Corporate income taxation uncertainty and foreign direct investment

Martin Zagler, Cristiana Zanzottera

Publication: Working/Discussion PaperWU Working Paper

Abstract

This paper analyzes the effects of legal uncertainty around corporate
income taxation on foreign direct investment (FDI). Legal uncertainty can
take many forms: double tax agreements, different types of legal systems
and corruption. We test the effect of legal uncertainty on foreign direct
investment with an international panel. We find that an increase in the
ratio of the statutory corporate income tax rate of the destination relative
to the source country exhibits a negative impact on foreign direct
investment. Interacting the statutory corporate income tax rate with
measures of legal uncertainty, we observe a negative effect.
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 2012

Publication series

NameWU International Taxation Research Paper Series
No.2012-07

WU Working Paper Series

  • WU International Taxation Research Paper Series

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