The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa
39 Pages Posted: 15 Nov 2018
There are 2 versions of this paper
The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa
Date Written: October 2018
Abstract
This paper investigates the costs and benefits of concluding double tax treaties with investment hubs. Based on a sample of 41 African economies from 1985-2015, the results suggest that signing treaties with investment hubs is not associated with additional investments; yet, these treaties tend to come with nonnegligible revenue losses. Building on a theoretical model, the paper investigates the role of treaty shopping in driving nominal investment flows and provides indirect evidence for its importance in the sample.
Keywords: Mauritius, Sub-Saharan Africa, Tax evasion, Tax Treaty Policy, Double Tax Treaties, Domestic Resource Mobilization, Business Taxes and Subsidies, Firm
JEL Classification: F21, F23, H25, H26, H32
Suggested Citation: Suggested Citation