2023

Exit taxation can impose a significant tax and cash flow burden on multinational enterprises (MNEs) in their cross-border operations, as it taxes unrealized capital gains. Using country-level data on newly established MNE subsidiaries in the European Union,  this paper investigates the effect of exit taxation and the inherent cash flow aspect on MNEs’ greenfield investments for the period 2005-2019.

Georg Winkler, Tax It before Exit: Exit Taxation and Greenfield Investments (WU Int’l Tax’n Rsch. Paper Series No. 2024-01).

This article explains the interplay between the UTPR and tax treaties and the role played by customary international tax law, including treaty overrides and soak-up taxes.

Reuven S. Avi-Yonah, The UTPR and the Treaties, 109 Tax Notes Int’l 45 (2023).

This paper illustrates the EU’s tax attractiveness as an investment location over time in terms of effective average tax rates and evaluates potential tax reform options. The paper’s quantitative assessment of recent tax policies suggests that corporate tax rate cuts, notional interest deductions, and R&D incentives reduce the effective average tax rate significantly. This paper, however, argues that targeted measures such as accelerated depreciation and R&D incentives are most suitable for creating an attractive tax environment for business investments, especially in the context of the global minimum tax.

Hannah Gundert, Katharina Nicolay, Daniela Steinbrenner & Sophia Wickel, The Tax Attractiveness of EU Locations for corporate Investments: A Stocktaking of past Developments and recent Reforms (ZEW, Discussion Paper No. 23-066, 2023).

This article discusses corporate tax effects on multinationals’ R&D. While corporate groups report aggregate R&D expenditures, the distribution across different subsidiaries is difficult to obtain in databases that are readily available for researchers. The present paper adds empirical evidence on real R&D activity by looking at R&D expenditures of U.S. majority-owned subsidiaries abroad.

The Global Minimum Tax (GMT) introduces significant changes to the international tax architecture and thereby to the taxation of large multinational enterprises. This paper assesses the impact of the GMT by using new and unique data on MNE worldwide activity building on comprehensive estimates of global low-taxed profit.

The proliferation of digital services taxes (DSTs) in Europe is generally understood as a way for those countries to claim taxing rights over the profits of large digital platforms. Under prevailing norms of international income taxation, these large digital businesses had been able to avoid paying taxes in countries where they had no physical presence, even if they had many users in those countries. The rise of big tech has generated a set of regulatory and political challenges, and taxation is one of these challenges. This article argues that the adoption of DSTs is not only about the fair allocation of taxing rights, but also economic competition between the U.S. and the EU, anxiety over the effects of digital platforms on society, and antitrust concerns about the economic power of the tech giants. DSTs provide an interesting illustration of how tax scholarship grapples with a novel tax.

Andrew T. Hayashi and Young Ran (Christine) Kim, Taxing Digital Platforms, 26 Va. J. L. & Tech. 1, 2023.