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 multinationals and on national welfare. Contrary to existing theory, in the absence of foreign taxation, deferral of home-country taxation until earnings on outbound FDI are repatriated is generally superior to including those earnings in current income. This holds even if the home country taxes domestic investment less generously. This is also generally superior to exempting foreign income. Foreign taxes permit foreign governments to capture some of the pre-tax economic rent from the home-country FDI; this reduces the benefit to the home country of more generous taxation of outbound FDI.

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: 02 Oct 2018 12:46

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