LOCATION CHOICE AND TAX RESPONSIVENESS OF FOREIGN MULTINATIONALS: EVIDENCE FROM ASEAN COUNTRIES

Athiphat Muthitacharoen

The Singapore Economic Review (SER), 2023, vol. 68, issue 01, 217-242

Abstract: This study uses a firm-level dataset to examine the impacts of taxation on multinationals’ decisions to set up new foreign subsidiaries in developing ASEAN countries. It finds that while taxes play a critical role in multinational enterprises’ location choice decision, there is an important heterogeneity in the tax responsiveness. First, the tax sensitivity for high-tech firms is significantly lower than that for low-tech firms. Second, having a prior presence in the respective host country is associated with substantially lower tax responsiveness. Finally, in accordance with international-tax-avoidance considerations, the tax responsiveness is significantly diminished for affiliates with a connection to tax-haven countries.

Keywords: Tax incentive; FDI; multinational firms; developing countries (search for similar items in EconPapers)
JEL-codes: C25 F21 F23 H25 H87 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Location Choice and Tax Responsiveness of Foreign Multinationals: Evidence from Asean Countries (2022)
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DOI: 10.1142/S021759082250062X

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