The Resource Formula apportionment or separate accounting? Tax-induced distortions of multinationals' locational investment decisions

Formula apportionment or separate accounting? Tax-induced distortions of multinationals' locational investment decisions

Label
Formula apportionment or separate accounting? Tax-induced distortions of multinationals' locational investment decisions
Title
Formula apportionment or separate accounting? Tax-induced distortions of multinationals' locational investment decisions
Creator
Subject
Language
eng
Summary
The authors examine which tax allocation system leads to more severe distortions with respect to locational investment decisions. They consider separate accounting (SA) and formula apportionment (FA). The effects of both systems have been hotly debated in Europe in the past years. The reason is that the EU Member States are striving to implement a common European tax system that would lead to a switch from SA to FA. While existing studies focus primarily on the impact of taxes on locational decisions under either SA or FA, the main innovation of this paper is that it compares both systems with regard to the level of distortions they induce. The distortions of locational investment decisions tend to be more severe under SA than under FA if a greater share of investment funds is to be invested in a low-tax country from a pre-tax perspective and the investment is profitable. Vice versa, locational decisions may be more distorted under FA if the optimal pre-tax investment decision requires investing a major share of funds in the high-tax country
http://library.link/vocab/creatorName
  • Ortmann, R
  • Pummerer, E
Geographic coverage
International
Index
no index present
Language note
English
Literary form
non fiction
Series statement
WU International Taxation Research Paper Series
Series volume
2015 no. 28
http://library.link/vocab/subjectName
  • allocation of taxing rights
  • MNE
  • formulary apportionment
  • foreign investment
Label
Formula apportionment or separate accounting? Tax-induced distortions of multinationals' locational investment decisions
Instantiates
Publication
Extent
34 p.
Label
Formula apportionment or separate accounting? Tax-induced distortions of multinationals' locational investment decisions
Publication
Extent
34 p.

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