Who ends up paying when a bank's foreign income is taxed twice?
International Taxation and Cross-Border Banking
Harry Huizinga, Johannes Voget, Wolf Wagner (2014) · American Economic Journal: Economic Policy 6(2)
Article ↗ · Replication data ↗ (openICPSR)
The archive requires an account we do not hold, so the files were not opened. What follows rests on the published abstract and on this platform's own observations.
What the authors found
Huizinga, Voget and Wagner examine banks across 38 countries from 1998 to 2008. International double taxation of foreign-source bank income reduces banking-sector foreign direct investment, and — the striking result — is almost fully passed on into higher interest margins charged abroad. The incidence falls on customers in the subsidiary's country, who had no part in the tax arrangement between two other governments.
What our data adds
This database can see banking-sector FDI only as part of the aggregate, which is the first limitation, and it holds nothing at all on interest margins, which is the paper's outcome. The FDI table shows Singapore receiving 26.3 per cent of GDP in net inflows and Cyprus 27.1, both financial centres where a substantial share of the recorded flow will be banking-related — but the series does not decompose by sector, so that sentence is inference from what those economies are, not something read off the data.
| Figure | Value | Indicator |
|---|---|---|
| Singapore, FDI net inflows as a share of GDP | 26.3% | BX.KLT.DINV.WD.GD.ZS |
| Cyprus | 27.1% | BX.KLT.DINV.WD.GD.ZS |
Every figure here is computed from observations in this database and can be charted, downloaded or queried.
What this cannot show
Sectoral FDI is a genuine gap. The IMF Coordinated Direct Investment Survey provides it and is recorded in this platform's source register; it is not loaded. Bank interest margins would need the BIS or a commercial banking database. What we hold is the aggregate that the paper's variable is one component of, which is enough to say the question is unanswerable here and not enough for anything else.