Corporation taxes in the European Union: Slowly moving toward comprehensive business income taxation?

This paper is a substantial revision of a paper presented at the 71st Annual Congress of the International Institute of Public Finance (Dublin, 20–23 August, 2015), which was issued under the title Tackling Spillovers by Taxing Corporate Income in the European Union at Source, as CPB Discussion Paper 324 (February 2016) and as CESifo Working Paper No. 5790 (March 2016).This paper surveys and evaluates the corporation tax systems of the Member States of the European Union on the basis of a comprehensive taxonomy of actual and potential regimes, which have as their base either profits; profits, interest and royalties; or economic rents. The current regimes give rise to various instate and interstate spillovers, which violate the basic tenets—neutrality and subsidiarity—of the single market. The trade-offs between the implications of these tenets—harmonization and diversity, respectively—can be reconciled by a bottom-up strategy of strengthening source-based taxation and narrowing differences in tax rates. The strategy starts with dual income taxation, proceeds with final source withholding taxes and rate coordination, and is made complete by comprehensive business income taxation. Common base and cash flow taxation are not favored.http://link.springer.com/journal/10797am2017Economic

The role of public policy in closing foreign direct investment gaps: an empirical analysis

Economic policy, Foreign direct investment, European Union, Industry-level study, Location decision, F21, H25, H71,

Talk softly but carry a big stick: transfer pricing penalties and the market valuation of Japanese multinationals in the United States

Corporate income tax law in OECD countries requires multinational enterprises (MNEs) to set their transfer prices according to the arm's length standard. In 1990 the United States (US) government introduced a transfer pricing penalty for cases where MNEs deviated substantially from this standard. More than two dozen other governments have followed suit. Our paper uses event study methodology to assess the impact of the US transfer pricing penalty on the stock market valuation of Japanese MNEs with US subsidiaries in the 1990s. We find that the penalty caused a drop in their cumulative market value of $56.1 billion, representing 12.6% of their 1997 market value. Journal of International Business Studies (2005) 36, 398–414. doi:10.1057/palgrave.jibs.8400141