The impact of worldwide vs territorial taxation on the location of assets and the scale of investment: A survey of the empirical evidence

The impact of worldwide vs territorial taxation on the location of assets and the scale of investment: A survey of the empirical evidence

Martin Simmler

University of Oxford Centre for Business Taxation

Summary:

Most countries have territorial corporate tax regimes and thus exempt repatriations of dividends from foreign subsidiaries from parent level taxation. In contrast, countries with a worldwide tax regime – the US, for example – include repatriations in the parent tax base, with a credit given for foreign taxes paid. This report summarizes the empirical literature on the impact of the difference between the two regimes on the location of assets of multinational companies between countries and also the scale of investment.

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