Where does multinational investment go with territorial taxation: evidence from the United Kingdom
By: Liu, Li
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Material type: 
BookPublisher: American Economic Journal: Economic Policy Description: 12(1), Feb, 2020: p. 325-58.Subject(s): Multinational firms, International business, Capital budgeting, Fixed investment and inventory studies
In:
American Economic Journal: Economic PolicySummary: In 2009, the United Kingdom changed from a worldwide to a territorial tax system, abolishing dividend taxes on foreign repatriation from many low-tax countries. This paper assesses the causal effect of territorial taxation on real investments, using a unique dataset for multinational affiliates in 27 European countries and employing the difference-in-differences approach. It finds that the territorial reform has increased the investment rate of UK multinationals by 16.7 percentage points in low-tax countries. In the absence of any significant investment reduction elsewhere, the findings represent a likely increase in total outbound investment by UK multinationals.- Reproduced
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Articles
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Indian Institute of Public Administration | 12(1), Feb, 2020: p. 325-58 | Available | AR123224 |
In 2009, the United Kingdom changed from a worldwide to a territorial tax system, abolishing dividend taxes on foreign repatriation from many low-tax countries. This paper assesses the causal effect of territorial taxation on real investments, using a unique dataset for multinational affiliates in 27 European countries and employing the difference-in-differences approach. It finds that the territorial reform has increased the investment rate of UK multinationals by 16.7 percentage points in low-tax countries. In the absence of any significant investment reduction elsewhere, the findings represent a likely increase in total outbound investment by UK multinationals.- Reproduced
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