To be able to do business, companies have to be equipped with capital by their shareholders. Usually, this capital is granted to them as equity. Nevertheless, it is also reasonable for shareholders to provide debt to the company. In any case, companies have to onsider the differences in taxation regarding equity and debt financing. That is why for internationally operating roups of companies the differing legal frameworks between countries are crucial factors for making decisions in corporate financing (Obser 2005: 1ff), especially because interest expenditure due to debt financing is usually tax-deductible in almost every country and thus considerably reduces a company's tax base (Jacobs 2007, 909). Hence, internationally operating companies should consider the various differing corporate tax rates between countries in their financing strategies in order to minimize their total tax base. (author's abstract) / Series: Discussion Papers SFB International Tax Coordination

Dieses Papier nimmt eine theoriegeleitete empirische Analyse des OECD Projekts gegen schädliche Steuerpraktiken vor. Auf der Grundlage der Literatur zur Handlungsfähigkeit von Nationalstaaten angesichts wirtschaftlicher Globalisierung wird ein theoretisches Modell des Steuerwettbewerbs als asymmetrisches Gefangenendilemma entwickelt. Aus dieser Spielstruktur werden verschiedene Hypothesen über die Wahrscheinlichkeit und Form der internationalen Kooperation generiert. Es kann zum Beispiel erwartet werden, dass Kooperation, sofern sie überhaupt zustande kommt, nur multilateral erfolgen wird. Des weiteren sieht das Modell die kleinen Staaten in der strukturell stärkeren Verhandlungsposition. Die Zusammenhänge, die diesen und weiteren Hypothesen unterliegen, werden mit sogenannten Schelling Diagrammen veranschaulicht. Anschließend werden die Hypothesen mit dem empirischen Material konfrontiert. Es wird gezeigt, dass das Modell in wesentlichen Zügen zutreffende Vorhersagen generiert. Allerdings zeigt sich, dass die kleinen Staaten ihren ökonomisch definierten strukturellen Vorteil nicht in Verhandlungsmacht verwandeln können. Abschließend wird diskutiert, inwieweit sich die Erklärungslücken des interessenbasierten Modells durch die Berücksichtigung der Faktoren Macht und Ideen schließen lassen. (Autorenref.) / Series: Discussion Papers SFB International Tax Coordination

(kein Abstract vorhanden) / Series: Discussion Papers SFB International Tax Coordination

(kein Abstract vorhanden) / Series: Discussion Papers SFB International Tax Coordination

The Central- and East European Countries have lowered their corporate tax rates substantially in order to induce shifts of production capacity to their countries. This paper analyses empirically how inward Foreign Direct Investment (FDI) flows channeled to these countries reacts to these tax policies. We estimate a panel of 35 bilateral country-relationships over a period of 1995-2002. Results suggest a semielasticity of -2.93 which is in line with results derived in studies mainly on OECD countries. This indicates that from an individual country perspective, tax-lowering strategies have been successful in the past, yet they may not be a successful policy option for the future when privatization-related FDI will decrease. / Series: Discussion Papers SFB International Tax Coordination

Company-taxation policies in the Central and East European New Member States (CEE-NMS) have been frequently characterised as tax-cutting strategies in order to attract Foreign Direct Investment (FDI). On the basis of a survey of six empirical studies a median value of the tax-rate elasticities of FDI of -0.22 in CEE-NMS and mediterranean periphery countries is derived. Yet, these tax-rate elasticities probably suffer from a sort of measurement error bias since these studies entirely rely on the host country Statutory tax rate as measure of tax burden. Building on a thorough criticism of FDI as a measure reflecting multinational activity and the Statutory tax rate as a reliable measure of the effective tax burden, 315 effective average bilateral tax rates (BEATR) are calculated for seven home countries and five CEE-NMS for the period 1996-2004, following the approach of Devereux and Griffith (1998). Since our empirical results show substantial differences in the variability of the host country Statutory tax rates and the BEATRs, it is contended that the latter should be used as explanatory variables in empirical studies. / Series: Discussion Papers SFB International Tax Coordination

Politicians and tax practitioners often claim that tax uncertainty negatively affects investment. In many countries, firms can request fee-based Advance Tax Rulings (ATRs) to mitigate tax uncertainty. We analyze theoretically the circumstances under which investors request ATRs, how tax authorities should price them and how they can affect investment. We assume that tax authorities integrate investors' reasoning into their decisions. We find that it is often optimal for tax authorities to charge prohibitively high fees to discourage firms from requesting an ATR. However, we find that revenue-maximizing tax authorities offer ATRs if the ruling enables them either to significantly reduce their tax audit costs or to increase the probability of detecting ambiguous tax issues. Under certain circumstances, ATRs may effectively foster investment and potentially benefit both the tax authorities and taxpayers. Our results provide new explanations for why taxpayers that face high levels of tax uncertainty often do not request ATRs, even when the fee is rather low. Our results also hold when the tax authority maximizes social wealth instead of its revenues. Regulatory changes in ATR requirements might serve as a natural quasi-experiment for an empirical study of our predictions regarding investment decisions. (authors' abstract) / Series: WU International Taxation Research Paper Series