Foreign‐Investment Tax and Tariff Policies in Developing Countries | Zendy

Chao ChiChur | Zendy; Yu Eden S.H. | Zendy

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Foreign‐Investment Tax and Tariff Policies in Developing Countries

Author(s) -

Chao ChiChur,

Yu Eden S.H.

Publication year - 1997

Publication title -

review of international economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.513

H-Index - 58

eISSN - 1467-9396

pISSN - 0965-7576

DOI - 10.1111/1467-9396.00038

Subject(s) - tariff , economics , tax credit , subsidy , international economics , tax reform , ad valorem tax , value added tax , welfare , indirect tax , double taxation , capital (architecture) , monetary economics , macroeconomics , public economics , market economy , history , archaeology

In this paper we examine the welfare effects of tax on foreign capital and tariff policies for a small open economy with sectoral unemployment. The individually and jointly optimal tax and tariff rates in the absence or presence of international tax credits are derived. A subsidy on foreign capital coupled with a tariff can be jointly optimal when tax credits are absent in the source country. However, the capital subsidy policy may fail to hold when the foreign country follows a tax credit system.

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