The Taxation of Multinationals: Firm Level Evidence for Belgium
Université Catholique de Louvain, IRES, CORE, LICOS-KUL and CEPR; Catholic University of Leuven (KUL), LICOS & CEPR
Catholic University of Leuven (KUL)
September 19, 2005
LICOS Discussion Paper No. 160/2005
This paper provides empirical evidence of a more favorable tax treatment for foreign multinationals compared to similar domestic firms in a small open economy. Using treatment effects to control for self-selection of foreign firms into low tax firms, we find that foreign multinationals have substantially lower effective tax rates compared to domestic firms. In our estimations we also control for firm size, sector membership and business-cycle effects. A simple theoretical framework is used to explain our empirical findings and rests on the notion that multinational firms are in a better position to bargain for lower taxes with governments as a result of their "footloose" nature and outside location options.
Number of Pages in PDF File: 23
Keywords: Firm level data, Multinationals, Corporate taxation, Self-selection
JEL Classification: C51, E62, F23working papers series
Date posted: December 16, 2005
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.469 seconds