Arbeitspapier
Interest limitation rules and business cycles: Empirical evidence
This paper studies the performance of interest limita- tion rules during business cycles. It employs register data on Finnish affiliates of multinational enterprises (MNEs) to study both thin-capitalization rules (TCRs) and earnings-stripping rules (ESRs). Both types of rules are found to become tighter in economic downturns: TCRs due to higher debt-to-equity ratios and ESRs due to lower company profits. Among equally tight interest limitation rules, TCRs are found to provide less variation and less pro-cyclical outcomes by increasing the compa- ny tax burden less than ESRs in an economic downturn. While ESRs increase the tax burden of Finnish compa- nies by 17.5%-19.3% following the 2008 global financial crisis, for TCRs the increase is less than 10%. Among the ESRs, we find that an EBIT rule induces tighter tax treat- ment in economic downturns than an EBITDA rule. How- ever, the differences between ESRs remain very small.
- Sprache
-
Englisch
- Erschienen in
-
Series: ETLA Working Papers ; No. 90
- Klassifikation
-
Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
Tax Evasion and Avoidance
International Business Cycles
- Thema
-
Business cycles
Corporate income taxation
Anti-tax avoidance rules
Thin-Capitalization Rules (TCRs)
Earnings Stripping Rules (ESRs)
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Ropponen, Olli
- Ereignis
-
Veröffentlichung
- (wer)
-
The Research Institute of the Finnish Economy (ETLA)
- (wo)
-
Helsinki
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Ropponen, Olli
- The Research Institute of the Finnish Economy (ETLA)
Entstanden
- 2021
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