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Corporate tax and location choice for multinational firms

Lawless, Martina orcid logoORCID: 0000-0002-3484-8670, McCoy, Daire orcid logoORCID: 0000-0001-6637-2227, Morgenroth, Edgar L.W. orcid logoORCID: 0000-0002-9442-0561 and O'Toole, Conor M. orcid logoORCID: 0000-0002-3484-8670 (2017) Corporate tax and location choice for multinational firms. Applied Economics, 50 (26). pp. 2920-2931. ISSN 0003-6846

The corporate tax rate and regime are policy instruments that are the subject of considerable attention for the role they play in attracting foreign multinationals making location decisions across countries. This paper examines the effects of corporate tax on these location decisions of newly established multinational subsidiaries across 26 European countries over an eight year period. We contribute to the existing literature by examining the effects of a non-linear response of firm location decisions to changes in the tax rate. We find that accounting for this nonlinearity improves the performance of the model for all of the alternative measures of the tax rate. We also show that there are large variations in the sensitivity to tax rates across sectors and firm size groups. In particular, financial sector firms are more than twice as sensitive to changes in corporation tax rates relative to other sectors.
Item Type:Article (Published)
Uncontrolled Keywords:Corporation Tax; Location Choice; Multinational firms; FDI
Subjects:Business > Economic policy
DCU Faculties and Centres:UNSPECIFIED
Publisher:Routledge (Taylor & Francis)
Official URL:http://dx.doi.org/10.1080/00036846.2017.1412078
Copyright Information:© 2018 Routledge
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 License. View License
ID Code:23549
Deposited On:15 Jul 2019 12:05 by Thomas Murtagh . Last Modified 10 Jan 2023 15:55

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