Where Does Multinational Investment Go with Territorial Taxation? Evidence from the UK
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Summary:
In 2009, the United Kingdom changed from a worldwide to a territorial tax system, abolishing dividend taxes on foreign repatriation from many low-tax countries. This paper assesses the causal effect of territorial taxation on real investments, using a unique dataset for multinational affiliates in 27 European countries and employing the difference-in-difference approach. It finds that the territorial reform has increased the investment rate of UK multinationals by 15.7 percentage points in low-tax countries. In the absence of any significant investment reduction elsewhere, the findings represent a likely increase in total outbound investment by UK multinationals.
Series:
Working Paper No. 18/7
Subject:
Corporate investment Corporate taxes Foreign direct investment Foreign investment Gross capital formation Gross fixed investment Multinational corporations Private investments Tax policy Territorial taxation United Kingdom
English
Publication Date:
January 12, 2018
ISBN/ISSN:
9781484337493/1018-5941
Stock No:
WPIEA2018007
Price:
$18.00 (Academic Rate:$18.00)
Format:
Paper
Pages:
49
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