Measuring Tax Incentives

• Applicants: Professor Dr. Johannes Becker; Professor Dr. Martin Ruf; Professor Dr. Georg Wamser
• Subject Area: Economic Policy, Applied Economics
• Term: from 2019 to 2023
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 388587616

The central theme of Project 1 (P1) is to compile tax and institutional data. This includes calculating effective tax measures to capture incentive effects of the international tax system. The resulting database provides a large number of variables, and usually covers the whole world as well as the last two decades. P1 is thus the backbone of the RU. As all data will be made publicly available, it generates massive benefits not only for the RU but also for the research community and a larger public. All work of the initial funding period in P1 has been organised along four work packages, WPI to WPIV. WPI is dedicated to collecting and describing data. We have therefore gathered information on the following tax and institutional variables: (i) taxes on corporate income as well as rules determining the tax base; (ii) taxes on personal income (earned and capital income); (iii) taxes on consumption; (iv) bilateral (country-pair specific) tax incentives, including bilateral tax treaties as well as withholding tax rates on cross-border dividends, interest, and royalty payments; (v) information on patent box regimes; (vi) transfer pricing regulations; and finally (vii) anti-tax-avoidance rules (thin-capitalisation and earnings-stripping rules, CFC rules). For each type of tax or institutional category, (i) to (vii), we provide data surveys and a detailed data handbook. In the second funding period, we aim to continue this work. We have therefore formulated four new work packages, WPV to WPVIII. Beside updating and quality controls, we intend to substantially add new data to the International Tax Institutions (ITI) database. For example, we will continue our work on effective tax measures and account for bilateral tax incentives at the bilateral country level. Novel tax-avoidance adjusted tax measures will account for the fact that multinational firms are able to substantially reduce their tax burden through international tax planning. We will finally complement the ITI database by generating additional information based on a firm survey.

• DFG Programme: Research Units
• Subproject of: FOR 2738: Understanding the Behaviour of Multinational Corporations in the Context of International Tax Institutions
• Co-Investigators: Professorin Dr. Valeria Merlo; Professorin Dr. Nadine Riedel; Professorin Dr. Kristina Strohmaier; Professor Dr. Frank Stähler; Professor Dr. Johannes Voget