The Effect of Moving to a Territorial Tax System on Profit Repatriation: Evidence from Japan

Hasegawa, Makoto; Kiyota, Kozo

doi:10.2139/ssrn.2618058

Cited by 24 publications

(27 citation statements)

References 30 publications

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“…Several empirical papers find support for tax deferral, by showing that US MNCs increase their dividend payout in response to lower taxes on repatriation (Hines and Hubbard, 1990;Altshuler and Newlon,1993;Grubert,1998;Altshuler and Grubert, 2003). Recent studies, exploiting UK's and Japan's adoption of a territorial system in 2009 in a quasi-experimental setting, provide similar evidence that exemption of foreign earnings boosted dividend repatriation in the UK (Egger et al, 2015) as well as in Japan (Hasegawa and Kiyota, 2017).…”

Section: Tax Deferralmentioning

confidence: 86%

International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots

Beer

Mooij

Liu

2019

Journal of Economic Surveys

158

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This paper reviews the rapidly growing empirical literature on international tax avoidance by multinational corporations. It surveys evidence on main channels of corporate tax avoidance including transfer mispricing, international debt shifting, treaty shopping, tax deferral and corporate inversions. Moreover, it performs a meta analysis of the extensive literature that estimates the overall size of profit shifting. We find that the literature suggests that, for the most recent year, a 1 percentage-point lower corporate tax rate compared to other countries will expand before-tax income by 1.5 percent-an effect that is larger than reported as the consensus estimate in previous surveys and tends to be increasing over time. The literature on tax avoidance still has several unresolved puzzles and blind spots that require further research. JEL-Codes: F230, H250. participants at the IMF "Evaluating Tax Reform" conference and Fiscal Affairs Department seminar for helpful comments. We are grateful to Jost Heckmeyer and Michael Overesch for sharing their dataset for replication purposes. Any remaining errors are our own. 5 Taxes in high-tax locations can also be avoided by changing the location of foreign direct investment (FDI). This paper, however, focuses only on tax avoidance through profit shifting, not through a change in the location of real capital (for a survey of taxation and FDI, see e.g. De Mooij and Ederveen 2008). 6 Transfer mispricing has also implications for national accounts statistics and the measurement of GDP growth, see e.g. Guvenen et al (2017).

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Section: Tax Deferralmentioning

confidence: 86%

International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots

Beer

Mooij

Liu

2019

Journal of Economic Surveys

158

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“…In addition, the Japanese taxation system changed from the territorial system to the personal link system. Hasegawa and Kiyota (2013) observed that Japanese overseas affiliates exhibited varying responses to this change. In the past ten years, Japanese outward FDI in China and the number of Japanese FDI affiliates in China have changed substantially compared with Taiwanese businesses.…”

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confidence: 99%

Survival of outward FDI in China’s food industry

Jian

Takahashi

Chang

et al. 2016

British Food Journal

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Purpose -The purpose of this paper is to investigate the stability of Taiwanese and Japanese outward foreign direct investment (FDI) in China's food industry and explore the Cox proportional hazard model to examine the factors that may affect the duration and stability of FDI. Design/methodology/approach -The data used in this study come from firm-level survey conducted in different Chinese provinces. Based on the data, survival analysis on the determinants of FDI in China's food industry was constructed and used for analysis. Findings -Estimated results from the study show that the survival rates are higher for Taiwanese FDI than for Japanese FDI from 2003 to 2012. In addition, empirical results show a positive relationship between research and development (R&D) expenditure/domestic investment and the hazard rate, implying that Japanese investments with greater R&D expenditure and domestic investment would decrease the survival of FDI in China. On the contrary, Taiwanese investments with greater R&D expenditure and domestic investment would enhance the survival of FDI in China. Originality/value -It could be the first that survival comparisons across countries are conducted together in the relevant FDI studies of the food industry. For robustness, survival rates for ten major provinces and cities where affiliates conducted FDI in the food industry are examined.

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“…These effects occurred even though (prereform) UK rules allowed greater scope for UK MNCs to return cash to the parent via mechanisms that avoided the repatriation tax than is the case for US MNCs. Hasegawa and Kiyota (2015) find similarly that repatriations from foreign affiliates with large amounts of retained earnings increased after the Japanese reform.…”

Section: 1) Evaluating "Consensus" Reformsmentioning

confidence: 68%

The Economics of Corporate and Business Tax Reform

Dharmapala

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The reform of corporate and business taxation is central to current tax policy debates in the United States. This paper provides a framework for analyzing reform proposals by describing the lessons from current economic research for business tax reform, addressing both international and domestic reforms within a unified perspective. The paper begins by identifying ten potential inefficiencies created by the current corporate tax regime. It then discusses three classes of reform proposals. The first involves a substantially lower corporate tax rate and a territorial regime. The second is a formula apportionment system. The third category includes a destination-based cash flow tax. The paper evaluates each of these proposals in the light of the framework introduced earlier. It concludes that the relatively modest reforms currently under discussion would address only a few of these margins. In contrast, more fundamental reforms would eliminate all or most of the inefficiencies of corporate taxation. Terms of use: Documents inJEL-Codes: H250, F230.

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The Effect of Moving to a Territorial Tax System on Profit Repatriation: Evidence from Japan

Cited by 24 publications

References 30 publications

International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots

International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots

Survival of outward FDI in China’s food industry

The Economics of Corporate and Business Tax Reform

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