The Direct and Indirect Costs of Tax Treaty Policy : Evidence from Ukraine
This study combines macro and micro data to quantify the revenue effects of double tax treaties. First, drawing on administrative information, the study estimates the tax sensitivity of income flows (dividend, interest, and royalty payments) at an...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/534391488205311904/The-direct-and-indirect-costs-of-tax-treaty-policy-evidence-from-Ukraine http://hdl.handle.net/10986/26181 |
| Summary: | This study combines macro and micro data
to quantify the revenue effects of double tax treaties.
First, drawing on administrative information, the study
estimates the tax sensitivity of income flows (dividend,
interest, and royalty payments) at an aggregate level. The
analysis finds important direct revenue costs linked to
treaty restrictions on taxing rights, especially for flows
into a few major investment hubs. However, high elasticities
of income flows also suggest that increases in withholding
rates at the individual treaty partner level would not
necessarily result in more revenue collection. Second, the
study uses firm-level information to estimate the
sensitivity of reported profitability to changes in the
relevant treaty network. The analysis of the reported
earnings of multinational enterprise affiliates in Ukraine
suggests that the ownership structure and operations with
affiliates in certain jurisdictions explain reported
profitability, and should thus receive increased attention
in risk assessment and transfer pricing audit activities. |
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