Tax avoidance with cross-border hybrid instruments

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Standard

Tax avoidance with cross-border hybrid instruments. / Johannesen, Niels.

I: Journal of Public Economics, Bind 112, 2014, s. 40-52.

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt

Harvard

Johannesen, N 2014, 'Tax avoidance with cross-border hybrid instruments', Journal of Public Economics, bind 112, s. 40-52. https://doi.org/10.1016/j.jpubeco.2014.01.011

APA

Johannesen, N. (2014). Tax avoidance with cross-border hybrid instruments. Journal of Public Economics, 112, 40-52. https://doi.org/10.1016/j.jpubeco.2014.01.011

Vancouver

Johannesen N. Tax avoidance with cross-border hybrid instruments. Journal of Public Economics. 2014;112:40-52. https://doi.org/10.1016/j.jpubeco.2014.01.011

Author

Johannesen, Niels. / Tax avoidance with cross-border hybrid instruments. I: Journal of Public Economics. 2014 ; Bind 112. s. 40-52.

Bibtex

@article{44ae473c0b28457a80bb1e07d2b8fa7f,
title = "Tax avoidance with cross-border hybrid instruments",
abstract = "The rules demarcating debt and equity for tax purposes differ between countries, hence the possibility that a hybrid financial instrument is treated as equity in one country and debt in another. This may create a scope for tax avoidance by allowing firms that invest in foreign countries to combine tax deductible interest expenses in the host country and tax favored dividend income in the home country. In this paper, we first develop a formal model of hybrid instruments and show that, for a given pair of countries, firms in at least one country and sometimes in both can avoid taxes on investment in the other country with a cross-border hybrid instrument. We then investigate why countries tend to allow the use of hybrid instruments for tax avoidance and show that even if effective anti-avoidance rules are available, there exists a global policy equilibrium in which no country uses such rules",
keywords = "Faculty of Social Sciences, Hybrid instruments, Tax planning, Tax avoidance, Corporate taxation, Multinational firms, Foreign investment",
author = "Niels Johannesen",
year = "2014",
doi = "10.1016/j.jpubeco.2014.01.011",
language = "English",
volume = "112",
pages = "40--52",
journal = "Journal of Public Economics",
issn = "0047-2727",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Tax avoidance with cross-border hybrid instruments

AU - Johannesen, Niels

PY - 2014

Y1 - 2014

N2 - The rules demarcating debt and equity for tax purposes differ between countries, hence the possibility that a hybrid financial instrument is treated as equity in one country and debt in another. This may create a scope for tax avoidance by allowing firms that invest in foreign countries to combine tax deductible interest expenses in the host country and tax favored dividend income in the home country. In this paper, we first develop a formal model of hybrid instruments and show that, for a given pair of countries, firms in at least one country and sometimes in both can avoid taxes on investment in the other country with a cross-border hybrid instrument. We then investigate why countries tend to allow the use of hybrid instruments for tax avoidance and show that even if effective anti-avoidance rules are available, there exists a global policy equilibrium in which no country uses such rules

AB - The rules demarcating debt and equity for tax purposes differ between countries, hence the possibility that a hybrid financial instrument is treated as equity in one country and debt in another. This may create a scope for tax avoidance by allowing firms that invest in foreign countries to combine tax deductible interest expenses in the host country and tax favored dividend income in the home country. In this paper, we first develop a formal model of hybrid instruments and show that, for a given pair of countries, firms in at least one country and sometimes in both can avoid taxes on investment in the other country with a cross-border hybrid instrument. We then investigate why countries tend to allow the use of hybrid instruments for tax avoidance and show that even if effective anti-avoidance rules are available, there exists a global policy equilibrium in which no country uses such rules

KW - Faculty of Social Sciences

KW - Hybrid instruments

KW - Tax planning

KW - Tax avoidance

KW - Corporate taxation

KW - Multinational firms

KW - Foreign investment

U2 - 10.1016/j.jpubeco.2014.01.011

DO - 10.1016/j.jpubeco.2014.01.011

M3 - Journal article

VL - 112

SP - 40

EP - 52

JO - Journal of Public Economics

JF - Journal of Public Economics

SN - 0047-2727

ER -

ID: 101558400