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Do thin capitalization rules crowd out multinational firms in Africa? Looking towards efficiency in revenue mobilization

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  • Ludovic Feulefack Kemmanang

    (Research Fellow, United Nations Economic Commission for Africa)

Abstract

This study investigates whether the implementation of the thin capitalization rules (TCRs) in Africa could jeopardize its already insignificant attractiveness and assess the impact of tax administration efficiency in revenue mobilization. Analyzes are carried out through the two-step system GMM, using data from 33 African countries between 2005 and 2018. The study finds that in Africa, the TCRs have a deterrent effect on multinationals' decision to set up. The study also found that local tax administrations' level of efficiency in revenue mobilization cushioned the impact of TCRs on FDI inflows on average in the sample.

Suggested Citation

  • Ludovic Feulefack Kemmanang, 2021. "Do thin capitalization rules crowd out multinational firms in Africa? Looking towards efficiency in revenue mobilization," Economics Bulletin, AccessEcon, vol. 41(2), pages 594-603.
    • Handle: RePEc:ebl:ecbull:eb-20-01149
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    References listed on IDEAS

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    More about this item

    Keywords

    Thin capitalization rules; multinationals; revenue mobilization; Africa;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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