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Title:From separate accounting to formula apportionment: analysis in a dynamic framework PDF Logo
Authors:Radulescu, Doina Maria
Issue Date:2007
Series/Report no.:CESifo working paper 2122
Abstract:This paper analyzes the switch from Separate Accounting to Formula Apportionment in a dynamic framework. The model features both purely domestic corporations and a domestic multinational which invests at home and abroad as well as a purely foreign corporation and a foreign multinational which invests in the foreign economy as well as in the domestic country. Using such a framework we can show that since the new FA rules apply only to multinational firms, this will affect the domestic activity of purely domestic or foreign corporations since these stick to SA and thus the marginal product of labour and capital will be different for the two firm types. This in turn will affect the investment incentives and distort capital and labour allocation between the different types of enterprises operating in an economy.
Subjects:capital income taxation
separate accounting
formula apportionment
dynamic optimization
multinational firms
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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