Research Information System
Gazi Journal of Economics &Business, vol.8, no.1, pp.115-123, 2022 (Peer-Reviewed Journal)
The aim of this study is to investigate tax competition in the EU
countries using the panel data method from 1996 to 2019. Since the
EU countries primarily attempt to attract foreign direct investment
through the alteration of corporate tax revenues or rates, the corporate
tax rate is used as an indicator of tax competition. This study differs
from previous studies by examining the effect of corporate tax on
foreign capital investment according to the threshold value of per
capita income of the countries. The main result shows the existence of
tax competition in the European Union. Moreover, the threshold value
of per capita income was found to be $30,000, according to the results
achieved. Changes in the corporate tax rate above and below the
threshold value have different effects on foreign direct investment.
This finding indicates that tax competition is fiercer in the countries
with lower economic growth rates. However, this negative association
becomes positive in the countries with per capita income which is
more than this value.