The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements
Copyright policy )The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements
AbstractOf a total of 2,976 double tax agreements (DTAs), some 60% are signed between a developing and a developed economy. AsDTAs shift taxing rights from capital‐importing to capital‐exporting countries, the latter inherently benefit more from the agreements. In this paper, we argue that capital exporters use foreign aid to incite capital importers into signingDTAs. We demonstrate in a theoretical model that in a deal, one country does not trump the other, but that the deal must be mutually beneficial. In the case of an asymmetricDTA, this requires compensation from the capital‐exporting country to the capital‐importing country. ExaminingDTAs that are signed between donor and recipient countries between 1991 and 2012, and using a fixed effects Poisson model, we find that bilateral foreign aid commitments increase by 22% in the year of the signature of aDTA. Evaluated at the sample mean, this translates into around US$ six million additional aid commitments in aDTAsignatory year.
developing countries, foreign aid, double taxation agreements, 330, JEL K33, F53, H25, H87, D82, H25, 502047 Volkswirtschaftstheorie, Department of Economics Working Paper Series, 502010 Finanzwissenschaft, developing countries; double taxation agreements; foreign aid, foreign aid, double taxation agreements, F53, 502010 Public finance, developing countrie, ddc:330, K33, 502046 Volkswirtschaftspolitik, developing countries, 502046 Economic policy, double taxation agreement, D82, H2, 502047 Economic theory, H87
developing countries, foreign aid, double taxation agreements, 330, JEL K33, F53, H25, H87, D82, H25, 502047 Volkswirtschaftstheorie, Department of Economics Working Paper Series, 502010 Finanzwissenschaft, developing countries; double taxation agreements; foreign aid, foreign aid, double taxation agreements, F53, 502010 Public finance, developing countrie, ddc:330, K33, 502046 Volkswirtschaftspolitik, developing countries, 502046 Economic policy, double taxation agreement, D82, H2, 502047 Economic theory, H87
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