Cross-Border Acquisitions and Corporate Taxes: Efficiency and Tax Revenues

Arbeitspapier

We find that reduced foreign corporate taxes may lead to inefficient foreign acquisitions if complementarities between foreign and domestic assets are low, and to efficient foreign acquisitions if such complementarities are high. Moreover, with large complementarities, foreign acquisitions can increase domestic tax revenues. The reason is that in the bidding competition between the foreign firms, all benefits from the acquisition, including tax advantages and evaded taxes, are competed away and captured by the domestic seller which, in turn, pays capital gains tax on the proceeds. Technical issues in the tax code, such as the treatment of goodwill deductibility, is also shown to crucially affect the pattern of foreign acquisitions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 663

Classification and Topics

• Classification: Wirtschaft ; Multinational Firms; International Business
• Subject: Tax Competition ; Ownership ; Tax Revenues ; FDI ; M&As ; Direktinvestition ; Übernahme ; Steuerwettbewerb ; Steuerwirkung ; Steuereinnahmen ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Norbäck, Pehr-Johan ; Persson, Lars ; Vlachos, Jonas
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/81285
• Last update: 10.03.2025, 11:44 AM CET