Corporate tax competition between firms

Simon Loretz and Padraig Moore ()

International Tax and Public Finance, 2013, vol. 20, issue 5, 725-752

Abstract: Firms’ tax planning decisions, similar to their other operational decisions, are made in a competitive environment. Various stakeholders observe the tax payments and evaluate these against the relevant peer group. This implies firms might not simply minimise their tax burden, but also consider their competitors behaviour when deciding about tax planning. Empirically this creates interdependencies in the tax planning activities of firms. Introducing the concept of a reputational loss we show the positive interdependence in a theoretical model and test it in a spatial econometric model. Empirical evidence suggests that benchmarking takes place both within countries and within industries, however for the latter it is important to include firms in large non-EU OECD countries. Copyright Springer Science+Business Media, LLC 2013

Keywords: Corporate taxation; Benchmarking; Tax competition; Spatial econometrics; C33; H25; M40 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Corporate Tax Competition between Firms (2009)
Working Paper: Corporate tax competition between firms (2009)
Working Paper: Corporate tax competition between firms (2009)
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DOI: 10.1007/s10797-012-9248-6

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