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The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa
Author:
Sebastian Beernull

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Jan Loepricknull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2018: Issue 227
Language:
English
Publication Date:
24 Oct 2018
DOI:
https://doi.org/10.5089/9781484378007.001
ISBN:
9781484378007
ISSN:
1018-5941
Pages:
38
Keywords:
WP; tax revenue; income tax; Tax Treaty Policy; Double Tax Treaties; Domestic Resource Mobilization; Mauritius; Sub-Saharan Africa; CIT revenue; cost of capital; withholding tax tax rate; tax cost; revenue loss; Investment hubs; cost parameter; repatriation impact FDI stock; FDI equation; effects of DTTS; revenue efficiency; tax revenue equation; Corporate income tax; Foreign direct investment; Double taxation; Withholding tax; Global; Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper investigates the costs and benefits of concluding double tax treaties with investment hubs. Based on a sample of 41 African economies from 1985–2015, the results suggest that signing treaties with investment hubs is not associated with additional investments; yet, these treaties tend to come with nonnegligible revenue losses. Building on a theoretical model, the paper investigates the role of treaty shopping in driving nominal investment flows and provides indirect evidence for its importance in the sample
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2018: Issue 227