scholarly journals CORPORATE TAX CUTS AND FOREIGN DIRECT INVESTMENT

2014 ◽  
Vol 33 (4) ◽  
pp. 977-1006 ◽  
Author(s):  
Leonardo Baccini ◽  
Quan Li ◽  
Irina Mirkina
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Corporate Tax ◽  
Tax Cuts

scholarly journals Modelling the synergy between fiscal incentives and foreign direct investment in Ghana

2020 ◽  
Vol 22 (2) ◽  
pp. 325-334
Author(s):  
Adamu Braimah Abille ◽  
Desmond Mbe-Nyire Mpuure ◽  
Ibrahim Yahaya Wuni ◽  
Peter Dadzie
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Negative Impact ◽  
Corporate Tax ◽  
Test Technique ◽  
Fdi Inflows ◽  
Content Type ◽  
Tax Rate ◽  
Fiscal Incentives ◽  
Short Run

PurposeThe purpose of the paper was to investigate the role of fiscal incentives in driving foreign direct investment (FDI) inflows into the Ghanaian economy based on data from 1975 to 2017 with the Eclectic paradigm as the theoretical basis. FDI inflows was the dependent variable whiles trade openness, corporate tax rate, exchange rate and market size were the independent variables with corporate tax rate as the main explanatory variable of interest.Design/methodology/approachThe autoregressive distributed lag (ARDL) bounds test technique was employed to investigate Cointegration in the model. The results showed the presence of cointegration among the variables.FindingsThe results revealed that corporate tax rates have a significant negative impact on FDI inflows into the Ghanaian economy in the long run and significant positive impact on FDI inflows in the short run. In the context of Ghana, the positive short-run relationship observed is attributed to the lag effect of tax policy on FDI inflows.Research limitations/implicationsOne obvious limitation of the research is that, it does not identify the specific foreign businesses that are more deserving of a low corporate rate and to what extent can that boost FDI inflows in Ghana. Another limitation is that the data analyzed in the paper is exclusively for Ghana and the findings may not be generalized for other countries.Practical implicationsBased on the research findings, it is recommended that the Ghana Revenue Service (GRA) restructures the corporate tax regime in the country to deal with the policy lapses. It is also recommended that low corporate rates should be maintained especially in respect of foreign companies that are into the production of goods and services for which indigenous companies in Ghana have a comparative disadvantage in order to drive FDI into the Ghanaian economy.Originality/valueThis paper is unique for providing up to date and dynamic insights into the tax incentive and FDI nexus in the Ghanaian context.

Determinants of Foreign Direct Investment in Australia

2013 ◽  
Vol 03 (08) ◽  
pp. 20-30
Author(s):  
Sauwaluck Koojaroenprasit
Keyword(s):  
Foreign Direct Investment ◽  
Research And Development ◽  
Exchange Rates ◽  
Significant Relationship ◽  
Direct Investment ◽  
Market Size ◽  
Corporate Tax ◽  
Fdi Inflows ◽  
Tax Rate ◽  
Significant Relationships

Determinants of Foreign Direct Investment (FDI) in Australia were analyzed from 1986 to 2011, based on data availability. The determinants considered FDI inflows according to aggregate FDI inflows and FDI inflows by the top three source countries (USA, UK and Japan). Empirical studies identified four results. (1) For the determinants of FDI in Australia, a larger market size will attract more FDI, whereas more openness and a higher corporate tax rate will discourage FDI inflows into Australia. Lower customs duty and lower interest and depreciation of exchange rates will attract more FDI. The relationship between FDI inflows into Australia and wages was not significant. (2) For the determinants of US inward FDI in Australia, a larger market size will attract more US inward FDI in Australia, whereas more openness and an appreciation of the exchange rate will discourage US inward FDI in Australia. A negative and significant relationship was obtained between customs duty and US inward FDI in Australia. There were positive and significant relationships between US inward FDI in Australia and both the interest and corporate tax rates. (3) For the determinants of UK inward FDI in Australia, greater research and development in Australia will attract more UK inward FDI in Australia, whereas a higher corporate tax rate will discourage UK inward FDI in Australia. The positive relationship between market size and UK inward FDI in Australia was not significant. Openness, customs duty and inflation did not have significant relationships with UK inward FDI in Australia. (4) For the determinants of Japanese inward FDI in Australia, higher wages and greater research and development will attract more Japanese inward FDI in Australia, whereas higher customs duty and a higher corporate tax rate will discourage Japanese inward FDI in Australia. There was no significant relationship between Japanese inward FDI in Australia and either the interest or exchange rates.

scholarly journals The Giant Sucking Sound: Is China Diverting Foreign Direct Investment from Other Asian Economies?

