The effect of a worldwide tax system on tax management of foreign subsidiaries

• 成果类型: Article
• 署名作者: Kohlhase, Saskia; Pierk, Jochen
• 署名单位: Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/s41267-019-00287-9
• 发表日期: 2020
• 页码: 1312-1330
• 关键词: cross-border investments; FOREIGN SUBSIDIARIES; dividend repatriation; Tax avoidance; Territorial tax system; Worldwide tax system

摘要

Under a worldwide tax system, firms pay taxes on their domestic income and repatriated foreign income, whereas under a territorial tax system repatriated foreign income is exempt from taxation. We examine whether worldwide tax systems reduce the incentives of multinational corporations to engage in tax management in their foreign subsidiaries. Using two quasi-natural experiments, we show that multinationals lower the effective tax rates in their foreign subsidiaries after countries switch from a worldwide to a territorial tax system. Thus, multinationals subject to a worldwide tax system face competitive disadvantages compared to competitors from countries with a territorial tax system.