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UID:92d95d1d6a301402f45704555068341d
CATEGORIES:Seminars
CREATED:20231212T093518
SUMMARY:Matthieu Parenti - Université Libre de Bruxelles 
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nAn Economic Analysis of Extraterritorial Taxation\n\n\nAbstract:\nThis 
 paper proposes an economic analysis of extraterritorial tax policy. We cons
 ider a country imposing top-up taxes to the foreign profits of multinationa
 l firms to ensure a minimum effective corporate tax rate. We analyze the in
 cidence of this tax, its domestic and global welfare effects, and derive co
 nditions for optimal unilateral policy in a flexible multinational monopoly
  model. We obtain four main results. First, extraterritorial taxation gener
 ates additional tax revenues but leads to domestic price increases. When fo
 reign profits are not taxed, the tax revenue gains dominate consumer welfar
 e losses even for small countries. Second, when the foreign tax rate is pos
 itive, welfare effects are ambiguous. The optimal extraterritorial rate ris
 es with domestic market shares and falls with foreign tax rates. A large en
 ough country (or coalition of countries) can top-up foreign taxes, but a sm
 all country alone cannot overtax firms that are already heavily taxed abroa
 d. Third, taxing the undertaxed profits of foreign multinationals has gener
 ally better welfare effects than tariffs. Last, revenue gains from extrater
 ritorial profit taxation increase quadratically with country size. Extrater
 ritorial tax collection turns the logic of tax competition on its head: lar
 ge destination market countries (for which revenue gains typically swamp pr
 ice increases) have incentives to tax the undertaxed profits of multination
 al firms, which can lead to a race-to-the-top with corporate income tax rat
 es.\n
DTSTAMP:20260615T082711Z
DTSTART:20240506T143000Z
DTEND:20240506T160000Z
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