Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123245
Authors: 
Gresik, Thomas A.
Schindler, Dirk
Schjelderup, Guttorm
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5609
Abstract: 
Many subsidiaries can deduct interest payments on internal debt from their taxable income. By issuing internal debt from a tax haven, multinationals can shift income out of host countries through the interest rates they charge and the amount of internal debt they issue. We show that, from a welfare perspective, thin-capitalization rules that restrict the amount of debt for which interest is tax deductible (safe harbor rules) are inferior to rules that limit the ratio of debt interest to pre-tax earnings (earnings stripping rules), even if a safe harbor rule is used in conjunction with an earnings stripping rule.
Subjects: 
multinational
income-shifting
safe harbor
earnings stripping
JEL: 
H73
H26
K34
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.