Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/174930 
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper No. 6807
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper develops a model of tax competition with three countries, which initially form a union where countries refrain from using different tax rates in different sectors of the economy. We study the impact of one country leaving the union. We show that the introduction of discriminatory taxation in one country increases tax policy heterogeneity within the remaining union. Moreover, the incentives for the two remaining countries to harmonize their tax rates decline. We discuss these results in the context of the debate about the tax policy implications of Brexit.
Subjects: 
international taxation
tax competition
preferential tax regimes
JEL: 
H20
H73
Document Type: 
Working Paper
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