Tax competition between developed, emerging, and developing countries Same same but different?

• 成果类型: Article
• 署名作者: Mardan, Mohammed; Stimmelmayr, Michael
• 署名单位: Norwegian School of Economics (NHH); University of Bath; Swiss Federal Institutes of Technology Domain; ETH Zurich; Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2020.102491
• 发表日期: 2020
• 关键词: Tax competition; country risk; Developing countries; Asymmetric countries

摘要

This paper analyzes tax competition between countries, which differ in their country-specific risks. We show that the outcome of asymmetric tax competition crucially depends on the ability of multinational firms to shift profits. With high costs of profit shifting, higher-risk countries set lower tax rates than lower-risk countries whereas the opposite is true if the costs of profit shifting are low. The results provide an explanation for the patterns observed in the corporate income tax policies across countries differing in their level of development. Moreover, for intermediate costs of profit shifting, we show that countries' absolute risk level plays an important role in tax rate setting. These results carry important implication for the empirical tax competition literature.