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The Effect of Intellectual Property Boxes on Innovative Activity & Effective Tax Rates

Bornemann, Tobias and Oßwald, Benjamin (2018) The Effect of Intellectual Property Boxes on Innovative Activity & Effective Tax Rates. WU International Taxation Research Paper Series, 2018-03. WU Vienna University of Economics and Business, Universität Wien, Vienna.

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We investigate whether the adoption of an intellectual property box increases innovative activity and what type of firms benefit. We examine the adoption of the intellectual property box in Belgium because it allows us to cleanly identify the impact on innovative activity and effective tax rates. Our results indicate an overall increase in innovative activity as proxied by patent grants, the efficiency with which firms apply for and receive patents, and employment. We also provide evidence that, while firms with patents on average enjoy lower effective tax rates, the greatest financial benefits accrue to multinational firms without income shifting opportunities, followed by domestic firms. Multinational firms with income shifting opportunities do not significantly benefit from the intellectual property box.

Item Type: Paper
Additional Information: Bornemann and Osswald gratefully acknowledge financial support by the Austrian Science Fund (FWF): W1235-G16. Laplante gratefully acknowledges support from the Wisconsin School of Business. Editors: Eva Eberhartinger, Michael Lang, Rupert Sausgruber and Martin Zagler (Vienna University of Economics and Business), and Erich Kirchler (University of Vienna)
Keywords: IP boxes, tax incentive, tax avoidance, income shifting
Classification Codes: JEL H21, H25
Divisions: Departments > Finance, Accounting and Statistics
Depositing User: Mohammad Al Hessan
Date Deposited: 15 Feb 2018 13:34
Last Modified: 16 Aug 2018 09:55
URI: http://epub.wu.ac.at/id/eprint/6059


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