Where Does Multinational Investment Go with Territorial Taxation? Evidence from the UK
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
In 2009, the United Kingdom changed from a worldwide to a territorial tax system, abolishing dividend taxes on foreign repatriation from many low-tax countries. This paper assesses the causal effect of territorial taxation on real investments, using a unique dataset for multinational affiliates in 27 European countries and employing the difference-in-difference approach. It finds that the territorial reform has increased the investment rate of UK multinationals by 15.7 percentage points in low-tax countries. In the absence of any significant investment reduction elsewhere, the findings represent a likely increase in total outbound investment by UK multinationals.
Series:
Working Paper No. 2018/007
Subject:
Corporate income tax Currencies Dividend tax Labor Money National accounts Private investment Taxes Wages
English
Publication Date:
January 12, 2018
ISBN/ISSN:
9781484337493/1018-5941
Stock No:
WPIEA2018007
Pages:
49
Please address any questions about this title to publications@imf.org