2004 ◽  
Vol 3 (3) ◽  
pp. 122-140 ◽  
Author(s):  
Busakorn Chantasasawat ◽  
K. C. Fung ◽  
Hitomi Iizaka ◽  
Alan Siu
Keyword(s):  
Foreign Direct Investment ◽  
Random Effects ◽  
Direct Investment ◽  
Simultaneous Equation ◽  
Southeast Asian ◽  
Equation Model ◽  
Tax Rates ◽  
Simultaneous Equation Model ◽  
Corporate Tax ◽  
Asian Economies

This paper attempts to determine empirically whether China is taking foreign direct investment (FDI) away from other Asian economies (the “China effect”). A random-effects simultaneous equation model, controlling for the determinants of inward FDI of eight East and Southeast Asian economies over 1985–2001 and using China's inward FDI as an indicator of the China effect, indicates that China's FDI level is positively related to these economies' FDI levels and negatively related to their shares in FDI in Asia. Moreover, openness, corporate tax rates, and corruption can exert a greater influence on these countries' FDI than China's FDI.

scholarly journals Relationship between Foreign Direct Investment and Company Taxation: Case of Bangladesh

2016 ◽  
Vol 3 (1) ◽  
pp. 11-14
Author(s):  
Alim Al Ayub Ahmed
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Significant Relationship ◽  
Direct Investment ◽  
Annual Reports ◽  
Corporate Tax ◽  
Tax Rate ◽  
Independent Variable ◽  
Company Taxation ◽  
The Government

This study looks at the association between foreign direct investment and company taxation in Bangladesh from 2001-2010. The annual reports were sourced from the Bangladesh Bank Bulletin, Bangladesh Bureau of Statistics (BBS) and World Bank which was analyzed using Descriptive Statistic, correlation and regression. The independent variable corporate taxation was measured using corporate tax rate (CTR) whilst dependent variable foreign direct investment was measured using FDI net inflow (% of GDP). GDP, exchange rate and inflation rate were used as control variables. The result showed negative significant relationship between CTR and FDI whereas exchange rate and FDI indicated negative insignificant relationship. On the other hand, GDP was positively insignificantly related with FDI whilst inflation had positive significant relationship with FDI. Based on the result, the study suggested that there is require for the government to lo trim down corporate tax rate in order to create a centre of attention FDI into the country.  

Equilibrium conditions in corporate tax competition and Foreign Direct Investment flows

2011 ◽  
Vol 28 (1-2) ◽  
pp. 13-21 ◽  
Author(s):  
Dimitrios Hristu-Varsakelis ◽  
Stella Karagianni ◽  
Anastasios Saraidaris
Keyword(s):  
Foreign Direct Investment ◽  
Tax Competition ◽  
Direct Investment ◽  
Corporate Tax ◽  
Equilibrium Conditions

scholarly journals Is Foreign Direct Investment Effective From The Perspective Of Tax Avoidance? An Analysis Of Tax Avoidance Through The International Transfer Pricing Behaviors Of Korean Corporations

2016 ◽  
Vol 32 (3) ◽  
pp. 917-934
Author(s):  
Sung Jin Park ◽  
Woo Jin Park ◽  
Eun Jung Sun ◽  
Sohee Woo
Keyword(s):  
Foreign Direct Investment ◽  
Empirical Analysis ◽  
Direct Investment ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Multinational Companies ◽  
Parent Company ◽  
Tax Credits ◽  
Corporate Tax ◽  
Overseas Subsidiaries

This study examines whether multinational companies carry out tax avoidance through subsidiaries. An empirical analysis was conducted of 4,585 Korean firms from 2001 to 2010 by company and year. The results are as follows. First, MNCs that have become more internationally diversified through the establishment of overseas subsidiaries generally show a higher tendency to avoid tax. Thus, the analysis results show a positive correlation between globally diversified MNCs and corporate tax avoidance. This correlation is established due to the firms' active use of tax strategies (investment tax credits, tax cuts) applicable to the various countries in which they have expanded their businesses. Second, the analysis results showed that these firms actively avoided tax with overseas transfer pricing behaviors when compared to companies without overseas subsidiaries. Thus, the adjustment of sales prices and purchase value through actual transactions increased the propensity of the parent company to avoid tax. 

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