Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155315
Authors: 
Braun, Julia
Zagler, Martin
Year of Publication: 
2017
Series/Report no.: 
ZEW Discussion Papers 17-011
Abstract: 
Out of a total of 2,976 double tax agreements (DTAs), some 60% are signed between a developing and a developed economy. As DTAs shift taxing rights from capital importing to capital exporting countries, the prior would incur a loss. We demonstrate in a theoretical model that in a deal one country does not trump the other, but that the deal must be mutually beneficial. In the case of an asymmetric DTA, this requires compensation from the capital exporting country to the capital importing country. We provide empirical evidence that such compensation is indeed paid, for instance in the form of bilateral official development assistance, which increases on average by six million US$ in the year of the signature of a DTA.
Subjects: 
developing countries
foreign aid
double taxation agreements
JEL: 
K33
F53
H25
H87
D82
Document Type: 
Working Paper

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