Taxing multinationals in the presence of internal capital markets

Marko Koethenbuerger and Michael Stimmelmayr

No 1408, Working Papers from Oxford University Centre for Business Taxation

Abstract: There is ample evidence that internal capital markets incur efficiency costs for multinational enterprises (MNEs). This paper analyzes whether tax avoidance behaviour interacts with these costs and how policies of competing governments respond to it. We show that the interaction in itself may lead to profit taxes that are inefficiently high (low), provided the costs are attenuated (magnified) by higher profit taxes. Further, internal efficiency costs might render infrastructure provision inefficiently low. We also clarify the implications of the decision to set up an internal capital market and of external finance for the behaviour of competing governments. The results are consistent with empirical findings that are not inherently related to the notion of fiscal competition.

Keywords: fiscal competition; multinational firms; internal efficiency costs; managerial behavior; corporate tax avoidance. (search for similar items in EconPapers)
JEL-codes: D21 F23 H25 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sbs.ox.ac.uk/sites/default/files/Busine ... series-14/WP1408.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/series-14/WP1408.pdf [301 Moved Permanently]--> https://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/series-14/WP1408.pdf)

Related works:
Journal Article: Taxing multinationals in the presence of internal capital markets (2016)
Working Paper: Taxing Multinationals in the Presence of Internal Capital Markets (2013)
Working Paper: Taxing Multinationals in the Presence of Internal Capital Markets (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:btx:wpaper:1408

Access Statistics for this paper

More papers in Working Papers from Oxford University Centre for Business Taxation Contact information at EDIRC.
Bibliographic data for series maintained by Dongxian Guo ( this e-mail address is bad, please contact ).