Foreign Ownership And Corporate Income Taxation

Recoge : 1. Introduction. - 2. Previous literature. - 3. The data. - 4. The estimation. - 5. Empirical results. - 6. Conclusions.

This report is based on a detailed analysis of the impact that CEE corporate income tax regimes have on the profitability of foreign investment. It has two purposes. The first is to describe the analysis and compare the corporate income tax regimes in the five CEE countries with the regimes in other countries that might compete for the same capital. The second purpose is to discuss the benefits and costs of the various options that the five CEE countries may consider for development of their corporate income tax policies. Particular attention is paid to the effects of tax holidays, which are temporary tax relief that all five countries offer to foreign investors. Some other tax incentives are examined including the impact that inflation would have on them.

This report considers various corporate tax measures to encourage FDI and a range of issues relevant to assessing their use.

This paper identifies tax factors in 21 developing countries that have an impact on foreign direct investment flows. It categorizes those factors into issues associated with tax coordination; tax rates and rate structures; and composition of the tax base. Recent actions by countries reveal no clear pattern in their attempts to increase tax coordination, while many have reduced corporate tax rates and stream-lined tax incentives. However, broad-based tax reform is lacking in most, leaving room for further possibilities in tax reform for attracting foreign investment. The paper also addresses nontax factors that can be instrumental in attracting foreign investment.

In the increasingly global business environment of the 1990s, policymakers and executives of multinational corporations must make informed decisions based on a sound knowledge of U.S. and foreign tax policy. Written for a nontechnical audience, Taxing Multinational Corporations summarizes the up-to-the-minute research on the structure and effects of tax policies collected in The Effects of Taxation on Multinational Corporations. The book covers such practical issues as the impact of tax law on U.S. competitiveness, the volume and location of research and development spending, the extent of foreign direct investment, and the financial practices of multinational companies. In ten succinct chapters, the book documents the channels through which tax policy in the United States and abroad affects plant and equipment investments, spending on research and development, the cost of debt and equity finance, and dividend repatriations by United States subsidiaries. It also discusses the impact of U.S. firms' outbound foreign investment on domestic and foreign economies. Especially useful to nonspecialists is an appendix that summarizes current United States rules for taxing international income.