The Tax Treatment of Interest Expenditures of Multinational Enterprises
2000-05-21
Research Paper
This publication is part of collection
| Related Files |
|---|
View PDF Version
(2000-0473.pdf, 0.1MB) |
This paper analyses the national tax treatment of interest expenditures of multinational enterprises in a non- cooperative world. It is shown that the international tax system generally leads to distortions in the capital decisions of multinational firms. In contrast to the existing literature on the tax treatment of the expenditures of multinationals, it is found that the form and size of distortions can differ per country depending on the stake a country has in the multinational. Furthermore, internationalisation of the firm's operations and ownership is demonstrated to lead to less generous interest deduction rules of individual countries and in the limit may result in no deduction allowance at all.
Keywords
- multinational firms
- optimal taxation
- R&D expenditures
- interest expenditures
- international investment
Classifications using
Journal of Economic Literature (JEL) Classification System
- H32 : Firm
- F23 : Multinational Firms; International Business
- H21 : Efficiency; Optimal Taxation
- F21 : International Investment; Long-Term Capital Movements
Automatically Extracted Terms
- country
- interest
- interest expenditures
- capital
- expenditure
- country i
- deduction
- income
- parameter
- tax treatment
- 0.7
- production
- 0.8
- ownership
- capital decisions
- system
- model
- 0.4
- =1..n
- value
