Tax impacts on MNE investment: evidence for cross-border relocation 

Tax impacts on MNE investment: evidence for cross-border relocation | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Tax impacts on MNE investment: evidence for cross-border relocation Tibor Hanappi, David Whyman This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4456835/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Multinational enterprises (MNEs) differ from other corporations—domestic groups or standalone entities—in various ways. Their organizational structures span large numbers of jurisdictions, which is likely to affect how they react to country-specific changes in taxation. We investigate MNE investment responses to taxation within and across a large number of countries using MNE entity- and group-level data. Our results show that MNE tax responsiveness is distinctively heterogenous within countries and that there are investment spillovers to and from countries that did not experience a tax change themselves, confirming the specific nature of MNE investment responses to taxation. Furthermore, it suggests that tax increases at host jurisdiction level may not lead to statistically and quantitatively significant investment responses at the MNE group level, while showing some evidence of positive cross-border tax effects on investment by entities in other jurisdictions within the same MNE group. This finding suggests that the well-document negative relationship between taxation and MNE investment within a host jurisdiction might partially mask the MNE rebalancing the location of its investment to other host jurisdictions in response to changes in cross-jurisdictional tax rate differentials rather than purely decreasing its investment globally. Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4456835","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":305606129,"identity":"17335a1a-7b8f-4f61-9969-f28793fde681","order_by":0,"name":"Tibor Hanappi","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAwklEQVRIiWNgGAWjYDACCQjFw8/MwPCBKB08MC2SzQyMM0jSwmBwgFgt9tLNzx783HFHxvg4d2IDQ8U9uwaCtsgcMzfsPfOMx+ww78YGhjPFyYS1SCSYSfC2HQZp2f6AsS0hmaDDeCTSv0n+BWoxbgbaQqSWHDNpkC0GzBAtdoS13Mgpk5YF+kUC5JeEMwkJBLWwz0jfJvl2xx17/v6zGxs+VCTYE9QCBowNByAMoBXAkCZJCxAQacsoGAWjYBSMJAAAfIo8kgqOWmgAAAAASUVORK5CYII=","orcid":"","institution":"International Monetary Fund","correspondingAuthor":true,"prefix":"","firstName":"Tibor","middleName":"","lastName":"Hanappi","suffix":""},{"id":305606131,"identity":"8a982b64-d090-4f7d-bb75-6dba9e3892b2","order_by":1,"name":"David Whyman","email":"","orcid":"","institution":"Princeton University","correspondingAuthor":false,"prefix":"","firstName":"David","middleName":"","lastName":"Whyman","suffix":""}],"badges":[],"createdAt":"2024-05-21 19:41:29","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-4456835/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4456835/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":57794427,"identity":"8c919527-1483-46d6-9360-9254f28a62b2","added_by":"auto","created_at":"2024-06-05 18:34:31","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1241729,"visible":true,"origin":"","legend":"","description":"","filename":"TaxMNEInvestmentHW2024.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4456835/v1_covered_396142c7-c98d-497e-828d-c1f44e7962cd.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":" Tax impacts on MNE investment: evidence for cross-border relocation ","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-4456835/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4456835/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"Multinational enterprises (MNEs) differ from other corporations—domestic groups or standalone entities—in various ways. 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