Tax Competition for FDI in Central-European Countries

Sedmihradský, Milan; Klazar, Stanislav

doi:10.2139/ssrn.301066

Cited by 15 publications

(13 citation statements)

References 2 publications

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“…An earlier study of transition countries by Holland and Owens (1996) similarly found only a marginal role for incentives in attracting FDI. Sedmihradsky and Klazar (2001) even found a negative correlation between investment incentives and FDI for the Czech Republic, Hungary and Poland, which they attribute to competition for FDI amongst similar locations in Central Europe. Mallya et al (2004) analyse the effectiveness of Czech FDI promotion policies in attracting new inflows of foreign capital, the quality of incoming FDI and the cost -benefit aspect of FDI promotion.…”

Section: Economics Of Investment Incentives and Their Effectivenessmentioning

confidence: 98%

The effectiveness of investment incentives: the Slovenian FDI Co-financing Grant Scheme

Burger

Jaklič

Rojec

2012

Post-Communist Economies

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Section: Economics Of Investment Incentives and Their Effectivenessmentioning

confidence: 98%

The effectiveness of investment incentives: the Slovenian FDI Co-financing Grant Scheme

Burger

Jaklič

Rojec

2012

Post-Communist Economies

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“…However, most studies on the ETR in this region are traditionally focused on tax competition: CEE countries are known to offer lower tax rates in comparison with other European states together with a wide range of investment incentives (e.g. Sedmihradsky and Klazar, 2002;Podviezko et al, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Human Freedom and Effective Corporate Income Tax Rates of CEE Listed Companies

Purina¹

2021

EFAJ

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This paper analyses firm-specific and country-specific factors that have an impact on the effective corporate income tax rates (ETR) for CEE listed companies based on data obtained from the BvD Amadeus database. Business factors analysed in this research are the company size, leverage, capital and inventory intensity, and return on assets. Concerning the country-specific factors, chosen were the statutory corporate income tax rate and cultural factors represented by personal and economic freedoms covered by the Human Freedom Index (HFI), making this study different from others. The tested hypotheses predict significance of all the stated variables. Nine models were analysed based on three ETR denominators (EBT; turnover; cash flow) and three groups of countries (whole sample; sample excluding Russia; sample consisted of Bulgaria, Croatia, Poland, and Romania). Based on the panel data regression analysis and particularly the Feasible Generalised Least Squares estimator, a significant impact on the ETR was found for all variables in all the models. The main variable of interest, the HFI, came always with a negative coefficient demonstrating that, for CEE countries, a higher level of freedom is associated with a lower ETR. Findings for the remaining variables are in line with the existing literature.

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“…But tax treatment has been done differently by scholars in order to reflect on FDI. Sedmihradsky & Klazar, (2002) emphasize most governments of the Central and East European countries adopted tax measures in the 1990s to support foreign direct investments. Such measures usually include 10-year tax holidays and exemption from import duties.…”

Section: Many Scholars Have Conducted Research On Various Factors Of mentioning

confidence: 99%

“…Profit tax rate reveals positive and significant effect on FDI flows in European transition countries. These states have taken incentives (tax reliefs), (some of them examined by Göndör & Nistor (2012), Sedmihradsky & Klazar, (2002)) which have impacted that, even though profit tax had grown over the years to these countries. At the same time foreign direct investment (FDI) have grown as result of these tax relief applied from these countries over this time period.…”

Section: Articlesmentioning

confidence: 99%

The Impact of the Investment Environment on Foreign Direct Investment (FDI) in the European Transition Economies

2020

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The main objective of this paper is to investigate the impact of the investment environment on FDI in transition economies in Europe, through the usage of dynamic panel methodology, due to the persistence of the endogeneity issues. Further, three main factors have been determined affecting the FDI in 15 developing countries through the time span 2009-2016 as Control of Corruption, Political Stability and Absence of Violence/Terrorism and Distance to frontier score (Doing Business) having positive and significant effect on attracting FDI in these transition countries. Also as pull factors are used GDP per capita, profit tax rate showing positive and significant effect on FDI flows, while unemployment rate was positive but does not have a significant role in the attraction of FDI flows in European transition countries.In addition, to our best knowledge this paper is among the first that attempts to investigate this relationship in this set of countries by employing the dynamic panel methodology using differenced GMM model as well as employing Distance to frontier score (Doing Business) as one of investment environment factors that impact FDI flows for this set of 15 countries. Furthermore, such findings will contribute to the existing literature by using these instruments to measure their impact on FDI attractiveness on European transition economies.

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Tax Competition for FDI in Central-European Countries

Cited by 15 publications

References 2 publications

The effectiveness of investment incentives: the Slovenian FDI Co-financing Grant Scheme

The effectiveness of investment incentives: the Slovenian FDI Co-financing Grant Scheme

Human Freedom and Effective Corporate Income Tax Rates of CEE Listed Companies

The Impact of the Investment Environment on Foreign Direct Investment (FDI) in the European Transition Economies

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