Do thin capitalization rules crowd out multinational firms in Africa? Looking towards efficiency in revenue mobilization

Ludovic Feulefack Kemmanang

Economics Bulletin, 2021, vol. 41, issue 2, 594-603

Abstract: This study investigates whether the implementation of the thin capitalization rules (TCRs) in Africa could jeopardize its already insignificant attractiveness and assess the impact of tax administration efficiency in revenue mobilization. Analyzes are carried out through the two-step system GMM, using data from 33 African countries between 2005 and 2018. The study finds that in Africa, the TCRs have a deterrent effect on multinationals' decision to set up. The study also found that local tax administrations' level of efficiency in revenue mobilization cushioned the impact of TCRs on FDI inflows on average in the sample.

Keywords: Thin capitalization rules; multinationals; revenue mobilization; Africa (search for similar items in EconPapers)
JEL-codes: F2 O1 (search for similar items in EconPapers)
Date: 2021-04-09
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