On the implications of introducing cross-border loss-offset in the European Union

• 成果类型: Article
• 署名作者: Kalamov, Zarko Y.; Runkel, Marco
• 署名单位: Technical University of Berlin; Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2016.10.007
• 发表日期: 2016
• 页码: 78-89
• 关键词: Cross-border loss-offset; Tax competition; Profit shifting

摘要

This article investigates a tax competition model where countries compete for capital and profits of multinational enterprises (MNEs) through statutory tax rates and cross-border loss-offset provisions, which allow a transfer of foreign subsidiaries' losses to the parent company. A joint implementation of full cross-border loss-relief is welfare maximizing, because it ensures production efficiency and no profit shifting in equilibrium. Local governments choose zero level of the loss-relief in a noncooperative equilibrium, if only capital is mobile and relax the loss-offset, when MNEs engage in profit shifting. Therefore, allowing multinationals to undertake international tax planning activities may be welfare-improving in our model. (C) 2016 Elsevier B.V. All rights reserved.