Corporate Tax Competition between Firms

Simon Loretz and Padraig J. Moore ()
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Padraig J. Moore: Deutsche Bank London

No 912, Working Papers from Oxford University Centre for Business Taxation

Abstract: Firms' tax planning decisions, similar to their other operational decisions, are made in a competitive environment. Various stakeholders observe the tax payments and evaluate these against the relevant peer group, which creates interdependencies in the tax planning activities of firms. Introducing the concept of reputational loss we show the positive interdependence in a theoretical model and test it in a spatial econometric model. Empirical evidence suggests that benchmarking takes place both within countries and within industries, however for the latter it is important to include firms in large non-EU OECD countries. Further, the analysis shows that spatial interdependence is stronger for the largest firms and if they have an average effective tax rate above the statutory tax rate.

Keywords: Corporate Taxation; Benchmarking; Tax Competition; Spatial Econometrics (search for similar items in EconPapers)
JEL-codes: H25 M40 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-mic, nep-pbe, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Corporate tax competition between firms (2013)
Working Paper: Corporate tax competition between firms (2009)
Working Paper: Corporate tax competition between firms (2009)
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