Host country coverage: There are 26 host countries in the sample: Australia, Austria,
Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hun-
gary, Ireland, Italy, Japan, Korea, Luxembourg, Netherlands, Norway, New Zealand,
Poland, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States.
2. Data on country size and factor endowments: Real GDP figures at constant
U.S. dollars (base year is 2000) are collected from the World Bank’s World Develop-
ment Indicators. Gross tertiary (and, alternatively, gross secondary) school enrollment
figures from the same source serve as our measure of a country’s skilled labor endow-
ment. Capital stocks are available from Baier, Dwyer and Tamura (2002). The sum of
professional, technical, kindred and administrative workers is taken from the Yearbook
of Labor Statistics published by the International Labor Organization (ILO).
3. Tax rates, depreciation allowances, tax treaties: Information on tax codes and
bilateral tax treaties are primarily taken from the following online databases of the
International Bureau of Fiscal Documentation (IBFD):
• Central/Eastern Europe - Taxation & Investment
• Corporate Taxation in Europe
• Tax News Service
• Tax Treaties Database
Additionally, we exploit information of tax law from the following publications:
• Baker&McKenzie, 1999. Survey of the effective tax burden in the European Union,
Amsterdam.
• Commission of the European Communities, 1992. Report of the committee of
independent experts on company taxation, Brussels and Luxembourg.
• Commission of the European Communities, 2001. Towards an internal market
without tax obstacles. A strategy for providing companies with a consolidated
corporate tax base for their EU-wide activities, COM (2001) 582 final, Brussels.
• Ernst&Young, 2003. Company taxation in the new EU Member states survey of
the tax regimes and effective tax burdens for multinational investors, Frankfurt
am Main.
• OECD, 1991. Taxing Profits in a Global Economy: Domestic and International
Issues, Paris: Organisation for Economic Co-operation and Development.
• PriceWaterhouseCoopers, 1999. Spectre: Study of potential of effective corporate
tax rates in Europe, Report commissioned by the Ministry of Finance in the
Netherlands, Amsterdam.
• Yoo, K.-Y., 2003. Corporate taxation of foreign direct investment income 1991-
2001, OECD Economics Department Working Paper No. 365, Paris: Organisa-
tion for Economic Co-operation and Development.
The computation of the net present value of depreciation allowances is derived in King
and Fullerton (1984). The corresponding information on the number of years for which
depreciations can be claimed (’depreciation rate’), the depreciation system (i.e., straight
line or declining balance schedule) and on (general) investment incentives (e.g., extra
first-year allowances in Australia, Poland or Spain) are taken from the above mentioned
sources. In cases where a firm has several opportunities to choose from, we use the most
generous one.
4. Descriptive statistics: Table A1, Table A2, Table A3
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