Policy Forum: Effective Tax Rates for Multinationals -- The Role of Tax Incentives and Tax Planning

Posted: 23 Oct 2015

See all articles by W. Steven Clark

W. Steven Clark

Organization for Economic Co-Operation and Development (OECD) - Committee on Fiscal Affairs

Alexander Klemm

International Monetary Fund (IMF)

Date Written: October 22, 2015

Abstract

Effective (marginal and average) tax rates (ETRs) are frequently used in the analysis and design of tax policies affecting investment, and this article provides various recent examples. The article addresses issues that arise when ETRs are calculated in an international context, such as for cross-border investments. It explains concretely how tax incentives and tax-planning strategies can be included in the calculation of ETRs. It then discusses typical difficulties in their interpretation, many of which become more severe in an international context. In particular, the range of ETRs for a given country rises, and both levels and country rankings depend on assumptions about tax and non-tax parameters.

Keywords: Effective income tax rates, corporate income taxes, tax planning, tax incentives

Suggested Citation

Clark, W. Steven and Klemm, Alexander, Policy Forum: Effective Tax Rates for Multinationals -- The Role of Tax Incentives and Tax Planning (October 22, 2015). Canadian Tax Journal/Revue Fiscale Canadienne, Vol. 63, No. 1, 2015, Available at SSRN: https://ssrn.com/abstract=2677677

W. Steven Clark (Contact Author)

Organization for Economic Co-Operation and Development (OECD) - Committee on Fiscal Affairs ( email )

Paris
France

Alexander Klemm

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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