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Download or read book The Impact of Thin Capitalization Rules on Shareholder Financing written by and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Alexandra Maßbaum
Publisher :
ISBN 13 :
Total Pages : 54 pages
Book Rating : 4.:/5 (17 download)
Download or read book ˜Theœ impact of thin capitalization rules on shareholder financing written by Alexandra Maßbaum and published by . This book was released on 2008 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jennifer Blouin
Publisher : International Monetary Fund
ISBN 13 : 1484384644
Total Pages : 37 pages
Book Rating : 4.4/5 (843 download)
Download or read book Thin Capitalization Rules and Multinational Firm Capital Structure written by Jennifer Blouin and published by International Monetary Fund. This book was released on 2014-01-24 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of thin capitalization rules that limit the tax deductibility of interest on the capital structure of the foreign affiliates of US multinationals. We construct a new data set on thin capitalization rules in 54 countries for the period 1982-2004. Using confidential data on the internal and total leverage of foreign affiliates of US multinationals, we find that thin capitalization rules significantly affect multinational firm capital structure. Specifically, restrictions on an affiliate’s debt-to-assets ratio reduce this ratio on average by 1.9%, while restrictions on an affiliate’s borrowing from the parent-to-equity ratio reduce this ratio by 6.3%. Also, restrictions on borrowing from the parent reduce the affiliate’s debt-to-assets ratio by 0.8%, which shows that rules targeting internal leverage have an indirect effect on the overall indebtedness of affiliate firms. The impact of capitalization rules on affiliate leverage is higher if their application is automatic rather than discretionary. Furthermore, thin capitalization regimes have aggregate firm effects: they reduce the firm’s aggregate interest expense but lower firm valuation. Overall, our results show than thin capitalization rules, which thus far have been understudied, have a substantial effect on the capital structure within multinational firms, with implications for the firm’s market valuation.
Author :
Publisher :
ISBN 13 : 9783865583789
Total Pages : 0 pages
Book Rating : 4.5/5 (837 download)
Download or read book The Impact of Thin-capitalization Rules on Multinationals' Financing and Investment Decisions written by and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Thiess Buettner
Publisher :
ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (129 download)
Download or read book The Impact of Thin-Capitalization Rules on Multinationals' Financing and Investment Decisions written by Thiess Buettner and published by . This book was released on 2008 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the role of Thin-Capitalization rules for capital structure choice and investment decisions of multinationals. A theoretical analysis shows that the imposition of such rules tends to affect not only the leverage and the level of investment but also their tax-sensitivity. An empirical investigation of leverage and investment reported for affiliates of German multinationals in 24 countries in the period between 1996 and 2004 offers some support for the theoretical predictions. While Thin-Capitalization rules are found to be effective in restricting debt finance, investment is found to be more sensitive to taxes if debt finance is restricted.
Author : Thiess Büttner
Publisher :
ISBN 13 : 9783865583772
Total Pages : 46 pages
Book Rating : 4.5/5 (837 download)
Download or read book The Impact of Thin-capitalization Rules on Multinationals' Financing and Investment Decisions written by Thiess Büttner and published by . This book was released on 2008 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Impact of Thin-Capitalization Rules on Multinationals Financing & Investment Decisions written by and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Thin Capitalization Rules and Multinational Firm Capital Structure written by and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jennifer Blouin
Publisher :
ISBN 13 : 9789279354298
Total Pages : 47 pages
Book Rating : 4.3/5 (542 download)
Download or read book Thin Capitalization Rules and Multinational Firm Capital Structure written by Jennifer Blouin and published by . This book was released on 2014 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of thin capitalization rules that limit the tax deductibility of interest on the capital structure of the foreign affiliates of US multinationals. We construct a new data set on thin capitalization rules in 54 countries for the period 1982-2004. Using confidential data on the internal and total leverage of foreign affiliates of US multinationals, we find that thin capitalization rules affect multinational firm capital structure in a significant way. Specifically, restrictions on an affiliate's debt-to-assets ratio reduce this ratio on average by 1.9%, while restrictions on an affiliate's borrowing from the parent-to-equity ratio reduce this ratio by 6.3%. Also, restrictions on borrowing from the parent reduce the affiliate's debt to assets ratio by 0.8%, which shows that rules targeting internal leverage have an indirect effect on the overall indebtedness of affiliate firms. The impact of capitalization rules on affiliate leverage is higher if their application is automatic rather than discretionary. Furthermore, we show that thin capitalization regimes have aggregate firm effects: they reduce the firm's aggregate interest expense bill but lower firm valuation. Overall, our results show than thin capitalization rules, which thus far have been understudied, have a substantial effect on the capital structure within multinational firms, with implications for the firm's market valuation.
