This paper uses an alternative approach to measure the revenue costs of tax treaties between developed and developing countries. Using a dyadic panel dataset of asymmetric DTTs between OECD members and developing economies, the paper investigates the effect of double tax relief method at the residence country of the investor, and the inclusion of tax sparing provisions, on the difference between WHTs on passive income under developing countries’ domestic tax law and WHT rates negotiated in tax treaties with OECD members. Results of the empirical analysis suggest first, that the difference between domestic and negotiated WHTs on portfolio dividends is higher when the OECD member uses the credit method, as compared to when it uses the exemption method. Second, results suggest that the inclusion of the tax sparing provisions vanishes the positive effect of the credit method on the difference between domestic and negotiated WHTs on portfolio dividends.

This paper provides the first evidence of the effect of CbCR in developing countries, mainly focusing on the market response of the African stock market to the country-by-country reporting regulation. Using the event study methodology, the results indicate a negative significant market response for firms subject to CbCR requirements. Tax-aggressive firms show a pronounced significant negative response around the event date, suggesting that investors anticipate increased tax liabilities due to heightened scrutiny of their tax planning practices, ultimately reducing future profits. Cross-listed firms exhibit a stronger significant market response in foreign markets than in domestic markets, highlighting differing investor reactions. This underscores the variation in how foreign and domestic investors process similar information across different markets. Additionally, firms with compliance issues show a significant market response. This paper provides an understanding of how regulatory transparency influences firms with different characteristics in developing markets.

Capital mobility has long preoccupied international tax scholars. According to prevailing narratives, mobile capital force countries to race to the bottom in competing to attract investment, and enables multinationals to shift profits. This paper argues, however, that mobile capital’s significance for international taxation may be largely an illusion.

First, the rising importance of intangibles makes capital less, not more, mobile. Intangibles seem mobile only because the rights to tax returns to them are arbitrarily assigned, but that is a fact about tax law itself, not an independent fact that tax policy responds to. Second, empirical evidence for tax competition is weak, and this is just what theories about multinationals would predict. Third, modelling profit shifting as capital mobility generates conceptual confusion and is often factually inaccurate. Fourth, the international provisions of the corporate income tax generate externalities that likely dominate those from the setting of rates and domestic tax base.

This paper determines the impact of DTAs on foreign direct investment (FDI) in Nepal from 1990 to 2020. A correlational fixed-effects estimation shows a high correlation between DTAs and FDI, with investment flows from countries signing a DTA varying from NRs.796 million to NRs. 2,002 million per year (USD 6 -18 million). The paper further estimates the average treatment effect of treatment using synthetic difference-in-difference (SDID), which suggests a positive but statistically insignificant difference between FDI from DTA countries (control) and countries without a DTA (treatment). The qualitative assessment shows that policymakers are willing to support DTAs to attract foreign investment. Yet, there seems to be limited capacity to negotiate a new treaty or review an old one. Further, the paper presents an assessment of revenue loss from a single industry (airlines), revealing that the country foregoes an estimated NRs635 million (USD 5 million) annually because of DTAs.