International taxation and multinational firm location decisions - Salvador Barrios, Harry Huizinga, Luc Laeven and Gaëtan Nicodème
Author(s): Salvador Barrios (European Commission), Harry Huizinga (Tilburg University and CEPR), Luc Laeven (International Monetary Fund and CEPR), Gaëtan Nicodème (European Commission, CEB, CESifo and ECARES)
International taxation and multinational firm location decisions - Salvador Barrios, Harry Huizinga, Luc Laeven and Gaëtan Nicodème (821 kB)
Summary for non-specialists (89 kB)
Using a large international firm-level data set, we estimate separate effects of host and parent country taxation on the location decisions of multinational firms.
Both types of taxation are estimated to have a negative impact on the location of new foreign subsidiaries. In fact, the impact of parent country taxation is estimated to be relatively large, possibly reflecting its international discriminatory nature.
For the cross-section of multinational firms, we find that parent firms tend to be located in countries with a relatively low taxation of foreign-source income. Overall, our results show that parent-country taxation – despite the general possibility of deferral of taxation until income repatriation – is instrumental in shaping the structure of multinational enterprise.
JEL classification: F23, G32, H25, R38
(European Economy. Economic Papers 356. February 2009.
Brussels. 46pp. Tab. Graph. Ann. Bibliogr. Free.)
| KC-AI-09-356-EN-N (online)||
|ISBN 978-92-79-08379-2 (online)||
|ISSN 1725-3187 (online)