1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Corporate Taxation of Foreign Direct Investment Income 1991-2001

This paper constructs indicators of tax burden on FDI in order to review their trends and cross-country patterns. Over the 1990s, the overall tax burden on inward FDI (measured by the effective marginal tax rates) fell by 8 percentage points, reflecting corporate tax reforms in some OECD countries. Nevertheless, a large variation across host countries still remains. With the effective tax rates on inward FDI differing across host countries by as much as 28 percentage points for marginal FDI and by as much as 21 percentage points for infra-marginal FDI in 2001, a cross-country comparison of tax burden indicators shows that, irrespective of the tax burden indicators chosen, Canada, Iceland and Japan are persistently ranked as high-tax host countries over the 1990s. It is also found that there is more variation in the tax burdens faced by a parent company operating in different host countries than in the tax burdens faced by subsidiaries from different home countries operating in the ...

English

Keywords: tax planning, withholding tax, marginal (infra-marginal) investment, inward (outward) FDI, effective marginal (inframarginal) tax rates, treatment of foreign-source income
JEL: H25: Public Economics / Taxation, Subsidies, and Revenue / Business Taxes and Subsidies including sales and value-added (VAT); G31: Financial Economics / Corporate Finance and Governance / Capital Budgeting; Fixed Investment and Inventory Studies; Capacity; F21: International Economics / International Factor Movements and International Business / International Investment; Long-term Capital Movements; F23: International Economics / International Factor Movements and International Business / Multinational Firms; International Business; H87: Public Economics / Miscellaneous Issues / International Fiscal Issues; International Public Goods; H32: Public Economics / Fiscal Policies and Behavior of Economic Agents / Fiscal Policies and Behavior of Economic Agents: Firm
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