Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
962907 | Journal of International Economics | 2006 | 14 Pages |
Abstract
We present a fiscal competition model with two policy instruments: the level of corporate taxation and the tightness of control of profit shifting by multinational firms (MNF). We show that a country may optimally decide not to monitor the MNF for two reasons. Firstly, this country becomes an attractive location for MNF activity despite a high corporate tax. Secondly, as the profits of the MNF become mobile, the focus of tax competition is shifted. Taxation then influences both an MNF's location and the place where it declares its profits.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Susana Peralta, Xavier Wauthy, Tanguy van Ypersele,