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Discussion Paper Details

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Title: Foreign Ownership and Corporate Income Taxation: An Empirical Evaluation

Author(s): Harry Huizinga and Gaëtan Nicodème

Publication Date: June 2003

Keyword(s): corporate taxation, foreign ownership and tax competition

Programme Area(s): Public Economics

Abstract: Economic integration in Europe has not led to a ?race to the bottom? regarding corporate income taxes. This Paper documents trends in the foreign ownership of companies in Europe and examines whether foreign ownership has exerted a positive influence on corporate income tax levels. Using company-level data, we document that foreign ownership share in Europe stood at around 21.5% in the year 2000. The estimation suggests that a one percentage point increase in foreign ownership increases the average corporate income tax rate between 0.5-1%. Further international economic integration is likely to lead to higher foreign ownership shares with a concomitant positive influence on corporate taxation levels.

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Bibliographic Reference

Huizinga, H and Nicodème, G. 2003. 'Foreign Ownership and Corporate Income Taxation: An Empirical Evaluation'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3952