Economics, public finance, domestic revenue mobilisation & budget support

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The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa (IMF Working Paper)


Abstract: This paper investigates the costs and benefits of concluding double tax treaties with investment hubs. Based on a sample of 41 African economies from 1985–2015, the results suggest that signing treaties with investment hubs is not associated with additional investments; yet, these treaties tend to come with nonnegligible revenue losses. Building on a theoretical model, the paper investigates the role of treaty shopping in driving nominal investment flows and provides indirect evidence for its importance in the sample.

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Xavier Le Mounier
25 October 2018

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