authors: Johannes Becker, Clemens FuestAbstract:Most economists reject the idea that Corporate Taxation should be interpreted as a price for the privilege of limited liability. In this paper, we reconsider this idea and show that limited liability can lead to overinvestment if information is incomplete. In this setting, introducing an additional tax on limited liability contracts is welfare-enhancing. Our model thus offers an explanation for the nexus between double Taxation and limited liability observed in many existing tax systems.
Kristina Kostial - One of the best experts on this subject based on the ideXlab platform.
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the disappearing tax base is foreign direct investment fdi eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between FDI, Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of European Union (EU) harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries.
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the disappearing tax base is foreign direct investment fdi eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between FDI, Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of European Union (EU) harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries.
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the disappearing tax base is foreign direct investment eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between Foreign Direct Investment (FDI), Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of EU harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries.
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the disappearing tax base is foreign direct investment eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between Foreign Direct Investment (FDI), Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of EU harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries. JEL Classification: H25, H87, F21, F42, F47
Georg Wamser - One of the best experts on this subject based on the ideXlab platform.
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foreign in direct investment and Corporate Taxation
2011Co-Authors: Georg WamserAbstract:This paper investigates the role of Corporate Taxation with respect to a multinational's investment decision, in which the multinational can pursue either a direct or an indirect investment strategy. The latter involves at least three Corporate entities and opens up enhanced opportunities for international tax planning. The existence of preferential tax treatment for conduit or intermediate Corporate entities presumably changes the role of Corporate Taxation in destination countries, because it supports multinationals in avoiding taxes. The empirical findings of this study are consistent with theoretical predictions and suggest that tax effects differ, depending on the investment regime. The endogeneity of the structural choice - direct versus indirect - is taken into account by a switching regression approach.
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foreign in direct investment and Corporate Taxation
2011Co-Authors: Georg WamserAbstract:Foreign investments of multinational firms are often complex in that they involve conduit entities. In particular, a multinational can pursue either a direct or an indirect investment strategy, where the latter involves an intermediate Corporate entity and is associated with enhanced opportunities for international tax planning. As a consequence, in the case of indirect investments, the role of Corporate Taxation in destination countries may change. This paper investigates the effects of Corporate Taxation on foreign investment decisions of German multinationals, taking explicitly into account that firms choose in a first stage the investment regime (direct vs. indirect). The empirical findings, consistent with theoretical predictions, suggest that tax effects differ according to whether the investment is direct or indirect. Les investissements a l’etranger des firmes plurinationales sont souvent complexes en ce sens qu’ils se font par des voies indirectes. En particulier, une firme plurinationale peut soit poursuivre une strategie directe ou indirecte d’investissement ou dans le second cas une entite corporative intermediaire est impliquee. Cette strategie est associee aux possibilites plus grandes de tirer profit d’une planification fiscale internationale. En consequence, dans le cas d’investissements indirects, le role de la fiscalite des entreprises dans les choix de destination peut changer. Ce texte analyse les effets de la fiscalite des entreprises sur les decisions d’investissement a l’etranger des multinationales allemandes, en tenant compte du fait que, dans une premiere etape, les firmes choisissent le regime d’investissement (i.e. investissement direct ou indirect). Les resultats empiriques sont consistants avec les predictions theoriques et suggerent que les effets fiscaux varient selon que l’investissement est direct ou indirect.
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Who Cares About Corporate Taxation? Asymmetric Tax Effects on Outbound FDI
2009Co-Authors: Michael Overesch, Georg WamserAbstract:This paper investigates whether different types of FDI are asymmetrically affected by Corporate Taxation. We classify investment projects according to several characteristics such as the general motivation for FDI, the type of business activity, or the degree of internationalisation of the multinational firm. Subsequently, we analyse how local taxes influence the number of German outbound investments in European countries. The analysis reveals significant asymmetries with regard to tax effects: vertically integrated investments are more sensitive to host-country Taxation than horizontal FDI; larger tax rate elasticities are estimated if business activities are considered highly mobile; and in accordance with profit-shifting considerations, subsidiaries of more internationalised companies are less tax responsive to host-country Taxation.
Reint Gropp - One of the best experts on this subject based on the ideXlab platform.
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the disappearing tax base is foreign direct investment fdi eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between FDI, Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of European Union (EU) harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries.
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the disappearing tax base is foreign direct investment fdi eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between FDI, Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of European Union (EU) harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries.
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the disappearing tax base is foreign direct investment eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between Foreign Direct Investment (FDI), Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of EU harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries.
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the disappearing tax base is foreign direct investment eroding Corporate income taxes
2000Co-Authors: Reint Gropp, Kristina KostialAbstract:This paper analyzes the link between Foreign Direct Investment (FDI), Corporate Taxation, and Corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the Corporate tax base. Simulations of EU harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries. JEL Classification: H25, H87, F21, F42, F47
