The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa

39 Pages Posted: 15 Nov 2018

See all articles by Sebastian Beer

Sebastian Beer

International Monetary Fund (IMF)

Jan Loeprick

Vienna University of Economics and Business; World Bank

Multiple version iconThere are 2 versions of this paper

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

Beer, Sebastian and Loeprick, Jan, The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa (October 2018). IMF Working Paper No. 18/227, Available at SSRN: https://ssrn.com/abstract=3285225

Sebastian Beer (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jan Loeprick

Vienna University of Economics and Business ( email )

Wien
Austria

World Bank ( email )

Wien
Austria

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