International Tax Spillovers and Tangible Investment, with Implications for the Global Minimum Tax
Li Liu and
No 2023/159, IMF Working Papers from International Monetary Fund
This paper articulates and, using newly-assembled data, explores how international taxation affects aggregate tangible cross-border investment. Spillovers from statutory tax rates abroad seem: As sizable as effects from the host’s rate; larger than previous consensus values (attributed to a systematic bias from FDI data); and consistent with ‘implicit’ profit shifting through real investment (rather than ‘paper’ profit shifting). Contrary to much policy discussion, the results also imply that: Host countries’ marginal effective tax rates have at best a weak effect on real investment; those elsewhere have none; and, applied to the prospective global minimum tax, inward tangible investment in most sample countries will increase.
Keywords: Corporate Taxation; International Tax; Multinational Investment; Foreign Direct Investment; host country; Affiliate investment; FDI data; investment impact; corporate tax tax rate; cross-border investment; Corporate income tax; Marginal effective tax rate; International tax issues; Capital account; Global (search for similar items in EconPapers)
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Working Paper: International Tax Spillovers and Tangible Investment, with Implications for the Global Minimum Tax (2023)
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