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| Tekijä: | Fuest, C. Huber, B. |
| Otsikko: | Why do countries combine the exemption system for the taxation of foreign products with domestic double taxation relief? |
| Lehti: | Journal of International Economics
2004 : JAN, VOL. 62:1, p. 219-231 |
| Asiasana: | International taxation Multinational companies Profit |
| Kieli: | eng |
| Tiivistelmä: | Several European countries exempt foreign profits from domestic corporate taxation. At the shareholder level, however, all corporate profits are taxed, and double taxation relief is granted only for domestic corporate taxes. This article rationalizes this tax policy. In the presence of double taxation agreements which exempt foreign profits from domestic corporate taxation, countries may use shareholder taxes to tax these profits. The disadvantage of shareholder taxes is that profits may preserve domestic ownership. The results indicate that national dividend tax policies may be a factor contributing to the empirically observed home bias in investment. |
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