Implications Of Double Taxation Agreements

To create our network analysis, we collect tax data for a sample of 138 countries between 2005 and 2012.Footnote 2 Our main sources of data on the national and international tax system are IBFD Global Corporate Tax Manuals for 2009-2012 and IBFD Online Tax Platform. For countries included in the Corporate Tax Handbooks, we collect information on the national tax system and, in particular, on the taxation of foreign income (including methods of double tax relief) as well as on national corporate tax rates and withholding tax in the directory. Footnote 3 To the extent that a country is not available in a global business booklet, we consult the data source for the missing year for the taxation of foreign income, including the IBFD Online Tax Platform, and we move, unless otherwise stated, to the same method of taxing foreign income for the missing years. Baier, S. L., Bergstrand, J. H. (2007). Do free trade agreements really increase international trade among members? Journal of the International Economy, 71(1), 72-95. We show that tax agreements can only influence foreign investment if they reduce the tax burden on the existing global network of double taxation agreements, i.e. if they are relevant. Any contract between third countries can compromise the relevance of a national contractual network, which means that countries lose some of their tax policy capabilities. While the identification of management countries is not the main purpose of this document (by analogy with Van`t Riet and Lejour 2018 and Hong 2018), we are interested in the channels that allow DTTs to reduce taxes on repatriation.

Until recently, the preamble to the OECD`s model tax treaty set out a single objective of double taxation conventions: the abolition of double taxation for income and capital taxes. TDTs should encourage international economic activity. At the same time, the tax treaty for more than half (17,899 out of 30,918) of all country couples in our sample with an effective DTT does not reduce repatriation taxes compared to the conditions under national law. Given their objective, is there still a justification for these tax agreements? Next, we monitor the simultaneous introduction of regional trade agreements (RTA) in Table 6, Columns (3) and (4). We are expanding our main model with a decoy that removes the value of the unit when the observed country couple is part of a regional trade agreement. As the additional control is statistically insignificant, it has no influence on our estimates of the tax treaty. Overall, the additional control variables confirm the robustness of our key performance in different forms of trade policy. There are two types of double taxation: double taxation and double economic taxation. In the first case, where the source rule overlaps, the tax is collected by two or more countries, in accordance with their national legislation, for the same transaction, the income is born or applies in their respective jurisdictions.

In the latter case, when the same transaction, the element of income or capital is taxed in two or more states, but in the hands of another person, there is double taxation. [1] Our study examines this gap in the literature and analyzes the effects of double taxation conventions in a richer environment that goes beyond their binary treatment. In particular, our paper adapts ANT data at the macro level with the usual institutional framework for studies, using data at the enterprise level. This paper examines the impact of double taxation (DTT) agreements on foreign direct investment (FDI) after controlling their relevance in the presence of contractual purchases. DTTs cannot be considered a bilateral issue, but should be considered a network.

Comments are closed.