The determinants of tax haven FDI

Chris Jones, Yama Temouri

    Research output: Contribution to journalArticlepeer-review

    116 Scopus citations

    Abstract

    This paper examines the determinants of a multinational enterprise's (MNEs) decision to set up tax haven subsidiaries. We adapt the firm-specific advantage-country-specific advantage (FSA-CSA) framework and construct a number of empirically testable hypotheses. The analysis is based on a database covering 14,209 MNEs in twelve OECD countries. We find that the variety of capitalism of a MNEs home location and the level of technological intensity has a strong impact on this decision. We also find that the home country corporate tax rate has a minimal impact. This suggests that corporate tax liberalisation is unlikely to deter MNEs from undertaking this activity.

    Original languageBritish English
    Pages (from-to)237-250
    Number of pages14
    JournalJournal of World Business
    Volume51
    Issue number2
    DOIs
    StatePublished - 1 Feb 2016

    Keywords

    • Corporate taxation
    • Probit regression
    • Tax havens
    • Theory of FDI and the MNE
    • Varieties of capitalism

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