Does Income Tax Competition Remain Relevant In Attracting FDI? The Case of ASEAN Countries
Thi Lam Anh Nguyen
Banking Academy of Vietnam, Hanoi, Vietnam ORCID: 0000-0002-9746-341X
https://doi.org/10.47191/jefms/v7-i8-24ABSTRACT:
This study evaluates the impact of corporate income tax on foreign direct investment (FDI) in 6 Southeast Asian countries from 1999 to 2022, under the context of the preparation for the Global minimum tax application in many countries in and outside the region. Using classical panel data models (Fixed Effects and Random Effects model), the findings show no significant impact of corporate income tax on FDI inflows to ASEAN nations. Observing the effects of other factors on foreign investments, the study discovers the significant role of infrastructure in attracting FDI for the entire sample. Additionally, we find significant positive impacts of trade openness and significant negative impacts of political stability on FDI inflows for the developing nations in the area. Interestingly, we find positive relationships between economic shocks and FDI and the region's quick recovery of foreign investment flows. Based on the results, we provide several valuable academic and policy suggestions.
KEYWORDS:
corporate income tax, tax competition, FDI, ASEAN
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