The use of tax havens in exemption regimes
By: Anna Gumpert, James R. Hines, Jr., Monika Schnitzer
Contributors: Hines, James R.; Schnitzer, Monika; National Bureau of Economic Research
Series: NBER working paper series -- working paper 17644; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17644.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper analyzes the tax haven investment behavior of multinational firms from a country that exempts foreign income from taxation.  High foreign tax rates generally encourage firms to invest in tax havens, though significant costs of reallocating taxable income dampen these incentives.  The behavior of German manufacturing firms from 2002-2008 is consistent with this prediction: at the mean, one percentage point higher foreign tax rates are associated with three percentage point greater likelihoods of owning tax haven affiliates.  This contrasts with earlier evidence for U.S.  firms subject to home country taxation, which are more likely to invest in tax havens if they face lower foreign tax rates.  Foreign tax rates appear to be unrelated to tax haven investments of German firms in service industries, possibly reflecting the difficulty they face in reallocating taxable income"--National Bureau of Economic Research web site.
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