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There is a growing concern that governments lose substantial corporate tax revenue because of profit shifting through transfer-pricing and thin-capitalization strategies. Existing literature studies profit shifting and transfer pricing separately. In practice, the choice of debt-to-asset ratios...
Persistent link: https://www.econbiz.de/10009792223
The increasing use of intellectual property as a means to shift profits to low-tax jurisdictions or jurisdictions with so-called "patent boxes" is a major challenge for the corporate tax base of medium- and high-tax countries. Extending a standard tax competition model for capital-enhancing...
Persistent link: https://www.econbiz.de/10011900768
Multinational corporations increasingly use royalty payments for intellectual property rights to shift profits globally. This threatens not only the tax base of countries worldwide, it also affects the nature of competition for foreign direct investment (FDI). Against this background, our...
Persistent link: https://www.econbiz.de/10012823537
In this paper, we study another approach to the profit shifting costs function of multinational profit shifting. First, we describe the modelling approaches of such costs functions and provide a synthesized analysis. More precisely, we investigate the involved resource costs that multinational...
Persistent link: https://www.econbiz.de/10014500710
The Global Minimum Tax (GMT) is applied only to firms above a certain size threshold, permitting countries to set differential tax rates for small and large firms. We analyse tax competition between a tax haven and a non-haven country for heterogeneous multinationals to evaluate the effects of...
Persistent link: https://www.econbiz.de/10014521242
In 2009, the United Kingdom abolished the taxation of profits earned abroad and introduced a territorial tax system. Under the territorial system, firms have strong incentives to shift profits abroad. Using a difference-in-differences research design, we show that the profitability of UK...
Persistent link: https://www.econbiz.de/10014239722
The European Commission has been supporting a transition from a system of separate accounting to a system of formula apportionment. In 2011, it presented a proposal for a council directive on a Common Consolidated Corporate Tax Base (CCCTB). Formula apportionment is often considered more...
Persistent link: https://www.econbiz.de/10013045308
This paper assesses the impact of corporate taxation on multinational activity. A numerically solvable general equilibrium model of trade and multinational firms is used to incorporate the following components of corporate taxation: parent and host country statutory corporate tax rates,...
Persistent link: https://www.econbiz.de/10013317492
This paper synthesizes and extends the literature on the taxation of foreign source income in a framework that covers both greenfield and acquisition investment, and a general constraint linking investment at home and abroad for the multinational by introducing a cost of adjustment for the...
Persistent link: https://www.econbiz.de/10010485517
Theory recommends aligning the tax treatment of debt and equity. A few countries, notably Belgium, have introduced an allowance for corporate equity (ACE) to achieve tax neutrality. We study the effects of adopting an ACE on debt financing, passive investment, and active investment of...
Persistent link: https://www.econbiz.de/10010519931