Taxing multinationals

Devereux, Michael and Hubbard, R. Glenn (2003) Taxing multinationals. International Tax and Public Finance, 10 (4). pp. 469-487.


This paper analyzes the effects of tax policy on the strategic choices of a domestic multinational company competing with a foreign multinational company in a third country. We demonstrate the role of the effective average tax rate and the effective marginal tax rate on the company's choices. We consider the impact on national welfare of alternative tax policies for outbound investment. Our results differ from existing models. In contrast to Feldstein and Hartman (1979), in our model, taxing foreign source income on accrual with a deduction for foreign taxes is not generally optimal. However, unlike Mintz and Tulkens (1996), the optimal policy for domestic and outbound investment is linked through the strategic choices of the multinational.

Item Type: Article
Keywords: foreign direct investment; multinationals; corporation tax
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 01 Dec 2011 12:14
Last Modified: 21 Sep 2016 10:17

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