Policy Forum: Effective Tax Rates for Multinationals--The Role of Tax Incentives and Tax Planning

W. Steven Clark () and Alexander Klemm
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W. Steven Clark: International Monetary Fund (IMF), Washington, DC

Canadian Tax Journal, 2015, vol. 63, issue 1, 133-148

Abstract: Effective (marginal and average) tax rates (ETRs) are frequently used in the analysis and design of tax policies affecting investment, and this article provides various recent examples. The article addresses issues that arise when ETRs are calculated in an international context, such as for cross-border investments. It explains concretely how tax incentives and tax-planning strategies can be included in the calculation of ETRs. It then discusses typical difficulties in their interpretation, many of which become more severe in an international context. In particular, the range of ETRs for a given country rises, and both levels and country rankings depend on assumptions about tax and non-tax parameters.

Keywords: Effective income tax rates; corporate income taxes; tax planning; tax incentives (search for similar items in EconPapers)
Date: 2015
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