The importance of corporate taxation for FDI attractiveness of southeast European countries

The aim of this paper is to research the determinants of FDI inflows in the SEE region with a special emphasis on corporate tax rates. The panel data analysis (GMM methodology) was conducted on six countries in the period 2000-2011 in two versions: as gravity model based on bilateral FDI inflows and on the total FDI inflows (and inward stock). The results pointed the most important determinants for attracting FDI in SEE countries are market size (population), growth rates, GDP per capita, and wages. Institutional variables and corporate tax rates were not significant in the analysis of flows, but they become significant in the analysis of FDI inward stock.

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Differences in Inward FDI Performance Between the Southern Eurozone and Eastern EU Members: A Panel-Data Analysis Over 2004-2016

Economic Themes ◽

10.2478/ethemes-2018-0030 ◽

2018 ◽

Vol 56 (4) ◽

pp. 519-532

Author(s):

Klimis Vogiatzoglou

Keyword(s):

Negative Impact ◽

Panel Data Analysis ◽

Tax Rates ◽

Production Networks ◽

Corporate Tax ◽

Economic Openness ◽

Fdi Inflows ◽

Eu Member States ◽

Labour Costs ◽

The Empirical Analysis

Abstract The aim of this paper is to examine the factors that explain the observed differences in inward foreign direct investment (FDI) performance between the peripheral southern eurozone countries (namely Greece and Portugal) and the eight Eastern EU members (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) that joined in 2004. The empirical analysis, which is based on the estimation of a panel-econometric model during the 2004-2016 period, provides for Greece and Portugal policy relevant insights with respect to improving the international competitiveness and attracting more FDI inflows vis-a-vis Eastern EU countries, which have outperformed the two southern eurozone members. The results indicate that, among other factors, positive differences in labour costs and corporate tax rates between southern eurozone members and Eastern EU member states largely explain the observed differences in inward FDI performance among those two country groups. The higher labour costs and corporate taxation in Greece and Portugal exhibit a strong negative impact on their relative inward FDI performance vis-avis Eastern EU members. Furthermore, differences in economic openness and integration into vertical production networks also have a significant effect on inward FDI performance.

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What Determine the Corporate Tax Rates During the COVID-19? Evidence From 113 Countries

Frontiers in Public Health ◽

10.3389/fpubh.2021.816561 ◽

2022 ◽

Vol 9 ◽

Author(s):

Ronghua Li ◽

Zhenhui Li ◽

Lin Guo

Keyword(s):

Fiscal Policy ◽

Total Population ◽

Developing Economies ◽

Policy Implications ◽

Driving Mechanism ◽

Tax Rates ◽

Negative Consequences ◽

Corporate Tax ◽

Corporate Tax Rates ◽

Per Capita

Fiscal policy implications become an important tool to soften the negative consequences of the COVID-19 pandemic. Given this backdrop, this paper analyses the drivers of corporate tax rates during the COVID-19 pandemic (i.e., in 2020 and 2021). The results from 113 advanced and developing economies show that a higher level of the COVID-19-related uncertainty is positively associated with the corporate tax rates. Similarly, the country size (measured by total population) increases the corporate tax rates. Per capita income is negatively related to the corporate tax rates, but this evidence is insufficient to consider different estimation techniques. The paper also discusses potential fiscal policy implications for the driving mechanism of corporate tax rates for the post-COVID-19 era.

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