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Foreign ownership and corporate income taxation : an empirical evaluation - Harry Huizinga and Gaëtan Nicodème

Harry Huizinga (Tilburg University and CEPR) and Gaëtan Nicodème (Directorate General for Economic and Financial Affairs)

Foreign ownership and corporate income taxation : an empirical evaluation - Harry Huizinga and Gaëtan Nicodèmepdf(267 kB) Choose translations of the previous link 

Economic integration in Europe has not led to a ‘race to the bottom’ regarding corporate income taxes. This paper documents trends in the foreign ownership of companies in Europe and it examines whether foreign ownership has exerted a positive influence on corporate income tax levels. Using company-level data, we document that the foreign ownership share in Europe stood at around 21.5 percent in the year 2000. The estimation suggests that a one percentage point increase in foreign ownership increases the average corporate income tax rate between a half and one percent. Further international economic integration is likely to lead to higher foreign ownership shares with a concomitant positive influence on corporate taxation levels.
(European Economy. Economic Papers. 185. June 2003. Brussels. 50pp. Tab. Free.)

KC-AI-03-006-EN-C (online)
ISBN 92-894-5833-X (online)
ISSN 1016-8060

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