Abstract:
Corporate tax reforms generate cross-border investment spillovers through multinational subsidiary networks and along global supply chains. Within multinational firms, production linkages can lead to negative crossborder investment spillovers following tax increases. Along global supply chains, tax shocks propagate between firms through cost transmission and changes in demand, amplifying the reach of domestic tax reforms. International tax coordination and reform efforts should account for real investment transmission across networks, not only profit shifting. When evaluating tax reforms, cross-country spillover effects need to be taken into account.
