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Tax Rate Harmonization, Renegotiation and Asymmetric Tax Competition for Profits with Repeated Interaction
| Title: | Tax Rate Harmonization, Renegotiation and Asymmetric Tax Competition for Profits with Repeated Interaction |
| Authors: | Eggert, Wolfgang Browse this author | | Itaya, Jun-ichi Browse this author →KAKEN DB |
| Keywords: | corporate taxation | | tax coordination | | multinational firms |
| Issue Date: | 13-Oct-2009 |
| Publisher: | Graduate School of Economics & Business Administration, Hokkaido University |
| Journal Title: | Discussion Paper, Series A |
| Volume: | 214 |
| Start Page: | 1 |
| End Page: | 30 |
| Abstract: | This paper analyzes a model of corporate tax competition with repeated interaction and with the strategic use of profit shifting within multinationals. We show that international tax coordination is more likely to prevail if the degree of asymmetry in terms of productivity differences between countries is smaller, or if concealment costs of profit shifting are larger when the tax authorities adopt grim-trigger strategies. Allowing for renegotiation in the tax harmonization process generally requires more patient tax authorities to support tax harmonization as a subgame perfect equilibrium. We find somewhat paradoxical situations where higher costs of profit shifting make international tax arrangements less sustainable under weakly-renegotiation-proof strategies. |
| Type: | bulletin (article) |
| URI: | http://hdl.handle.net/2115/39483 |
| Appears in Collections: | Discussion paper > Series A
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Submitter: 板谷 淳一
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