Revenue Implications of Destination-Based Cash-Flow Taxation

Shafik Hebous, Alexander Klemm, Saila Stausholm

Research output: Working paperResearch

10 Downloads (Pure)

Abstract

We estimate the revenue implications of a Destination Based Cash Flow Tax (DBCFT) for 80 countries. On a global average, DBCFT revenues under unchanged tax rates would remain similar to the existing corporate income tax (CIT) revenue, but with sizable redistribution of revenue across countries. Countries are more likely to gain revenue if they have trade deficits, are not reliant on the resource sector, and/or—perhaps surprisingly—are developing economies. DBCFT revenues tend to be more volatile than CIT revenues. Moreover, we consider the revenue losses resulting from spillovers in case of unilateral implementation of a DBCFT. Results suggest that these spillover effects are sizeable if the adopting country is large and globally integrated. These spillovers generate strong revenue-based incentives for many—but not all—other countries to follow the DBCFT adoption.
Original languageEnglish
Place of PublicationWashington, D.C.
PublisherInternational Monetary Fund
Number of pages35
ISBN (Print)9781484392935
DOIs
Publication statusPublished - 2019
SeriesIMF Working Paper
Number2019/7
ISSN1018-5941

Keywords

  • Tax revenue
  • Destination-based cash flow tax
  • Border adjustment tax

Cite this

Hebous, S., Klemm, A., & Stausholm, S. (2019). Revenue Implications of Destination-Based Cash-Flow Taxation. Washington, D.C.: International Monetary Fund. IMF Working Paper, No. 2019/7 https://doi.org/10.5089/9781484392935.001
Hebous, Shafik ; Klemm, Alexander ; Stausholm, Saila. / Revenue Implications of Destination-Based Cash-Flow Taxation. Washington, D.C. : International Monetary Fund, 2019. (IMF Working Paper; No. 2019/7).
@techreport{7e87500c97824d708dbe46cce42132f8,
title = "Revenue Implications of Destination-Based Cash-Flow Taxation",
abstract = "We estimate the revenue implications of a Destination Based Cash Flow Tax (DBCFT) for 80 countries. On a global average, DBCFT revenues under unchanged tax rates would remain similar to the existing corporate income tax (CIT) revenue, but with sizable redistribution of revenue across countries. Countries are more likely to gain revenue if they have trade deficits, are not reliant on the resource sector, and/or—perhaps surprisingly—are developing economies. DBCFT revenues tend to be more volatile than CIT revenues. Moreover, we consider the revenue losses resulting from spillovers in case of unilateral implementation of a DBCFT. Results suggest that these spillover effects are sizeable if the adopting country is large and globally integrated. These spillovers generate strong revenue-based incentives for many—but not all—other countries to follow the DBCFT adoption.",
keywords = "Tax revenue, Destination-based cash flow tax, Border adjustment tax, Tax revenue, Destination-based cash flow tax, Border adjustment tax",
author = "Shafik Hebous and Alexander Klemm and Saila Stausholm",
year = "2019",
doi = "10.5089/9781484392935.001",
language = "English",
isbn = "9781484392935",
publisher = "International Monetary Fund",
type = "WorkingPaper",
institution = "International Monetary Fund",

}

Revenue Implications of Destination-Based Cash-Flow Taxation. / Hebous, Shafik; Klemm, Alexander; Stausholm, Saila.

Washington, D.C. : International Monetary Fund, 2019.

Research output: Working paperResearch

TY - UNPB

T1 - Revenue Implications of Destination-Based Cash-Flow Taxation

AU - Hebous, Shafik

AU - Klemm, Alexander

AU - Stausholm, Saila

PY - 2019

Y1 - 2019

N2 - We estimate the revenue implications of a Destination Based Cash Flow Tax (DBCFT) for 80 countries. On a global average, DBCFT revenues under unchanged tax rates would remain similar to the existing corporate income tax (CIT) revenue, but with sizable redistribution of revenue across countries. Countries are more likely to gain revenue if they have trade deficits, are not reliant on the resource sector, and/or—perhaps surprisingly—are developing economies. DBCFT revenues tend to be more volatile than CIT revenues. Moreover, we consider the revenue losses resulting from spillovers in case of unilateral implementation of a DBCFT. Results suggest that these spillover effects are sizeable if the adopting country is large and globally integrated. These spillovers generate strong revenue-based incentives for many—but not all—other countries to follow the DBCFT adoption.

AB - We estimate the revenue implications of a Destination Based Cash Flow Tax (DBCFT) for 80 countries. On a global average, DBCFT revenues under unchanged tax rates would remain similar to the existing corporate income tax (CIT) revenue, but with sizable redistribution of revenue across countries. Countries are more likely to gain revenue if they have trade deficits, are not reliant on the resource sector, and/or—perhaps surprisingly—are developing economies. DBCFT revenues tend to be more volatile than CIT revenues. Moreover, we consider the revenue losses resulting from spillovers in case of unilateral implementation of a DBCFT. Results suggest that these spillover effects are sizeable if the adopting country is large and globally integrated. These spillovers generate strong revenue-based incentives for many—but not all—other countries to follow the DBCFT adoption.

KW - Tax revenue

KW - Destination-based cash flow tax

KW - Border adjustment tax

KW - Tax revenue

KW - Destination-based cash flow tax

KW - Border adjustment tax

U2 - 10.5089/9781484392935.001

DO - 10.5089/9781484392935.001

M3 - Working paper

SN - 9781484392935

BT - Revenue Implications of Destination-Based Cash-Flow Taxation

PB - International Monetary Fund

CY - Washington, D.C.

ER -