Author : Mohammed Mardan
Publisher :
ISBN 13 :
Total Pages : 33 pages
Book Rating : 4.:/5 (13 download)
Download or read book Why Countries Differ in Thin Capitalization Rules written by Mohammed Mardan and published by . This book was released on 2015 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the absence of financial frictions, the purpose of thin capitalization rules is to limit multinational firms' possibilities of engaging in tax planning via debt shifting. This paper analyzes the effects of thin capitalization rules in the case where firms have limited access to external funding. First, we show that a host country allows positive internal interest deductions if its financial development is sufficiently low. This amount increases when the financial development of the host country worsens. Then we ask which of the two most common thin capitalization rules used in practice is better suited to maximizing welfare of the host country. We show that welfare under a safe haven rule is higher than under an earnings stripping rule if firms are not able to manipulate transfer prices. Welfare, however, can be higher under an earnings stripping rule if firms are able to manipulate transfer prices. The analysis provides an explanation for why countries differ in the strictness and in the type of thin capitalization rule.
Author : Sandra Martinho Fernandes
Publisher :
ISBN 13 : 9789087225476
Total Pages : 437 pages
Book Rating : 4.2/5 (254 download)
Download or read book International Double Taxation of Interest written by Sandra Martinho Fernandes and published by . This book was released on 2019 with total page 437 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Mr. Luc Laeven
Publisher : International Monetary Fund
ISBN 13 : 1451910568
Total Pages : 40 pages
Book Rating : 4.4/5 (519 download)
Download or read book Capital Structure and International Debt Shifting written by Mr. Luc Laeven and published by International Monetary Fund. This book was released on 2007-02-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a model of a multinational firm''s optimal debt policy that incorporates international taxation factors. The model yields the prediction that a multinational firm''s indebtedness in a country depends on a weighted average of national tax rates and differences between national and foreign tax rates. These differences matter because multinationals have an incentive to shift debt to high-tax countries. The predictions of the model are tested using a novel firm-level dataset for European multinationals and their subsidiaries, combined with newly collected data on the international tax treatment of dividend and interest streams. Our empirical results show that corporate debt policy indeed not only reflects domestic corporate tax rates but also differences in international tax systems. These findings contribute to our understanding of how corporate debt policy is set in an international context.
Author : Martin Eckhoff Andresen
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (135 download)
Download or read book The Importance of Escape Clauses written by Martin Eckhoff Andresen and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Escape clauses, where small firms are exempt from particular tax rules, is a crucial feature of a number of corporate tax schemes, but creates incentives to avoid taxation by manipulating the measures that determine inclusion. We evaluate the impact of thin capitalization rules, which commonly feature such escape clauses across the world, by exploiting the introduction of these rules in Norway in 2014. Combining difference-in-differences, regression discontinuity and bunching estimates, we show that what appears to be a strong response in the capital structure among exposed firms primarily reflect within-group reallocation of debt to avoid exposure to the rules. We observe sharp bunching among both new and existing subsidiaries at both thresholds for rule inclusion, and find that internal corporate group debt is offloaded to these bunching subsidiaries in order to avoid additional tax costs. As a result, significant and large effects on firm-level capital structure in response to the thin capitalization rules is driven by reshuffling of capital within corporate groups with little real effects. Re-estimating the difference-in-difference specification at the corporate group level confirms this finding, questioning the extent to which thin capitalization rules affect the real economy due to the presence of escape clauses.
