Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74901
Authors: 
Vandenbussche, Hylke
Tan, Chang
Year of Publication: 
2005
Series/Report no.: 
LICOS Discussion Paper 160
Abstract: 
This paper provides empirical evidence of a more favorable tax treatment for foreign multinationals compared to similar domestic firms in a small open economy. Using treatment effects to control for self-selection of foreign firms into low tax firms, we find that foreign multinationals have substantially lower effective tax rates compared to domestic firms. In our estimations we also control for firm size, sector membership and business-cycle effects. A simple theoretical framework is used to explain our empirical findings and rests on the notion that multinational firms are in a better position to bargain for lower taxes with governments as a result of their "footloose" nature and outside location options.
Subjects: 
firm level data
multinationals
corporate taxation
self-selection
JEL: 
C51
E62
F23
Document Type: 
Working Paper

Files in This Item:
File
Size
265.23 kB





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