Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81285
Authors: 
Norbäck, Pehr-Johan
Persson, Lars
Vlachos, Jonas
Year of Publication: 
2006
Series/Report no.: 
IFN Working Paper 663
Abstract: 
We find that reduced foreign corporate taxes may lead to inefficient foreign acquisitions if complementarities between foreign and domestic assets are low, and to efficient foreign acquisitions if such complementarities are high. Moreover, with large complementarities, foreign acquisitions can increase domestic tax revenues. The reason is that in the bidding competition between the foreign firms, all benefits from the acquisition, including tax advantages and evaded taxes, are competed away and captured by the domestic seller which, in turn, pays capital gains tax on the proceeds. Technical issues in the tax code, such as the treatment of goodwill deductibility, is also shown to crucially affect the pattern of foreign acquisitions.
Subjects: 
Tax Competition
Ownership
Tax Revenues
FDI
M&As
JEL: 
F23
Document Type: 
Working Paper

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