Corporate income tax, IP boxes and the location of R&D

Pranvera Shehaj () and Alfons Weichenrieder
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Pranvera Shehaj: Freie Universität Berlin, School of Business and Economics

International Tax and Public Finance, 2024, vol. 31, issue 1, No 8, 203-242

Abstract: Abstract We discuss corporate tax effects on multinationals’ R&D. Theoretically, we find that a host country’s tax increase may boost local R&D expenditure: while R&D becomes deductible at a higher rate, this higher rate may not apply to all R&D returns. First, as R&D creates a public good within the MNE, some R&D returns are taxed at other countries’ tax rates. Second, some of the R&D returns are taxed at a lower IP regime tax rate. The positive tax rate effect is empirically supported by country-by-country R&D data of U.S.-owned subsidiaries for countries that have an IP regime.

Keywords: Corporate income tax; R&D; Intellectual property regimes; Patent box; International profit shifting (search for similar items in EconPapers)
JEL-codes: H25 H26 O3 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Corporate Income Tax, IP Boxes and the Location of R&D (2021)
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DOI: 10.1007/s10797-023-09812-x

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