Tax issues of the international capital flows (with special analysis of the international corporate tax position of Republic of Macedonia)

Gaber, Stevan and Gruevski, Ilija (2012) Tax issues of the international capital flows (with special analysis of the international corporate tax position of Republic of Macedonia). In: From Liberalization to Globalization: Challenges in the Changing World. First International Conference on Business, Economics and Finance, 1 (1). Faculty of Economics, Goce Delcev University, Stip, Macedonia, pp. 541-552.

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Abstract

In the world of perfect global economy, the level of the international capital flows is determined by the international interest rate, which in this case is equivalent to the investor’s required rate of return. But, the existence of national corporate tax systems, especially the ones with exceptionally high tax rates, might limit the overall international capital flows. The reason for the distortive effect of the corporate income tax is that the international investors require higher rate of return on their international investment projects for the amount of the corporate tax liability generated by the project. Therefore, in order to avoid the negative effects from tax distortion, as well as to promote the domestic economy as a favorable and attractive destination for the foreign capital, most of the countries tend to lower their national corporate tax rates. This global tax policy is called “race to the bottom” or with other words “corporate tax competition”. The goal of this article is to analyze the international corporate tax position of Republic of Macedonia. For that purpose, the basic methodology is consisted of the comparative method, and the method of the average effective tax rates. The second is an internationally acknowledged method especially developed for evaluation of the tax attractiveness of certain specific location (evaluation of discrete investment choices in open economy). In addition of the main method, the coefficient of the marginal effective tax rates will be used occasionally, for the need of the comparative analysis. This article might be of a great practical value for the companies, institutions as well as the investors interested for information about the level of the international corporate tax position of Republic of Macedonia, or more specifically, about the effective corporate tax burden in this country. Beside the empirical value, the text may serve as a theoretical foundation, or a start point for much deeper and essential researches especially in the domestic country, as it promotes the contemporary methodological approaches in this field commonly used by the developed countries.

Item Type: Book Section
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Economics
Depositing User: Stevan Gaber
Date Deposited: 11 Dec 2012 13:52
Last Modified: 11 Dec 2012 13:52
URI: http://eprints.ugd.edu.mk/id/eprint/3349

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