The use of tax havens in exemption regimes
James Hines () and
Monika Schnitzer ()
No 8943, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper analyzes the tax haven investment behavior of multinational firms from a country that exempts foreign income from taxation. High foreign tax rates generally encourage firms to invest in tax havens, though significant costs of reallocating taxable income dampen these incentives. The behavior of German manufacturing firms from 2002-2008 is consistent with this prediction: at the mean, one percentage point higher foreign tax rates are associated with three percentage point greater likelihoods of owning tax haven affiliates. This contrasts with earlier evidence for U.S. firms subject to home country taxation, which are more likely to invest in tax havens if they face lower foreign tax rates. Foreign tax rates appear to be unrelated to tax haven investments of German firms in service industries, possibly reflecting the difficulty they face in reallocating taxable income.
Keywords: Manufacturing FDI; Multinational Firms; Profit Shifting; Service FDI; Tax Avoidance; Tax Havens (search for similar items in EconPapers)
JEL-codes: F23 H87 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-iue and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at email@example.com
Working Paper: The use of tax havens in exemption regimes (2012)
Working Paper: The Use of Tax Havens in Exemption Regimes (2011)
Working Paper: The use of tax havens in exemption regimes (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8943
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=8943
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().