The Cost And Benefits Of Tax Treaties With Investment Hubs

  • Date Published 14/05/2025
The Cost And Benefits Of Tax Treaties With Investment Hubs
The Cost And Benefits Of Tax Treaties With Investment Hubs

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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The Cost And Benefits Of Tax Treaties With Investment Hubs

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