Global Players – Global Markets
Edited by John-ren Chen
5. Do multinational enterprises pay less tax? Empirical evidence for Italy Francesca Gastaldi and Maria Grazia Pazienza INTRODUCTION In recent years, multinational enterprises (henceforth ME) have increased their role in more integrated economic systems. As a consequence, international taxation issues have attracted the attention of both economists and policy makers. This focus initially originated in the United States, Canada and the United Kingdom, where both the external attitude of ﬁrms and the amount of direct investment ﬂows have been substantial. Recently, following the process of creation of the European Union (EU), these issues have become more important also in Europe and in Italy. In the EU, direct investment (DI) outﬂows tripled, from 1.5 per cent of GDP in 1993 to 4.6 per cent of GDP in 1998. Inﬂows more than doubled, from 1.2 per cent of GDP to 2.8 per cent of GDP. In the same period, in the United States, outﬂows increased from 1 to 1.5 per cent of GDP, while inﬂows increased from 0.6 to 2.1 per cent of GDP. This sharp change has raised the question whether the corporate taxation originally introduced in a more regulated ﬁnancial environment with limited international capital mobility may still be appropriate. Various factors may affect the answer: (a) how taxes affect savings and capital formation in different countries; (b) how they affect the choice between debt and equity; (c) how more integrated systems have increased the opportunity for tax avoidance and/or tax evasion; and (d) the role...
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