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Article

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Accepted version

Publication date

2021-09

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Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/180017

The role of tax system complexity on foreign direct investment allocation

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https://doi.org/10.1080/00036846.2021.1922587

Abstract

We present new cross-country empirical evidence that tax system complexity affects the location of international investment. The evidence comes from a database of foreign direct investment (FDI) bilateral flows for all OECD countries over the 2013-2016 period, and from the Doing Business survey, which collects several measures of tax system complexity and effective tax rates. By means of a gravity model, we consider the impact of destination and parent country characteristics on firm investment decisions. An increase in the difference between tax complexity in the home country and the destination country is related with an increase in FDI outflows from home to destination. We do not find any significant impact of tax rate differentials on FDI outflows.

Subject

Administració fiscal, Inversions estrangeres

Subject (English)

Tax administration and procedure, Foreign investments

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Articles publicats en revistes (Economia)

Citation

ESTELLER MORÉ, Alejandro, RIZZO, Leonzio and SECOMANDI, Riccardo. The role of tax system complexity on foreign direct investment allocation. Applied Economics. 2021. Vol. 53, num. 45, pags. 5208-5220. ISSN 0003-6846. [consulted: 10 of August of 2026]. Available at: https://hdl.handle.net/2445/180017

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