Tax Effects on Foreign Direct Investment: Recent Evidence and Policy Analysis

Example Tables | Executive Summary
Table of contents | How to Obtain this Publication

Example Tables

Executive Summary

Table of contents

Executive Summary

Chapter 1. Alternative Models for Analysing Tax Effects on FDI

A. Introduction

B.Frameworks for analysing determinants of FDI

1.OLI framework

2.OECD policy framework for investment

3.Neo-classical investment framework

4.New economic geography models

Chapter 2.Tax Effects on FDI – Empirical Evidence

A.Introduction

B.Main problems encountered in empirical work (data, identification)

1.FDI capital and tax data problems

2.Identification problems

C.Summary of empirical studies and elasticity results

1.Time series data studies

2.Cross section data studies

3.Panel data studies

4.Discrete choice models

D.META regression analysis of sample of empirical studies

1.Summary of meta regression results

2.Fitted ‘typical’ elasticities

Chapter 3.Taxation of Inbound FDI – Policy Considerations and Perspectives

A.Introduction

B.Possible benefits of inbound FDI

C.Overview of policy considerations in taxing inbound FDI

1.Main policy considerations and trade-offs

2.Some main results from the ‘tax competition’ and ‘new economic geography’ literature

3.Other efficiency considerations including spillover effects

4.Accounting for windfall gains

5.Efficiency considerations with the use of alternative tax instruments

D.Views on linkages between host country taxation and FDI

1.Tax alongside other determinants of FDI

2.General uncertainty over the sensitivity of aggregate FDI to tax

3.Evidence of location-specific rents and ability to tax

4.Importance of host country fundamentals

E.Responding to international tax competition

1.Comparisons with ‘similarly-situated’ countries

2.View that international tax competition is increasing

3.Alternative approaches in responding to tax competition

F.Responding to tax avoidance

1.Importance of addressing tax avoidance

2.Tax planning incentives driven by the CIT rate

3.Limits to reliance on CIT rate reductions

4.Challenges in addressing aggressive tax planning

Chapter 4.Taxation of Outbound FDI – Policy Considerations and Perspectives

A.Introduction

B.Possible benefits of outbound FDI

C.Overview of policy considerations in taxing outbound FDI

1.Main policy considerations and trade-offs

2.Alternative efficiency criteria and policy implications

D.Policy perspectives and practices

1.Treatment of foreign dividend income

2.Treatment of foreign interest and royalty income

E.International competitiveness concerns and policy responses

1.Tax relief under the ‘basic’ competitiveness argument

2.Implications of foreign (tax haven) base companies

3.Implications of tax haven conduit companies

F.Policy trends, constraints and options

Chapter 5. Assessing the FDI Response to Tax Reform and Tax Planning

A.Introduction

B.Basic approach to assessing the FDI response to tax reform

C.Consideration of cross-border tax-planning strategies

1.Standard financing structure

2.Triangular financing structure

3.Hybrid entity financing structure

4.Hybrid instrument financing structure

D.Cross-border financing developments – observations from U.S. data

E.Cross-border METR/AETR analysis – a focus on tax planning effects

1.Selection of alternative financing structures

2.Illustrative METR and AETR results with tax-planning

F.Factoring tax planning into assessments of the FDI response to tax reform

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