The incidence of interest withholding taxes: Evidence from the LDC loan market

• 成果类型: Article
• 署名作者: Huizinga, H
• 署名单位: Tilburg University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/0047-2727(95)01511-6
• 发表日期: 1996
• 页码: 435-451
• 关键词: interest withholding taxes; foreign tax credits

摘要

During the 1970s, developing countries differed widely in their regimes of source-based interest withholding taxes. This paper provides evidence on the relationship between interest rates paid by private LDC borrowers on international credits and the withholding tax regime. Pre-tax interest rates are estimated to increase significantly in withholding tax rates. The extent of the mark-up into higher pre-tax interest rates reflects the offsetting foreign tax credits that banks expect to receive. The expected tax credits represent the expected incidence of the non-resident withholding taxes on creditor country treasuries. Estimated expected tax credits, as reflected in bank interest rates, vary with the year of loan origination. They are relatively large for short-term loans.