TY - JOUR
T1 - On the relevance of double tax treaties
AU - Petkova, Kunka
AU - Stasio, Andrzej
AU - Zagler, Martin
PY - 2020
Y1 - 2020
N2 - This paper investigates the effects of double tax treaties (DTTs) on foreign direct investment (FDI) after controlling for their relevance in the presence of treaty shopping. DTTs cannot be considered a bilateral issue, but must be viewed as a network. We define tax distance as the cost of channelling corporate income from one country to another and, by considering treaty shopping through intermediate jurisdictions, we calculate the shortest (i.e. the cheapest) distance between any two countries. We show that relevant tax treaties—which reduce the direct tax distance both over domestic law and the entire existing treaty network—will increase FDI by about 18%.
AB - This paper investigates the effects of double tax treaties (DTTs) on foreign direct investment (FDI) after controlling for their relevance in the presence of treaty shopping. DTTs cannot be considered a bilateral issue, but must be viewed as a network. We define tax distance as the cost of channelling corporate income from one country to another and, by considering treaty shopping through intermediate jurisdictions, we calculate the shortest (i.e. the cheapest) distance between any two countries. We show that relevant tax treaties—which reduce the direct tax distance both over domestic law and the entire existing treaty network—will increase FDI by about 18%.
UR - https://link.springer.com/article/10.1007/s10797-019-09570-9?wt_mc=Internal.Event.1.SEM.ArticleAuthorOnlineFirst&utm_source=ArticleAuthorContributingOnlineFirst&utm_medium=email&utm_content=AA_en_06082018&ArticleAuthorContributingOnlineFirst_20190922
U2 - 10.1007/s10797-019-09570-9
DO - 10.1007/s10797-019-09570-9
M3 - Journal article
JO - International Tax and Public Finance
JF - International Tax and Public Finance
SN - 0927-5940
ER -