Publication: International Tax Spillovers and Tangible Investment, with Implications for the Global Minimum Tax
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2023-05-03
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2023-05-03
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This paper articulates and, using newly-assembled data, explores how international taxation affects aggregate tangible cross-border investment. Spillovers from statutory tax rates abroad seem: As sizable as effects from the host’s rate; larger than previous consensus values (attributed to a systematic bias from FDI data); and consistent with ‘implicit’ profit shifting through real investment (rather than ‘paper’ profit shifting). Contrary to much policy discussion, the results also imply that: Host countries’ marginal effective tax rates have at best a weak effect on real investment; those elsewhere have none; and, applied to the prospective global minimum tax, inward tangible investment in most sample countries will increase.
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“Keen, Michael; Liu, Li; Pallan, Haley. 2023. International Tax Spillovers and Tangible Investment, with Implications for the Global Minimum Tax. Policy Research Working Papers; 10427. © World Bank. http://hdl.handle.net/10986/39777 License: CC BY 3.0 IGO.”
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