Tax holidays and profit-repatriation rates for FDI firms
The case of the Czech Republic
Bibliographic Data
| ID | 22231989 |
|---|---|
| Authors | Duong Hoang Vu (0000-0003-4564-5163), Vu Hoang Duong (0000-0002-2651-2923, Tomas Bata University in Zlin, corresponding author), Drahomíra Pavelková (0000-0003-1399-6129, Tomas Bata University in Zlin), Milan Damborský (0000-0002-8366-3656, Tomas Bata University in Zlin) |
| Year | 2023 |
| Volume | 10 |
| Issue | 1 |
| Publication date | 2023-11-20 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Humanities and Social Sciences Communications (JOURNAL) |
| Journal identifiers | ISSN: 2662-9992 • E-ISSN: 2662-9992 |
| Publisher | Springer Science and Business Media LLC (PUBLISHER) |
| DOI | 10.1057/s41599-023-02369-4 |
| OpenAlex | W4388824464 |
| Language | EN |
| References cited | 48 |
The Czech Republic has been a promising destination for foreign investors due to its locational advantages and tax-incentive policy. However, the profit-repatriation rate in the country is extremely high, which results in less capital being available for development. This paper studies the differences in profit-repatriation rates among FDI (foreign direct investment) firms in the Czech Republic after the appearance of tax-holiday incentives from 2008 to 2019. The precondition is to find the determinants of the repatriation rate of FDI firms, and the results show that the profit repatriation rate of FDI firms is positively affected by firm size and the liquidity of firms and negatively affected by investment opportunities and leverage. The paper divides FDI firms into several groups and examines the differences in repatriation rates between them before revealing the determinants of these differences. Firstly, there is no difference in profit repatriation between FDI firms with tax incentives and those without tax incentives. Next, we divide the FDI firms with tax incentives into two groups: those who still enjoy the tax incentives and those who no longer enjoy the tax incentives. The FDI firms with tax incentives that are in the tax-incentive period repatriate less than FDI firms with tax incentives that are not in the tax period any longer. The difference stems from the endowment effect, and three determinants that can reduce the repatriation rate of FDI firms that are no longer in the tax period are investment opportunities, leverage, and firm size
Business · Economics · Foreign direct investment · Incentive · International economics · Labour economics · Macroeconomics · Market economy · Microeconomics · Monetary economics · Repatriation · Tax rate · Corporate Finance and Governance · Corporate Taxation and Avoidance · Taxation and Compliance Studies
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| Citation velocity | historical |
|---|---|
| Highly cited | No |