12 Pages Posted: 21 Apr 2005
Date Written: April 2005
When multinational firms expand their operations in tax havens, do they divert activity from non-havens? Much of the debate on tax competition presumes that the answer to this question is yes. This paper offers a model for examining the relationship between activity in havens and non-havens, and discusses the implications of recent evidence in light of that model. Properly interpreted, the evidence suggests that tax haven activity enhances activity in nearby non-havens.
Keywords: Tax havens, tax competition, foreign direct investment, investment, multinational firms
JEL Classification: H87, F23, F21
Suggested Citation: Suggested Citation
Desai, Mihir A. and Foley, C. Fritz and Hines Jr., James R., Do Tax Havens Divert Economic Activity? (April 2005). Ross School of Business Paper No. 1024. Available at SSRN: https://ssrn.com/abstract=704221 or http://dx.doi.org/10.2139/ssrn.704221