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Measuring tax attractiveness across countries

Author

Listed:
  • Keller, Sara
  • Schanz, Deborah
Abstract
This paper develops a new tax measure - the Tax Attractiveness Index - reflecting the attractiveness of a country's tax environment and the tax planning opportunities that are offered. Specifically, the Tax Attractiveness Index covers 16 different components of real-world tax systems, such as the statutory tax rate, the taxation of dividends and capital gains, withholding taxes, the existence of a group taxation regime, loss offset provision, the double tax treaty network, thin capitalization rules, and controlled foreign company (CFC) rules. We develop methods to quantify each tax factor. The Tax Attractiveness Index is constructed for 100 countries over the 2005 to 2009 period. Regional clusters in the index as well as in the application of certain tax rules can be observed. The evaluation of individual countries based on the index corresponds - but is not totally identical - with the OECD's black respectively grey list. By comparing the Tax Attractiveness Index with the statutory tax rate, we reveal that even high tax countries offer favorable tax condi-tions. Hence, the statutory tax rate is not a suitable proxy for a country's tax climate in any case since countries may set other incentives to attract firms and investments.

Suggested Citation

  • Keller, Sara & Schanz, Deborah, 2013. "Measuring tax attractiveness across countries," arqus Discussion Papers in Quantitative Tax Research 143, arqus - Arbeitskreis Quantitative Steuerlehre.
    • Handle: RePEc:zbw:arqudp:143
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    References listed on IDEAS

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    1. Tax attractiveness
      by Economic Logician in Economic Logic on 2013-08-30 18:42:00

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    1. Keller, Sara & Schanz, Deborah, 2013. "Tax attractiveness and the location of German-controlled subsidiaries," arqus Discussion Papers in Quantitative Tax Research 142, arqus - Arbeitskreis Quantitative Steuerlehre.
    2. Dinkel, Andreas & Schanz, Deborah, 2015. "Tax attractiveness and the location of patents," arqus Discussion Papers in Quantitative Tax Research 188, arqus - Arbeitskreis Quantitative Steuerlehre.
    3. Schanz, Deborah & Feller, Anna, 2014. "Wieso Deutschland (fast) keine BEPS-Bekämpfung braucht," arqus Discussion Papers in Quantitative Tax Research 171, arqus - Arbeitskreis Quantitative Steuerlehre.
    4. Dinkel, Andreas, 2015. "Tax attractiveness and the allocation of risk within multinationals," arqus Discussion Papers in Quantitative Tax Research 189, arqus - Arbeitskreis Quantitative Steuerlehre.
    5. Petutschnig, Matthias, 2017. "Future orientation and taxes: Evidence from big data," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 29(C), pages 14-31.
    6. Elemes, Anastasios & Blaylock, Bradley & Spence, Crawford, 2021. "Tax-motivated profit shifting in big 4 networks: Evidence from Europe," Accounting, Organizations and Society, Elsevier, vol. 95(C).
    7. Cozmei Catalina & Serban Elena Claudia, 2015. "The Influence Of Competitiveness On Investment Location Decisions –Case Study: France, Italy, Romania, Great Britain," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 188-196, April.
    8. Magdalena Małgorzata Hybka, 2014. "Legislative proposal for a controlled foreign companies regime in Poland from an international perspective," Financial Theory and Practice, Institute of Public Finance, vol. 38(4), pages 465-487.
    9. Deborah Schanz & Andreas Dinkel & Sara Keller, 2017. "Tax attractiveness and the location of German-controlled subsidiaries," Review of Managerial Science, Springer, vol. 11(1), pages 251-297, January.

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