International corporate taxation and US multinationals' behaviour: an integrated approach

Using data from the International Revenue Service, this paper explores the effects of corporate taxation on U.S. capital invested abroad and on tax planning practices (dividend payments, income shifting, and passive investment). The econometric analysis first indicates that investment is strongly influenced by average tax rates, with a magnified impact for particularly low-tax rates implying that the attractiveness of low-tax countries is not weakened by anti-deferral rules and cross-crediting limitations. Further explorations suggest that firms report higher profit and are less likely to repatriate dividends when they are located in low-tax jurisdictions. Firms also report higher Subpart F income in countries in which they shift their profit, suggesting that cross-crediting provides an incentive to shift passive income in low-tax countries and that passive investment can be an alternative strategy to minimize taxes when active investment opportunities are lacking. Finally, the paper estimates the role of effective transfer pricing regulation on income shifting activities using the quality of host countries' law enforcement. It appears that low degrees of law enforcement are associated with higher income-shifting.Uncertainty, Multi-Prior Beliefs, Suspension Schemes, Panic-Driven Bank Runs.

Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa

Using 1985-2004 yearly panel data for 70 developing countries, including 28 from Sub-Saharan Africa (SSA), the paper finds that once market size is accounted for, SSA's FDI deficit with other regions of the world is mainly explained by the insufficient provision of public goods: relatively low human capital accumulation, in terms of education and health in SSA. Based on additional cross-sectional data, the paper finds that in the absence of HIV and malaria, net FDI inflows in the median SSA country could have been one-third higher during 2000-2004, with slightly more than one-half of this deficit explained by malaria.Public Governance, Foreign Direct Investment, Health

Who Ultimately Bears the Burden of Greater Non-Wage Labour costs?

We investigate the effect of a rise in non-wage labour costs (NWLC) on real manufacturing labour costs in OECD countries, taking into account the degree of coordination in the wage bargaining process. We find that, in countries in which wage bargaining is not highly coordinated, 55% of an increase in NWLC appears to be shifted to workers in the long run, whereas in countries operating under a highly coordinated bargaining regime, full shifting occurs. Overall, our results suggest that high NWLC can be associated with a high equilibrium unemployment rate, but only in those OECD countries that do not have highly coordinated wage bargaining.labour costs, tax wedge, wage determination, bargaining coordination

The Tax Sparing Provision Influence: A Credit versus Exempt Investors Analysis

This paper is concerned with the impact of tax sparing provisions on the location choices of multinational enterprises. Special attention is paid to the economic in°uence of tax sparing because the OECD proposal to reconsider the inclusion of this provision in bilateral tax treaties is highly controversial. An empirical analysis is proposed in order to apprehend the effects of tax sparing on both credit and exempt investors, since they do not benefit from the same advantages provided by tax sparing. Using data from 54 developing countries over the 1990-2000, and distinguishing Japanese credit investors from French exempt investors, we first find that the asymmetrical sensitivity between exempt and credit investors relative to foreign corporate taxes is considerably reduced with tax measures accounting for tax sparing. Second, we find that tax sparing provisions have a favorable impact on the location choices of credit investors and have no influence on the location choices of exempt investors. Third, the non-robust significance of both a tax sparing adjusted effective interest tax rate and effective royalties tax rate tends to suggest that tax incentives on passive incomes are not really considered by both credit and exempt investors when making the decision of where to invest.foreign direct investment, tax sparing, credit and exempt tax systems, corporate taxes, interest and royalty taxes

Short-run strategies for attracting Foreign Direct Investment

This paper empirically investigates the effectiveness and feasibility of two FDI policies, fiscal incentives and deregulation, aimed at improving the attractiveness of a country in the short run. Using disaggregated data on sales by US MNEs’ foreign affiliates in 43 developed and developing countries over the 1982-1994 period, results show that the provision of fiscal incentives or the deregulation of the labour market would exert a positive impact on total FDI. Given the drawbacks frequently associated with the use of incentive packages, economy-wide policies which ease firing procedures and reduce severance payments would certainly be the best policy option. This paper also highlights the different aggregation and omitted variable biases that have affected results of previous studies and provides some support to recent theoretical models of FDI by showing that third country effects and spatial interdependence influence respectively the location of export-platform FDI and vertical FDI.Foreign direct investment; fiscal incentives; regulations, market potential; spatial interdependence.

