Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86656
Authors: 
Vrijburg, Hendrik
de Mooij, Ruud A.
Year of Publication: 
2010
Series/Report no.: 
Tinbergen Institute Discussion Paper 10-011/3
Abstract: 
This paper analyzes enhanced cooperation agreements in corporate taxation in a three country tax competition model where countries differ in size. We characterize equilibrium tax rates and the optimal tax responses due to the formation of an enhanced cooperation agreement. Conditions for strategic complementarity or strategic substitutability of tax rates are crucial for the welfare effects of enhanced cooperation. Simulations show that enhanced cooperation is unlikely to be feasible for small countries. When enhanced cooperation is feasible, it may hamper global harmonization. Only when countries are of similar size is global harmonization a feasible outcome.
Subjects: 
Tax coordination
Asymmetry
Enhanced Cooperation Agreements
Strategic Tax Response
JEL: 
E62
F21
H25
H77
Document Type: 
Working Paper

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