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How corporate tax impact decisions in merger and acquisition deals. The phenomenon of "profit shifting"
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Resumo(s)
Using data on mergers and acquisitions, this paper aims at evaluating
the impact of corporate tax on the type of M&A deals. The results
suggest the existence of a negative relationship between the corporate
tax rate charged in the target’s country and the probability of having a
merger/acquisition corresponding to 100% of the target company.
Suggesting that cross-border deals, where the target’s country is
characterized by lower tax rates, may result in profitability gains for
the acquiring company. Moreover, benefits and implications of a
harmonized corporate tax base are presented as a possibility for
hedging against “profit shifting” practices resulting in a reduction of
cross-border M&A deals.
Descrição
Palavras-chave
Mergers and acquisitions Corporate tax rate Profit shifting Consolidated corporate tax base.