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- Title
CONSEQUENCES OF THE NEW UK TAX EXEMPTION SYSTEM: EVIDENCE FROM MICRO-LEVEL DATA.
- Authors
Egger, Peter; Merlo, Valeria; Ruf, Martin; Wamser, Georg
- Abstract
Until 2009, the UK operated a system of worldwide taxation. Under this system, taxation of foreign income was deferred until repatriated as dividends, leaving UK-owned multinational firms the possibility of avoiding UK taxation by delaying dividend payments and keeping earnings abroad. In 2009, the UK switched to a system under which all foreign-earned income is exempted from taxation. We evaluate the effects of this reform on foreign affiliates of UK multinationals. Using an identification approach that quasi-randomises over the country of residence of the ultimate firm owners, we find that the reform significantly affected short-run repatriation behaviour.
- Subjects
UNITED Kingdom; TAXATION; TAXATION of foreign income; TAXATION of dividends; TAXATION of international business enterprises; REVERSE outsourcing; TAXATION of foreign investments
- Publication
Economic Journal, 2015, Vol 125, Issue 589, p1764
- ISSN
0013-0133
- Publication type
Article
- DOI
10.1111/ecoj.12190