Taxing Mobile Capital in Free Trade Zones to the Detriment of Workers

Glenn Jenkins (jenkins@econ.queensu.ca) and Chun-Yan Kuo (chunyankuo@gmail.com)
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Chun-Yan Kuo: Department of Economics, Queen's University, Canada

No 2013-04, Development Discussion Papers from JDI Executive Programs

Abstract: Many countries exempt the income of firms operating in their free trade or export processing zones from corporate income taxation. This paper examines both theoretically and empirically the incidence of removing this exemption. The empirical analysis is carried out for the Dominican Republic. The findings indicate that removal of the corporate income tax exemption would inflict a burden on relatively low-waged workers of over nine times the amount of additional tax revenue collected from the companies operating in the country's free trade zones. In turn, this loss would largely be a gain to the more advantaged groups in society.

Keywords: WTO; tax incidence; free trade zones; corporate income taxation; Dominican Republic (search for similar items in EconPapers)
JEL-codes: F13 H22 O24 O54 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2013-12
New Economics Papers: this item is included in nep-int, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Taxing mobile capital in free trade zones to the detriment of workers (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:dpaper:228

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