International Taxation

International Taxation

• Authorship team: Rachel Griffith, James Hines, and Peter Birch Sørensen.
• The chapter assesses the role of international considerations in tax design, emphasizing issues related to capital taxation.
• In truth, all of the volume’s chapters have international components; this one is perhaps merely the most explicit.

Importance of International Considerations in UK tax policy

• The scope and magnitude of foreign direct investment.
• The (rising) significance of cross-border share ownership.
• Imports and exports of goods and services.
• Magnitude of international factor payments, including interest, rents, and royalties.
• Importance of footloose activities, such as R&D.

Who works for whom?

• Note: Figure shows annual outward FDI flows in 2000 US$ billion
• Source: OECD

• Figure 1

• Note: Figure shows annual outward FDI flows as a % GDP
• Source: OECD

• Figure 2

• Note: Figure shows % of UK listed ordinary shares owned by Rest of World. UK offshore islands were re-classified to RoW in 1997
• Source: ONS, Share Ownership 2004.

• Figure 3

• Note: Figure shows Balance Sheet nominal values at the end of the year in £bn, HLXV only available from 1987
• Source: The Pink Book, 2006, Tables 1.3 or 8.1, http://www.statistics.gov.uk/statbase/TSDSeries1.asp

• Figure 4 UK international investment position - investment abroad

• Note: Figure shows Balance Sheet nominal values at the end of the year in £bn, HLXW and HLYD only available from 1987
• Source: The Pink Book, 2006, Tables 1.3 or 8.1, http://www.statistics.gov.uk/statbase/TSDSeries1.asp

• Figure 5 UK international investment position - investment in the UK

• Note: Figure shows nominal trade flows in £bn
• Source: The Pink Book, 2006, Tables 3.8, http://www.statistics.gov.uk/statbase/TSDSeries1.asp

• Figure 6 UK royalty and licence fees

• Note: Figure shows nominal trade flows in £bn
• Source: The Pink Book, 2006, Tables 2.1 and 3.1, http://www.statistics.gov.uk/statbase/TSDSeries1.asp

• Figure 7 UK trade in goods and services

• Source: Abramovsky, Griffith and Harrison (2005)
• values have been deflated by the GDP deflator and re-based to equal 100 in 1996.

• Figure 8: R&D by UK plc compared to R&D in the UK

• R&D by UK PLC
• conducted anywhere in the world

• R&D in the UK
• by UK and foreign firms

• Figure 9: share of BERD undertaken in the UK financed from abroad

• Source: Authors’ calculations using OECD MSTI.

• Figure 10: share of BERD undertaken in the UK financed from abroad

• Source: OECD Main Science and Technology Indicators, 2004