Jack M. Mintz and Alfons J. Weichenrieder
- Published in print:
- 2010
- Published Online:
- August 2013
- ISBN:
- 9780262014496
- eISBN:
- 9780262289658
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262014496.003.0001
- Subject:
- Economics and Finance, Econometrics
This introductory chapter first sets out the book’s purpose, which is to expand our knowledge of multinational finance and tax research by exploring multinational financial structures, especially ...
More
This introductory chapter first sets out the book’s purpose, which is to expand our knowledge of multinational finance and tax research by exploring multinational financial structures, especially with respect to leverage and so-called “indirect financing structures.” The book spells out in more detail how different types of multinational financial planning and tax policy affect the choice of financing structures. It not only discusses these ideas in theory but also tests empirically effects on financial and ownership structures, using a unique data set (MiDi) on German multinationals provided by the Deutsche Bundesbank in Frankfurt. The chapter also discusses multinational direct and indirect financial structures and the role of conduit holding companies, followed by an overview of the subsequent chapters.Less
This introductory chapter first sets out the book’s purpose, which is to expand our knowledge of multinational finance and tax research by exploring multinational financial structures, especially with respect to leverage and so-called “indirect financing structures.” The book spells out in more detail how different types of multinational financial planning and tax policy affect the choice of financing structures. It not only discusses these ideas in theory but also tests empirically effects on financial and ownership structures, using a unique data set (MiDi) on German multinationals provided by the Deutsche Bundesbank in Frankfurt. The chapter also discusses multinational direct and indirect financial structures and the role of conduit holding companies, followed by an overview of the subsequent chapters.
Jack M. Mintz and Alfons J. Weichenrieder
- Published in print:
- 2010
- Published Online:
- August 2013
- ISBN:
- 9780262014496
- eISBN:
- 9780262289658
- Item type:
- book
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262014496.001.0001
- Subject:
- Economics and Finance, Econometrics
The recent increase in cross-border flows of foreign direct investment has sharpened the research focus on multinational taxation. This book examines how multinational corporations use indirect ...
More
The recent increase in cross-border flows of foreign direct investment has sharpened the research focus on multinational taxation. This book examines how multinational corporations use indirect financing structures—organizing themselves into groups with several tiers of ownership—to reduce worldwide taxes. It spells out in detail how different tax policies affect corporations’ choice of financing structures, discussing the issues in both theoretical and empirical terms. Drawing on a unique data set (MiDi) on German multinationals provided by the Deutsche Bundesbank in Frankfurt, the book confirms the prevalence of indirect financing structures for both outbound and inbound German investment. It finds evidence of “treaty shopping” to avoid withholding taxes (using a third country with more favorable tax rates as a conduit through which to route investments) and of “debt shifting.” The book argues that increasing our knowledge of the tax reasons behind conduit investment will lead to a better understanding of how tax policy can affect macroeconomic flows of capital in the global economy. It reviews the trade-offs that governments face and discusses policy options, considering not only possible changes to corporate income tax policy but also the potential influence of international cooperation on countries’ domestic tax policy.Less
The recent increase in cross-border flows of foreign direct investment has sharpened the research focus on multinational taxation. This book examines how multinational corporations use indirect financing structures—organizing themselves into groups with several tiers of ownership—to reduce worldwide taxes. It spells out in detail how different tax policies affect corporations’ choice of financing structures, discussing the issues in both theoretical and empirical terms. Drawing on a unique data set (MiDi) on German multinationals provided by the Deutsche Bundesbank in Frankfurt, the book confirms the prevalence of indirect financing structures for both outbound and inbound German investment. It finds evidence of “treaty shopping” to avoid withholding taxes (using a third country with more favorable tax rates as a conduit through which to route investments) and of “debt shifting.” The book argues that increasing our knowledge of the tax reasons behind conduit investment will lead to a better understanding of how tax policy can affect macroeconomic flows of capital in the global economy. It reviews the trade-offs that governments face and discusses policy options, considering not only possible changes to corporate income tax policy but also the potential influence of international cooperation on countries’ domestic tax policy.
