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Acquisitions transfrontalières et fiscalité : efficacité et revenus fiscaux.
Author(s) -
Norbäck PehrJohan,
Persson Lars,
Vlachos Jonas
Publication year - 2009
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.1540-5982.2009.01554.x
Subject(s) - profit (economics) , economics , tax deferral , goodwill , monetary economics , revenue , bidding , mergers and acquisitions , tax revenue , business , international economics , microeconomics , tax reform , market economy , finance , public economics , state income tax , gross income
We develop a theoretical oligopoly model to study how international differences in profit and capital gains taxes affect foreign acquisitions. Reductions in foreign profit taxes tend to trigger inefficient foreign acquisitions, while reductions in foreign capital gains taxes may trigger efficient foreign acquisitions. Foreign acquisitions can increase domestic tax revenues even when profit taxes are evaded. The reason is that bidding competition between foreign firms ensures that all benefits from the acquisition, including tax advantages, are captured by a domestic seller paying capital gains taxes. Tax code issues, such as the treatment of goodwill, are shown to affect the pattern of foreign acquisitions.