December 17, 2014

Potential benefits of tax inversion remain (huge): with the model and full country ranking

The recent actions of the US Treasury to reign in corporate tax inversions leave their rationale largely intact: the potential tax benefits of inversions remain unchanged and huge.

A change in corporate residence still means that average dividend repatriation tax rates can be up to 10 percentage points lower than before. This applies to current or future foreign profits of US based corporations. Tax inversion is an example of profit shifting by multinational enterprises leading to erosion of corporate tax bases; not a unique US problem but a worldwide concern high on the international agenda with the BEPS – initiative of the G20 and the OECD.

Read also CPB Discussion Paper 290 'Ranking the Stars: Network Analysis of Bilateral Tax Treaties'.