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- Title
Corporate income tax, IP boxes and the location of R&D.
- Authors
Shehaj, Pranvera; Weichenrieder, Alfons J.
- Abstract
We discuss corporate tax effects on multinationals' R&D. Theoretically, we find that a host country's tax increase may boost local R&D expenditure: while R&D becomes deductible at a higher rate, this higher rate may not apply to all R&D returns. First, as R&D creates a public good within the MNE, some R&D returns are taxed at other countries' tax rates. Second, some of the R&D returns are taxed at a lower IP regime tax rate. The positive tax rate effect is empirically supported by country-by-country R&D data of U.S.-owned subsidiaries for countries that have an IP regime.
- Subjects
TAX returns; TAX rates; CORPORATE taxes; COMMON good
- Publication
International Tax & Public Finance, 2024, Vol 31, Issue 1, p203
- ISSN
0927-5940
- Publication type
Article
- DOI
10.1007/s10797-023-09812-x