The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata

Ronald Davies, Pehr-Johan Norbäck and Ayça Tekin-Koru

No 721, Working Papers from Oxford University Centre for Business Taxation

Abstract: This paper uses affiliate level data from Swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales. In line with previous results, we find little evidence for an effect of treaties on the level of total sales. We do, however, find that a tax treaty increases the probability of investment by a firm in a given country. In addition, we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent. This is consistent with treaties increasing the effective host tax. This suggests that tax treaties impact the behavior of multinationals along some dimensions but not along others.

Keywords: Tax Treaties; Multinational Firms; Foreign Direct Investment (search for similar items in EconPapers)
JEL-codes: F21 F23 H25 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-int
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Related works:
Working Paper: The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata (2010)
Journal Article: The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata (2009)
Working Paper: The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata (2007)
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