Tax enforcement and tax havens under formula apportionment

Becker, Johannes and Fuest, Clemens (2010) Tax enforcement and tax havens under formula apportionment. International Tax and Public Finance, 17. pp. 217-235.


In this paper, we consider optimal tax enforcement policy in the presence of profit shifting toward tax havens. We show that, under separate accounting, tax enforcement levels may be too high due to negative fiscal externalities. In contrast, under formula apportionment, tax enforcement is likely to be too low due to positive externalities of tax enforcement. Our results challenge recent contributions arguing that, under formula apportionment, there is a tendency toward effficiently high levels of (effective) tax rates.

Item Type: Article
Keywords: Corporate taxation; Foreign direct investment
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 25 May 2012 15:56
Last Modified: 23 Oct 2015 14:07

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