A Destination-Based Allowance for Corporate Equity / Shafik Hebous, Alexander Klemm.

Format:

Book

Government document

Author/Creator:

Hebous, Shafik.

Contributor:

Klemm, Alexander.

Series:

IMF Working Papers; Working Paper ; No. 2018/239

IMF Working Papers

Language:

English

Physical Description:

1 online resource (27 pages)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2018.

Summary:

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.

Contents:

Cover

Content

Abstract

I. Introduction

II. Background: Theory of Neutral Taxes without Border Adjustment

A. The Theory of the ACE

III. Defining Destination-Based Allowances

A. The DBCFT

B. The DBACE

C. The DBACC

IV. Properties and Implications of Destination-Based Allowances

A. Domestic Neutrality

B. Profit Shifting

C. Strategic Interactions

D. Revenue

E. Exchange Rate and Trade

F. Incidence

G. Sector-Specific Issues

V. Conclusions

References

Tables

1. Acronyms and Tax Systems

A1. Empirical Evidence on the ACE

A2. Experiences with ACE Systems

Figures

1. The Marginal Return to Capital Before and After Tax

Appendixes

1. Country Experiences with Rent Taxes.

Notes:

Description based on publisher supplied metadata and other sources.

ISBN:

9781484384138

148438413X

9781484384169

1484384164

OCLC:

1076256717