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On the relevance of double tax treaties

This paper investigates the effects of double tax treaties (DTTs) on foreign direct investment (FDI) after controlling for their relevance in the presence of treaty shopping. DTTs cannot be considered a bilateral issue, but must be viewed as a network. We define tax distance as the cost of channelling corporate income from one country to another and, by considering treaty shopping through intermediate jurisdictions, we calculate the shortest (i.e. the cheapest) distance between any two countries. We show that relevant tax treaties-which reduce the direct tax distance both over domestic law and the entire existing treaty network-will increase FDI by about 18%.

Identiferoai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:7181
Date January 2020
CreatorsPetkova, Kunka, Stasio, Andrzej, Zagler, Martin
PublisherSpringer US
Source SetsWirtschaftsuniversität Wien
LanguageEnglish
Detected LanguageEnglish
TypeArticle, PeerReviewed
Formatapplication/pdf
RightsCreative Commons: Attribution 4.0 International (CC BY 4.0)
Relationhttps://link.springer.com/article/10.1007/s10797-019-09570-9?wt_mc=Internal.Event.1.SEM.ArticleAuthorOnlineFirst&utm_source=ArticleAuthorContributingOnlineFirst&utm_medium=email&utm_content=AA_en_06082018&ArticleAuthorContributingOnlineFirst_20190922, https://www.springer.com/, http://epub.wu.ac.at/7181/

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