Tax Justice Blog

UBS: invest in food, water and death

January 28, 2014   Blog

From the excellent weekly newsletter of the U.S. inequality-watching organisation Too Much:

“Simon Smiles, the global chief investment officer at the Swiss bank UBS, usually only ladles out advice to investors worth at least $30 million. But Smiles has just done an interview that shares a bit of what he’s telling his clients. Increasing “international pressure on banking secrecy and tax avoidance,” says Smiles, is complicating life for the ultra rich, and they’re searching for simple “certainties.” The advice from Smiles: Invest in “food, water, and death.”

IMF: tax cuts don’t attract investment

January 28, 2014   Africa, Blog, Tax Wars, Taxing corporations

From the IMF, a Working Paper. It doesn’t make quite the sweeping claim suggested in the headline, but still.

“Using manufacturing and services firm-level data for 30 sub-Saharan African (SSA) countries, this paper shows that taxation is not a significant driver for the location of foreign firms in SSA, while other investment climate factors, such as infrastructure, human capital, and insitutions, are. By analyzing disaggregate FDI data, the paper establishes that, while there is considerable contrast in behavior between vertical FDI (foreign firms producing for export) and horizontal FDI (foreign firms producing for local markets), taxation is not a key determinant for either type of FDI.”

Our emphasis added. We would have thought that you could find this sort of information on sites such as this one – after all, would you site a car assembly plant in Syria if it offered a fabulous tax break? – but it is still worth measuring these things.

And of course it isn’t just the IMF saying this. A new paper by Francis Weyzig examining the impact of Dutch tax treaties on developing countries has a pithy summary of the research out there:

“Empirical studies show that lower taxes are largely ineffective to attract FDI; determinants like good governance and infrastructure are more important. “

(hat tip: Indra Römgens)

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