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Bilateral tax treaties network and global value chain position

Author

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  • Rong, Xueyun
  • Yan, Wenhong
  • Yang, Yiyun

Abstract

This study investigates the effect of bilateral tax treaty (BTT) network centrality on countries’ global value chain (GVC) positions using a panel dataset of 62 economies from 2007 to 2021. Employing an instrumental variable approach, we find that higher BTT network centrality reduces a country's overall GVC position, with heterogeneous effects across sectors and participation types (forward and backward). The results suggest that increased BTT network centrality may facilitate production fragmentation and enable tax planning strategies (treaty shopping), leading to a distortion in the distribution of value-added across countries in GVCs.

Suggested Citation

  • Rong, Xueyun & Yan, Wenhong & Yang, Yiyun, 2024. "Bilateral tax treaties network and global value chain position," Finance Research Letters, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:finlet:v:68:y:2024:i:c:s1544612324010055
    DOI: 10.1016/j.frl.2024.105975
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    More about this item

    Keywords

    Bilateral tax treaties; Global value chains; Network centrality; Treaty shopping; Instrumental variable;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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