The incentive to locate a multinational firm: The effect of tax reforms in the United Kingdom

The advent of the single European market has focused attention on the structure of international tax incentives for the location of multinational business. Multinationals that channel foreign income through the United Kingdom have been likely to suffer double taxation in the form of surplus advance corporation tax when they subsequently distribute the income to a foreign parent. This paper shows that the 1993 U.K. tax reforms create a significant reduction in the tax cost of locating in the United Kingdom, relative to traditionally favorable tax regimes such as the Netherlands.