The Relation between Tax Complexity and Foreign Direct Investments: Evidence Across Countries

Hoppe, Thomas; Schanz, Deborah; Sturm, Susann; Sureth-Sloane, Caren; Voget, Johannes

doi:10.2139/ssrn.3526177

Cited by 9 publications

(5 citation statements)

References 43 publications

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“…To date, much of what we know about the taxation versus employment nexus and its impact on public expenditure lies in macroeconomics (Kotlikoff et al, 1984;Shin et al, 2012), through the traditional Keynesian model of economic growth, where taxes affect households consumption through reducing the disposable income available for household consumption if the taxes are high, disable income reduces and thus consumption reduces, and given the fact that under these models income is either consumed or saved, thus a high tax on incomes reduces savings to (Kotlikoff et al, 1984). Empirically there have been several studies investigating the impact of taxes on different macroeconomic various, and these among others include (Almunia et al, 2015;Mawejje & Munyambonera, 2016;Ssewanyana & Okidi, 2008;Terefe & Teera, 2018) in Uganda and (Alloza, 2020;Ameyaw et al, 2015;Bartkus, 2017;Bikas & Jurevičiūtė, 2016;Bilek et al, 2021;Davies et al, 2021;Ewa et al, 2020;Hamoudi, 2019;Hoppe et al, 2020;Hysa, 2019;Levell et al, 2020;Lyeonov & Michalkova, 2021;Merima et al, 2012;Park & Park, 2018;Pohwani et al, 2019;Sahebe et al, 2020;Sari & Mulyati, 2018) conducted elsewhere as discussed below.…”

Section: Empirical Literaturementioning

confidence: 99%

Asymmetric Analysis of the Impact of Taxation on Unemployment in Uganda

Mukoki,

Mukisa,

Ssebulime

et al. 2024

East Afr. j. bus. econ.

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Uganda, like most developing countries, has one of the highest tax rates not only in Africa but also in the world. This explains the numerous challenges faced in mobilizing sufficient revenues to fight poverty and improve people’s economic welfare. We, therefore, use a more recent nonlinear autoregressive distributed lag model (NARDL) to analyze the impact of higher taxes on the unemployment rate in Uganda. Results indicate that total Unemployment in Uganda is a negative function of both an increase in tax and a negative change in tax. Specifically, if taxes increase, then unemployment decreases by almost 3.9%, and if taxes decrease, then unemployment increases by about 4.9%. Also, the unemployment level decreased by 0.06% with a decrease in the gross capital formation (GFKF). Finally, unemployment also decreases with a rise in GDP and decreases with a decrease in GDP. In a nutshell, Uganda lacks the possibility of making the economy more productive and thus only relies on taxing an already overtaxed economy. Overtaxing an economy kills the possibility of ever building a formidable capital base that can stimulate economic growth and reduce poverty and unemployment. The government, therefore, should cut taxes and level the playing field regarding tax policies for foreign and home-grown investors. Finally, policymakers should also aim to unlock the potential of the informal sector not only to create jobs but also to widen the tax base

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Section: Empirical Literaturementioning

confidence: 99%

Asymmetric Analysis of the Impact of Taxation on Unemployment in Uganda

Mukoki,

Mukisa,

Ssebulime

et al. 2024

East Afr. j. bus. econ.

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“…corresponds approximately to a 10% reduction in time to comply. Further, complexity of the tax system was investigated by Lawless (2013) and Hoppe et al (2020); however, these authors divide the complexity of the tax system into the so-called "tax code complexity", or the complexity of tax legislation, and the so-called "tax framework complexity". On the contrary, the complexity of tax legislation had a positive effect on the stock of FDI.…”

Section: Literature Reviewmentioning

confidence: 99%

Factors Affecting Allocation of Czech FDI in EU Countries

Síbrtová¹

2023

Politicka ekonomie

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The main objective of this paper is to analyse which factors have an impact on the allocation of Czech foreign direct investment (FDI) in EU countries. Multivariate panel regression with general macroeconomic variables and time dummy variables using Eurostat data for the period 2013-2019 was performed. Indicators of a tax system promoting and/ or enabling aggressive tax planning, and other more general indicators were included in the model. This paper provides the opposite view by analysing the flow of FDI from a transition economy to more advanced economies. The results suggest that Czech FDI is placed in developed countries with lower statutory corporate income tax rates, and with which the Czech Republic has a larger volume of foreign trade. Furthermore, it is confirmed that the factors affecting allocation of Czech FDI in the EU are the distance between the capital cities and the existence of the so-called patent box regime.

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“…Other studies have challenged this view, arguing that the existence of low-tax jurisdictions allows other jurisdictions to offer lower effective marginal tax rates (at the MNE group level) when tax policy cannot discriminate between mobile and immobile tax bases. According to this argument, the existence of low-tax jurisdictions therefore has the potential to induce an increase in real investment that could outweigh other costs associated to them (Desai, Foley and Hines (2006[155]); Hong and Smart (2010 [156])). Finally, Johannesen (2010 [157]) further explores the effects on tax competition, suggesting that the existence of zero-tax jurisdictions and investment hubs could force countries with lower effective taxation to choose whether to pursue a zero-tax strategy.…”

mentioning

confidence: 99%

Tax Challenges Arising from Digitalisation – Economic Impact Assessment

2020

OECD/G20 Base Erosion and Profit Shifting Project

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The integration of national economies and markets has increased substantially in recent years, putting a strain on the international tax rules, which were designed more than a century ago. Weaknesses in the current rules create opportunities for base erosion and profit shifting (BEPS), requiring bold moves by policy makers to restore confidence in the system and ensure that profits are taxed where economic activities take place and value is created.

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The Relation between Tax Complexity and Foreign Direct Investments: Evidence Across Countries

Cited by 9 publications

References 43 publications

Asymmetric Analysis of the Impact of Taxation on Unemployment in Uganda

Asymmetric Analysis of the Impact of Taxation on Unemployment in Uganda

Factors Affecting Allocation of Czech FDI in EU Countries

Tax Challenges Arising from Digitalisation – Economic Impact Assessment

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