From separate accounting to formula apportionment: analysis in a dynamic framework

Arbeitspapier

This paper analyzes the switch from Separate Accounting to Formula Apportionment in a dynamic framework. The model features both purely domestic corporations and a domestic multinational which invests at home and abroad as well as a purely foreign corporation and a foreign multinational which invests in the foreign economy as well as in the domestic country. Using such a framework we can show that since the new FA rules apply only to multinational firms, this will affect the domestic activity of purely domestic or foreign corporations since these stick to SA and thus the marginal product of labour and capital will be different for the two firm types. This in turn will affect the investment incentives and distort capital and labour allocation between the different types of enterprises operating in an economy.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2122

Classification and Topics

• Classification: Wirtschaft ; Multinational Firms; International Business ; Fiscal Policy ; Business Taxes and Subsidies including sales and value-added (VAT)
• Subject: capital income taxation ; separate accounting ; formula apportionment ; dynamic optimization ; multinational firms ; Körperschaftsteuer ; Kapitalertragsteuer ; Formula Apportionment ; Steuerbemessung ; Multinationales Unternehmen ; Steuerwirkung ; Investition ; Dynamische Optimierung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Radulescu, Doina Maria
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/26167