EconPapers    
Economics at your fingertips  
 

Competiton for FDI and profit shifting: on the effects of subsidies and tax breaks

Oscar Amerighi () and Giuseppe De Feo ()

No 1326, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: We investigate competition for FDI within a region when a foreign multinational firm can profitably exploit differences in statutory corporate tax rates by shifting taxable profits to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm’s investment decision when profit shifting motivations induce the firm to locate in the (before tax) least profitable country.

Keywords: Policy competition for FDI; profit shifting; tax discrimination (search for similar items in EconPapers)
JEL-codes: H25 H26 H32 H73 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2013-11
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published

Downloads: (external link)
http://www.strath.ac.uk/media/1newwebsite/departme ... /2013/13-26FINAL.pdf (application/pdf)

Related works:
Journal Article: Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks (2014) Downloads
Working Paper: Competition for FDI and profit shifting: On the effects of subsidies and tax breaks (2013) Downloads
Working Paper: Competition for FDI and profit shifting: On the effects of subsidies and tax breaks (2013) Downloads
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:str:wpaper:1326

Access Statistics for this paper

More papers in Working Papers from University of Strathclyde Business School, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Kirsty Hall ().

 
Page updated 2019-11-14
Handle: RePEc:str:wpaper:1326