If you were a multinational firm, where would you locate your activities and investments? A handful of economic factors play a role in this decision, but for tax-related aspects, you would think in terms of an average effective tax rate. It's not that complicated; let me explain.
Taxes matter. Taxes specifically play a role in where multinational firms locate their economic activity, for example, plants and equipment. In the debate on corporate tax reform, however, the discussion of individual countries' corporate tax rates and how they affect multinational firms' decisions to invest focuses almost exclusively on the statutory tax rate. Although the statutory tax rate in some sense is a useful proxy, it's actually often quite distinctly different in magnitude from the rate that is more meaningful: the average effective tax rate.
http://www.forbes.com/sites/thetaxfoundation/2015/04/14/how-taxes-affect-investment-decisions-for-multinational-firms/
My opinion on this matter:
If I was a multinational firm, I would choose the Netherlands. The Netherlands is globally famous for being one of the premier locations for international business operations. In addition, the Dutch government has created a competitive tax regime that stimulates entrepreneurship and foreign investment in the Netherlands. Not only the corporate tax rates are lower in relation of its European neighbours, there are also numerous features that make it attractive for foreign companies to locate operations in the Netherlands. Some examples of attractive features: Advance Tax Ruling policy (offering certainty on future tax positions), absence of statutory withholding taxes on outgoing interest and royalty payments, absence of capital tax, ... .
Taxes matter. Taxes specifically play a role in where multinational firms locate their economic activity, for example, plants and equipment. In the debate on corporate tax reform, however, the discussion of individual countries' corporate tax rates and how they affect multinational firms' decisions to invest focuses almost exclusively on the statutory tax rate. Although the statutory tax rate in some sense is a useful proxy, it's actually often quite distinctly different in magnitude from the rate that is more meaningful: the average effective tax rate.
http://www.forbes.com/sites/thetaxfoundation/2015/04/14/how-taxes-affect-investment-decisions-for-multinational-firms/
My opinion on this matter:
If I was a multinational firm, I would choose the Netherlands. The Netherlands is globally famous for being one of the premier locations for international business operations. In addition, the Dutch government has created a competitive tax regime that stimulates entrepreneurship and foreign investment in the Netherlands. Not only the corporate tax rates are lower in relation of its European neighbours, there are also numerous features that make it attractive for foreign companies to locate operations in the Netherlands. Some examples of attractive features: Advance Tax Ruling policy (offering certainty on future tax positions), absence of statutory withholding taxes on outgoing interest and royalty payments, absence of capital tax, ... .
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