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Relationship between Foreign Direct Investment and Company Taxation: Case of Bangladesh

Author

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  • Ahmed, Alim Al Ayub

    (Assistant Professor, Faculty of Business, ASA University Bangladesh, Shyamoli, Dhaka-1207, BANGLADESH)

Abstract

This study examines the association between foreign direct investment and company taxation in Bangladesh from 2001-2010. The annual reports were sourced from the Bangladesh Bank Bulletin, Bangladesh Bureau of Statistics (BBS), and World Bank, which were analyzed using Descriptive Statistics, correlation, and regression. The independent variable corporate taxation was measured using corporate tax rate (CTR), whilst the dependent variable foreign direct investment was measured using FDI net inflow (% of GDP). GDP, exchange rate, and inflation rate were used as control variables. The result showed a significant negative relationship between CTR and FDI, whereas exchange rate and FDI indicated an insignificant negative relationship. On the other hand, GDP was positively insignificantly related to FDI, whilst inflation had a significant positive association with FDI. Based on the result, the study suggested that there is required for the government to lo trim down the corporate tax rate to create a center of attention for FDI in the country.

Suggested Citation

  • Ahmed, Alim Al Ayub, 2016. "Relationship between Foreign Direct Investment and Company Taxation: Case of Bangladesh," American Journal of Trade and Policy, Asian Business Consortium, vol. 3(1), pages 11-14.
    • Handle: RePEc:ris:ajotap:0097
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    More about this item

    Keywords

    Company Taxation; Corporate Tax Rate; Foreign Direct Investment (FDI); GDP; Bangladesh;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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