Tax Competition with Multinational Firms

Thomas Dickescheid

FinanzArchiv: Public Finance Analysis, 1999, vol. 56, issue 3/4, 500-

Abstract: This paper examines tax competition between two countries that mutually undertake foreign direct investment via subsidiaries of the domestic industry. Different forms of corporate finance are considered, which allows for the analysis of a variety of different taxes that influence multinationals´investment. As in Mintz and Tulkens (1996), both countries maximise national welfare by taxing foreign subsidiaries operating domestically and abstaining from taxing domestic firms and their affiliates operating abroad. This can be achieved by all forms of double taxation relief (e.g. exemption, credit, deduction) when accompanied by appropriate domestic tax rules. These concern two aspects. The first one is the tax treatment of interest costs that the parent company incurs when it borrows to finance its affiliate´s shares and the second one is the taxation of foreign dividends at the shareholder level. In Germany, for example, the nationally optimal tax rules are enforced even when a double taxation treaty applies.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mhr:finarc:urn:sici:0015-2218(200007)56:3/4_500:tcwmf_2.0.tx_2-z

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

Access Statistics for this article

FinanzArchiv: Public Finance Analysis is currently edited by Alfons Weichenrieder, Ronnie Schöb and Jean-François Tremblay

More articles in FinanzArchiv: Public Finance Analysis from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().