Discussion Paper Details

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Title: Does a Tax Credit matter for Job Creation by Multinational Enterprises?

Author(s): Jozef Konings, Cathy Lecocq and Bruno Merlevede

Publication Date: August 2018

Keyword(s): employment, Foreign direct investment, Multinational Enterprises and Tax policy

Programme Area(s): International Trade and Regional Economics and Public Economics

Abstract: We analyze the impact of a tax credit on jobs in multinational enterprises. In particular, we exploit the introduction of the 'notional interest deduction' regime in Belgium in 2006, an 'allowance for corporate equity', which aimed to provide an attractive tax system for multinational enterprises active in Belgium. We study employment growth in foreign affiliates of MNEs in Belgium and use as a control group the affiliates of the same MNEs in France. We find that the tax credit has increased employment in Belgian affiliates by 6 to 8 percent over the period 2006-2008.

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Bibliographic Reference

Konings, J, Lecocq, C and Merlevede, B. 2018. 'Does a Tax Credit matter for Job Creation by Multinational Enterprises?'. London, Centre for Economic Policy Research.