Work

Corporate tax systems and cross country profit shifting

Year: 2000

Type: article

Abstract: The paper analyses optimal taxation of corporate profits when governments can choose both the rate and the base of the corporation tax, but are constrained to collect a given amount of corporate tax revenue. In a standard two-period model of investment and international mobility of portfolio capital only, the optimal tax system allows a full deduction for the costs of capital. When foreign direct investment is permitted, however, and firms can shift profits between countries through transfer pricing, it will be optimal for each government to distort investment decisions in order to reduce tax rates and limit the incentive for profit shifting.

Source: Oxford Economic Papers

DOI: 10.1093/oep/52.2.306

Author: A Haufler

Language: English

Topic: Corporate Taxation and Avoidance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funders: University of Warwick, Norges Forskningsråd, Freie Universität Berlin, Universität Konstanz

OpenAlex ID: W1691165764

FWCI: 28.16

Cites: 33

Cited by: 253

Related to: 10