Author : International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
ISBN 13 : 1498345204
Total Pages : 78 pages
Book Rating : 4.4/5 (983 download)
Download or read book Tax Policy, Leverage and Macroeconomic Stability written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2016-12-10 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt: Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern. This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.
Author : Florian Haase
Publisher : Oxford University Press
ISBN 13 : 0192652346
Total Pages : 1185 pages
Book Rating : 4.1/5 (926 download)
Download or read book The Oxford Handbook of International Tax Law written by Florian Haase and published by Oxford University Press. This book was released on 2023-09-22 with total page 1185 pages. Available in PDF, EPUB and Kindle. Book excerpt: International Tax Law is at a turning point. Increased tax transparency, the tackling of Base Erosion and Profit Shifting (BEPS), the reconstruction of the network of bilateral tax treaties, the renewed discussion about a fair and efficient allocation of taxing rights between States in a global, digitalized economy, and the bold push for minimum corporate taxation are some expressions of this shift. This new era also demonstrates the increased influence of international standard setters such as the OECD, the UN, and the EU. Each of these developments alone has the potential of being disruptive to the traditional world of international tax law, but together they have the potential to reshape the international tax system. The Oxford Handbook of International Tax Law provides a comprehensive exploration of these key issues which will shape the future of tax law. Divided into eight parts, this handbook traces the history of international tax law from its earliest days until the present, including reflections on the developments that have characterized the last one hundred years. The second section places tax law within the broader international context considering how it relates to public and private international law, as well as corporate, trade, and criminal law. Sections three and four consider key legal principles and issues such as regional tax treaty models, OECD dispute resolution, and transfer pricing versus formulary apportionment. Subsequent analysis places these issues within their European and cross-border contexts providing an assessment of the role of the ECJ, state aid, and cross-border VAT. Section seven broadens the scope of this analysis, asking how trends in recent major economies and regions have helped shape the current outlook. The final section considers emerging issues and the future of international tax law. With over sixty authors from 28 different countries, the Oxford Handbook of International Tax Law is an invaluable resource for scholars, academics, and practitioners alike.
Author : Shafik Hebous
Publisher : International Monetary Fund
ISBN 13 : 1484381904
Total Pages : 26 pages
Book Rating : 4.4/5 (843 download)
Download or read book A Destination-Based Allowance for Corporate Equity written by Shafik Hebous and published by International Monetary Fund. This book was released on 2018-11-08 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following renewed academic and policy interest in the destination-based principle for taxing profits—particularly through a destination-based cash flow tax (DBCFT)—this paper studies other forms of efficient destination-based taxes. Specifically, it analyzes the Destination-Based Allowance for Corporate Equity (DBACE) and Allowance for Corporate Capital (DBACC). It describes adjustments that are required to turn an origin into a destination-based versions of these taxes. These include adjustments to capital and equity, which are additional to the border adjustments needed under a DBCFT. The paper finds that the DBACC and DBACE reduce profit shifting and tax competition, but cannot fully eliminate them, with the DBACE more sensitve than the DBACC. Overall, given the potential major political cost of switching from an origin to a destination-based tax system, we conclude that advantages of the DBCFT are likely to outweigh the transitional advantages of the DBACE/DBACC.
Author : Jack M. Mintz
Publisher : MIT Press
ISBN 13 : 0262014491
Total Pages : 203 pages
Book Rating : 4.2/5 (62 download)
Download or read book The The Indirect Side of Direct Investment written by Jack M. Mintz and published by MIT Press. This book was released on 2010-08-06 with total page 203 pages. Available in PDF, EPUB and Kindle. Book excerpt: Drawing on a unique data set (MiDi) on German multinationals provided by the Deutsche Bundesbank in Frankfurt, Mintz and Weichenrieder confirm the prevalence of indirect financing structures for both outbound and inbound German investment. They find evidence of "treaty shopping!' to avoid withholding taxes (using a third country with more favorable tax rates as a conduit through which to route investments) and of "debt shifting." --