Multinational Firms' Heterogeneity in Tax Responsiveness: the Role of Transfer Pricing

In this paper we show that the ability of multinational firms to manipulate transfer prices affects the tax sensitivity of foreign direct investment (FDI). We offer a model of international capital allocation where firms are heterogeneous in their ability to manipulate transfer prices. Perhaps paradoxically, we show that the ability to shift profits can make parent companies' investment more sensitive to host-country tax rates, as long as investors expect fiscal authorities to use price and profit detection methods. We then offer a comprehensive empirical study to test our predictions in the case of Japanese FDI. We exploit the finding that the unobservable ability to manipulate transfer prices is correlated with whole ownership of affiliates and R&D expenditure. Based on country, parent firm and sector characteristics, we estimate an investment equation on a sample of 3614 Japanese affiliates in 49 emerging countries. We obtain a greater semi-elasticity of investment to the statutory tax rate in affiliates that are wholly owned and that have R&D intensive parents. We interpret these results as indirect evidence that abusive transfer pricing is one of the determinants of FDI activity.International Taxation, Transfer Pricing, FDI, Ownership Structure, R&D, Japanese Investment, Tax Sparing

Public governance as a key determinant of FDI : a comparative analysis of sub-saharan Africa and south-east Asia host countries

The World Bank (2000), in its report on Quality of Growth emphasises the importance of public governance as the keystone of a country's development. Studies examining determinants of foreign direct investment (FDI) are also increasingly taking account of such fundamentals as institutional and political factors. Thus, rule of law, bureaucratic corruption, educational attainment or quality of physical infrastructure are now included in econometric analyses next to more common variables such as market size, labour costs or trade openness. In other words, good governance appears to be a key condition for attracting FDI. For instance, Lehmann (1999), shows that a country like India could increase its share of US affiliates' physical investment by 50% if it were to eliminate all political uncertainty. For a developing country, the stakes for improving its public governance are high. Beyond an increase in its growth rate, a favourable business climate is likely to attract more FDI and enhance their alleged spillovers. More FDI means more financial resources for the host country, whereas it is likely that the technological intensity of these investments and the transfer of foreign know-how to domestic firms will largely depend on the quality of public governance. This article has three goals. First, to clarify why public governance is likely to influence FDI inflows. Second, to propose a new evaluation of public governance through the construction of quantitative, relatively objective, easily replicable and sample-specific indicators. The public governance of two geographic zones will be assessed through this method: Sub-Saharan Africa (SSA) and South-East Asia (SEA). As shown in table 1.1, the former attracts much less FDI than the latter. Third, to test econometrically whether public governance explains the diverging abilities of SSA and SEA to attract FDI

Au large de Zonza – Île de Cornuta

La prospection effectuée au mois d’août visait à retrouver une ancre signalée sur un fond de 8-12 m à proximité de l’île de Cornuta. Deux personnes équipés de locoplongeurs ont quadrillé la zone balisée de petits flotteurs positionnés tous les 5 m. Malgré ce travail systématique, l’ancre n’a pas été retrouvée

Larzac aveyronnais

Les opérations de prospection inventaire restent un moyen sûr d’apprécier le degré de protection et les risques qui pèsent sur le patrimoine mégalithique du plus vaste des Grands Causses : le Larzac. Aux xixe et xxe s., l’exploitation intensive du contenu des chambres funéraires a provoqué bien des démantèlements architecturaux accélérant l’érosion d’un patrimoine qui était encore largement préservé au milieu du xixe s. La mécanisation agricole, les remembrements ont eu leur impact ici comme ..

Les Mégalithes du Larzac Aveyronnais

Lien Atlas (MCC) : Dans le prolongement des programmes de recherche entamés sur le Larzac il y a près de trois décennies, l’inventaire des mégalithes dans cette partie de l’Aveyron se poursuit autour d’un capital dont la prospection systématique de terrain ne cesse de révéler la richesse, la variété et les potentialités pour une meilleure compréhension du mégalithisme des Grands Causses. Cette prospection inventaire, au-delà des problématiques de recherche qu’elle alimente, est aussi destinée..