Dynamic inconsistency and preferential taxation of foreign capital

Kaushal Kishore

International Tax and Public Finance, 2017, vol. 24, issue 3, No 1, 396 pages

Abstract: Abstract In a two-period dynamic model in which a single country attempts to attract two large investors endowed with capital with varying rate of returns, we show that the result of Kishore and Roy (Econ Lett 124:88–92, 2014) that a country has incentives to commit to a non-preferential regime to circumvent a dynamic inconsistency problem does not hold. The tax revenue of the government may be higher under a preferential regime compared to a non-preferential regime.

Keywords: Tax competition; Non-preferential regime; Preferential regime; Dynamic inconsistency; F21; H21; H25; H87 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10797-016-9423-2

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