Taxation and the international strategy of Japanese multinational enterprises

Céline Azemar, Gregory Corcos and Andrew Delios
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Céline Azemar: TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Andrew Delios: Business school - NUS - National University of Singapore

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper analyzes the effect of statutory tax rates on the location of Japanese capital in emerging countries. Considering the fact that the difference between Japan and foreign tax rates can engender transfer pricing manipulation to diminish tax liabilities, and that some firms are more able to manipulate transfer pricing, such as wholly-owned ventures and high technology affiliates, we investigate the sensitivity of Japanese capital to foreign tax rates by distinguishing wholly-owned ventures from joint-ventures and high R&D affiliates from low R&D affiliates. Based on country, parent firm and sector characteristics an investment equation is estimated on a sample of 3774 Japanese affiliates in 49 emerging countries. We obtain a greater semi-elasticity between investment and the statutory tax rate for wholly-owned affiliates and R&D intensive parents. We interpret these results as indirect evidence for abusive transfer pricing to be one of the determinants of FDI flows.

Keywords: international taxation; Japanese investments; transfer pricing; ownership structure; technology intensity; tax sparing; fiscalité internationale; investissement direct à l'étranger; firmes japonaises; prix de transfert; structure de propriété (search for similar items in EconPapers)
Date: 2006-06
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590421v1
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Taxation and the international strategy of Japanese multinational enterprises (2006)
Working Paper: Taxation and the international strategy of Japanese multinational enterprises (2006)
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