Macroeconomics, World Trade and Investment

This paper introduces the new Tax Treaties Explorer dataset, developed with support from the World Bank and the G-24, and illustrates its use for research by tax treaty negotiators, policy makers, and researchers.

The new dataset provides a rich source of data to reexamine existing tax treaty policy, inform negotiation positions, and assess treaty networks. For the first time, it provides a tool to analyse trends in the content of tax treaties, across individual agreements, over time, and between countries. To illustrate the value of such an approach, we replicate a study by Barthel, Busse, and Neumayer (2009), which found a positive association between the presence of a tax treaty and the bilateral stock of FDI.

We show that this effect is mainly driven by the withholding tax rates in the treaty rather than by other provisions affecting taxing rights such as permanent establishment. If the outcomes of this proof-of-concept replication are borne out in future research, this would suggest that negotiators can seek the maximum protection of source taxing rights in other parts of the treaty, knowing that this is unlikely to dilute investment-promoting impacts.

Authors

Martin Hearson

Martin Hearson is a Research Fellow at IDS, co-Research Director of the ICTD and the International Tax programme lead. His research focuses on the politics of international business taxation, and in particular the relationship between developed and developing countries. Before joining ICTD, Martin was a fellow in international political economy at the London School of Economics and Political Science, teaching courses on political economy and global financial governance.

Marco Carreras

Marco Carreras is an economist by training and works in development economics, focusing on development banks, agricultural economics, energy and corporate taxation. He is a post-doctoral fellow working on the DIGITAX team in the ICTD.

Anna Custers

Anna is an Economist at the World Bank. She focuses on fiscal policy in developing countries. In particular, on domestic resource mobilization, including both customs and tax reform, as well as the role of trust, morale, and equity in tax systems. Prior to joining the World Bank Anna worked with the Jameel Poverty Action Lab (J-PAL) in both India and France.
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