Corporate Taxation, Multinational Enterprise and Economic Integration

Hans Jarle Kind (), Guttorm Schjelderup () and Ulltveit-Moe, Karen-Helene

No 2753, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies how economic integration affects transfer pricing, tax policy and welfare, when multinationals are taxed either according to formula apportionment (FA) or separate accounting (SA). It is shown that economic integration induces multinationals to lower their transfer prices under both tax systems, but that transfer prices become less tax sensitive under FA than under SA. A main result of the paper is that economic integration lowers tax rates in the Nash equilibrium under SA, but leads to higher taxes in the Nash equilibrium under FA.

Keywords: Economic Integration; International Tax Competition; Multinational Enterprises; Tax Regimes (search for similar items in EconPapers)
JEL-codes: F15 F23 H25 H87 (search for similar items in EconPapers)
Date: 2001-03
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