Johannes Voget
| Date of Ph.D. defense: | 30 January 2009 |
| Title of thesis: | Tax Competition and Tax Evasion in a Multi-Jurisdictional World |
| ISBN: | 978 90 5668 233 0 |
| Promotores: | Prof.dr. H.P. Huizinga, Prof.dr. J.E. Ligthart |
Abstract:
Over the last twenty years virtually all European countries have decreased their corporate income tax rates as they perceive themselves to be in competition with one another for investment. This thesis investigates whether there is similar scope for competition for firms' headquarters. It is shown that multinationals' headquarters tend to locate in countries where their foreign subsidiaries' profits are not taxed upon repatriation. This tendency is reflected in the pattern of international mergers and acquisitions. Firms from countries that impose taxes on worldwide profits engage in fewer acquisitions abroad. Similarly, withholding taxes on cross-border dividend payments are a deterrent to potential foreign acquirers. The sensitivity of a firm's headquarter location to taxes is further evidence of how difficult it is to effectively impose corporate income taxes.
As an alternative to taxation of capital income at the corporate level, countries could instead tax their individual residents on their worldwide capital income. Information exchange on individuals' foreign investment income is absolutely necessary for this approach to be effective. The second part of this thesis empirically and theoretically analyzes the circumstances under which countries would be willing to share information with each other so that residence-based capital income taxation becomes a viable option.
Global / English