The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa

Sebastian Beer and Jan Loeprick

No 2018/227, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates the costs and benefits of concluding double tax treaties with investment hubs. Based on a sample of 41 African economies from 1985–2015, the results suggest that signing treaties with investment hubs is not associated with additional investments; yet, these treaties tend to come with nonnegligible revenue losses. Building on a theoretical model, the paper investigates the role of treaty shopping in driving nominal investment flows and provides indirect evidence for its importance in the sample

Keywords: WP; tax revenue; income tax; Tax Treaty Policy; Double Tax Treaties; Domestic Resource Mobilization; Mauritius; Sub-Saharan Africa; CIT revenue; cost of capital; withholding tax tax rate; tax cost; revenue loss; Investment hubs; cost parameter; repatriation impact FDI stock; FDI equation; effects of DTTS; revenue efficiency; tax revenue equation; Corporate income tax; Foreign direct investment; Double taxation; Withholding tax; Global; Africa (search for similar items in EconPapers)
Pages: 38
Date: 2018-10-24
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Citations: View citations in EconPapers (14)

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Working Paper: The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa (2018)
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