Taxes and the Location of Targets

Wiji Arulampalam, Michael P. Devereux and Federica Liberini

Memo 02/2017


We use firm-level data to investigate the impact of taxes on the international location of targets in M&A allowing for heterogeneous responses by companies. The statutory tax rate in the target country is found to have a negative impact on the probability of an acquisition in that country. In addition, the estimated size of the effect is found to depend on whether (i) acquirer is a domestic or a multinational enterprise; (ii) the acquisition is domestic or cross-border; and (iii) the acquirer's country has a worldwide or territorial tax system


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Published Feb. 28, 2017 3:54 PM - Last modified Feb. 2, 2019 4:33 PM