Capital Income and Profits Taxation with Foreign Ownerwhip of Firms

Harry Huizinga and Soeren Bo Nielsen

No 95-09, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: This paper establishes in the simplest possible way optimal rules for capital income and profits taxation in the open economy with or without foreign ownership of doemstic firms. We show that if there are constraints on the feasibility of profits taxation, both saving and investment taxes generally enter the optimal tax package. If instead profits can be fully taxed, then source-based investment taxes vanish. If domestic firms are in part owned by foreigners, then source-based investment taxes can be used to shift income away from these to domestic citizens and they may even be used to finance lump sum transfers to domestic residents.

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Related works:
Journal Article: Capital income and profit taxation with foreign ownership of firms (1997)
Working Paper: Capital income and profit taxation with foreign ownership of firms (1997)
Working Paper: Capital Income and Profits Taxation with Foreign Ownership of Firms (1995)
Working Paper: Capital income and profits taxation with foreign ownership of firms (1995)
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