Lessons the United States Can Learn from Other Countries’ Territorial Systems for Taxing Income of Multinational Corporations

57 Pages Posted: 30 Jan 2015  

Rosanne Altshuler

Rutgers, The State University of New Jersey - Department of Economics

Stephen E. Shay

Harvard Law School

Eric J. Toder

Urban Institute

Date Written: January 21, 2015

Abstract

The United States has a worldwide system that taxes the dividends its resident multinational corporations receive from their foreign affiliates, while most other countries have territorial systems that exempt these dividends. This report examines the experience of four countries – two with long-standing territorial systems and two that have recently eliminated taxation of repatriated dividends. We find that the reasons for maintaining or introducing dividend exemption systems varied greatly among them and do not necessarily apply to the United States. Moreover, classification of tax systems as worldwide or territorial does not adequately capture differences in how countries tax foreign-source income.

Keywords: International taxation, multinational corporations, territorial taxation, corporate taxation

JEL Classification: H20, H25, H87

Suggested Citation

Altshuler, Rosanne and Shay, Stephen E. and Toder, Eric J., Lessons the United States Can Learn from Other Countries’ Territorial Systems for Taxing Income of Multinational Corporations (January 21, 2015). Available at SSRN: https://ssrn.com/abstract=2557190

Rosanne Altshuler

Rutgers, The State University of New Jersey - Department of Economics ( email )

75 Hamilton Street
New Jersey Hall
New Brunswick, NJ 08901
United States

Stephen E. Shay

Harvard Law School ( email )

1563 Manssachusetts Avenue
Cambridge, MA 02138
United States

Eric J. Toder (Contact Author)

Urban Institute ( email )

Urban Institute
2100 M Street NW
Washington, DC 20037
United States
2022615577 (Phone)

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