The Impact of Globalization on Corporate Taxation: Evidence from The KOF Globalization Index

Deniz Sevi̇nç (), Gamze Öz-Yalaman () and Güven Sevi̇l ()

Journal of Research in Economics, Politics & Finance, 2019, vol. 4, issue 3, 350-369

Abstract: The increase in globalization has led to the redefinition of the tax policy perceptions of countries. The increase in globalization has also led to pressures on governments to revise their taxation policies in order to compensate for the potential risks that may arise. It is noteworthy that many countries around the world have reduced corporate tax rates in recent years. Thus, this paper investigates the role of increasing globalization in this process of decline. For this, the paper tests whether globalization has a significant effect on corporate taxation by using a panel of 33 countries over the period 1998-2016. The paper takes into account three main dimensions of globalization: economic, trade and politics. Moreover, the paper uses the two different measurements of globalization: de facto and de jure. The empirical results suggest a negative relationship between globalization and corporate tax. The results are robust in terms of different dimensions and measurements of globalization. It can be concluded that global integration does matter for policymakers and increasing integration also influences independent national fiscal and economic policies of countries.

Keywords: Globalization; Corporate Tax Rate; Panel Data; KOF Globalization Index (search for similar items in EconPapers)
JEL-codes: C23 F65 F68 G32 H20 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:ahs:journl:v:4:y:2019:i:3:p:350-369

DOI: 10.30784/epfad.632288

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