Title
An empirical study of the impact of corporate taxation on the global allocation of foreign direct investment : a broad tax attractiveness index approach
Document Type
Journal article
Source Publication
Journal of International Accounting, Auditing and Taxation
Publication Date
12-1-2003
Volume
12
Issue
2
First Page
105
Last Page
120
Publisher
Pergamon Press
Keywords
Corporate taxation, FDI inflows
Abstract
The question of whether a country's corporate tax regime has a significant influence on the level of foreign direct investment (FDI) into that country is an important consideration in the design of national tax policy. This is especially relevant today in view of the recent increase in the global mobility of capital and subsequent increase in the importance of FDI to nations' economies. Although several prior quantitative studies have investigated the link between taxation and FDI, they have tended to be restricted in geographical scope and in their measure of taxation.This study constructs indices of "corporate tax attractiveness" for selected countries and then analyses the relationship between the indices and measures of the flow of FDI into those countries. The indices are constructed by obtaining evaluations from international investors and taxation experts on the various attributes of the tax systems of those selected countries. A significant positive relationship was found to exist between the indices and measures of FDI inflows, and between individual tax system attributes and those inflows, thus adding support to the supposition that host country corporate taxation influences the size of FDI inflows.
DOI
10.1016/j.intaccaudtax.2003.08.005
Print ISSN
10619518
E-ISSN
18791603
Publisher Statement
Copyright © 2003 Elsevier Inc
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Simmons, R. S. (2003). An empirical study of the impact of corporate taxation on the global allocation of foreign direct investment: A broad tax attractiveness index approach. Journal of International Accounting, Auditing & Taxation, 12(2), 105-120. doi: 10.1016/j.intaccaudtax.2003.08.005
