Resource title

Corporate income taxation of multinationals in a general equilibrium model

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Resource description

This paper contributes to the discussion on Separate Accounting versus Formula Apportionment in the corporate income taxation of multinational enterprises (MNEs). The innovation of the analysis is that we consider a general equilibrium tax competition model with an endogenously determined world interest rate. Under the principle of Separate Accounting, it turns out that corporate tax rates may be inefficiently low or high, while under Formula Apportionment corporate tax rates are always inefficiently low. These results are true independent of whether the number of countries is small or large. They reverse the insights obtained by previous studies under the assumption of an exogenously given world interest rate.

Resource author

Thomas Eichner, Marco Runkel

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Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26365

Resource license

Adapt according to the presented license agreement and reference the original author.