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Entering a new era? The Impact of Corporate Tax Rates on Foreign Direct Investment with a BEPS Project Perspective

Andrésdóttir Kjerúlf, Ásthildur LU and Falkland, Maria LU (2024) NEKN01 20241
Department of Economics
Abstract
This thesis utilizes panel data from 38 OECD countries, spanning 21 years to estimate the impact of corporate income taxes on foreign direct investment. This analysis aims to examine how the relationship between these two variables has changed due to the launch of the Base Erosion and Profit Shifting (BEPS) project from the OECD/G20. Regressions are computed both for the full time period and three separate time periods, in order to analyze the possible BEPS project effect. The estimations from using the fixed effects method over the separate time periods give varying results. Notably, the period during the BEPS project always finds the relationship between statutory corporate taxes and foreign direct investment to be non-significant. The... (More)
This thesis utilizes panel data from 38 OECD countries, spanning 21 years to estimate the impact of corporate income taxes on foreign direct investment. This analysis aims to examine how the relationship between these two variables has changed due to the launch of the Base Erosion and Profit Shifting (BEPS) project from the OECD/G20. Regressions are computed both for the full time period and three separate time periods, in order to analyze the possible BEPS project effect. The estimations from using the fixed effects method over the separate time periods give varying results. Notably, the period during the BEPS project always finds the relationship between statutory corporate taxes and foreign direct investment to be non-significant. The results for the full time period indicate that statutory corporate tax rates have a significant negative effect on foreign direct investment inflows, in line with previous empirical findings within the field. (Less)
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author
Andrésdóttir Kjerúlf, Ásthildur LU and Falkland, Maria LU
supervisor
organization
course
NEKN01 20241
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Foreign direct investment, corporate income taxes, BEPS, fixed effects estimator, panel data
language
English
id
9156185
date added to LUP
2024-10-01 13:05:25
date last changed
2024-10-01 13:05:25
@misc{9156185,
  abstract     = {{This thesis utilizes panel data from 38 OECD countries, spanning 21 years to estimate the impact of corporate income taxes on foreign direct investment. This analysis aims to examine how the relationship between these two variables has changed due to the launch of the Base Erosion and Profit Shifting (BEPS) project from the OECD/G20. Regressions are computed both for the full time period and three separate time periods, in order to analyze the possible BEPS project effect. The estimations from using the fixed effects method over the separate time periods give varying results. Notably, the period during the BEPS project always finds the relationship between statutory corporate taxes and foreign direct investment to be non-significant. The results for the full time period indicate that statutory corporate tax rates have a significant negative effect on foreign direct investment inflows, in line with previous empirical findings within the field.}},
  author       = {{Andrésdóttir Kjerúlf, Ásthildur and Falkland, Maria}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Entering a new era? The Impact of Corporate Tax Rates on Foreign Direct Investment with a BEPS Project Perspective}},
  year         = {{2024}},
}