• 検索結果がありません。

The Effect of Moving to a Territorial Tax System on Profit Repatriations: Evidence from Japan

N/A
N/A
Protected

Academic year: 2024

シェア "The Effect of Moving to a Territorial Tax System on Profit Repatriations: Evidence from Japan"

Copied!
35
0
0

読み込み中.... (全文を見る)

全文

Japan had a worldwide tax system similar to that in the United States, but switched to a territorial tax system by introducing a foreign dividend exemption in April 2009. In turn, the dividend exemption increased dividend repatriations by foreign subsidiaries that had paid dividends under the worldwide tax system. Thus, with the introduction of the dividend exemption system, Japan switched to a territorial tax system.

2012) investigate the impact of the Japanese dividend exemption on dividends received by Japanese parent firms from their foreign subsidiaries. First, as we will explain in detail in the next section, most Japanese multinationals learned about the introduction of the dividend exemption system before the end of the 2008 accounting year. Thus, they may have reduced dividend repatriations in 2008. pending the approval of the dividend exemption system and increase them in 2009.

The following section describes the background and provisions of the dividend exemption enacted in Japan. In summary, regardless of the introduction of the dividend exemption system, the net tax cost of transferring one dollar of a royalty can be written as. In the following sections, we empirically examine the response of repatriated dividends to the introduction of the dividend exemption regime and test hypotheses H1-H4.

Although the dividend exemption system does not appear to encourage the repatriation of most foreign companies that have not paid dividends under the global tax system, a small proportion.

Basic Speci…cations

We also control for foreign tax rates that could directly or indirectly affect repatriation behavior, including statutory tax rates and withholding tax rates on dividends, interest and royalties. To account for ... rm-specific ... c payoff capacity, we will control for appropriate returns in the next section.20. As defined in the previous section, Pijct is the difference between the Japanese statutory tax rate and the average branch tax rate, plus the average branch tax rate if the parent company is in a surplus position.21 Withholding tax rates on dividends, royalties and interest payments in the country in one year.

Therefore, it is difficult to identify dividends that did not qualify for dividend exemption in the 2009 data. Based on the hypotheses in the previous section, we expect the signs of the main parameters to be as follows. If dividend repatriation becomes more sensitive to withholding tax rates on dividends, as assumed in H3, the coefficient (DEt wDct) would be estimated as negative (2 < 0).

The signs of the coefficients on withholding tax rates and statutory tax rates will depend on how strongly dividends substitute for royalties or interest as an alternative means of repatriating profits. 22 We collect information on withholding tax rates on dividends, royalties and interest from the Japan External Trade Organization (JETRO) database, J-FILE (http://www.jetro.go.jp/world /search/cost/). This data provides up-to-date information on the withholding tax rates of 75 countries for 2011.

We also collect information on withholding tax rates in 46–51 countries for 2007–2010 from the reports published by JETRO (http://www.jetro.go.jp/world/reports/). To supplement the information on the withholding tax rates for the countries not covered by JETRO's data, in cases where Japan has tax treaties with these countries, we use the withholding tax rates stipulated in the tax treaties. Finally, our data includes information on withholding tax rates in 53 countries from 2007 to 2009, which is used in our current analysis.

23 Data on statutory corporate income tax rates are obtained from the KPMG Corporate and Indirect Tax Survey 2011. We note that for the assessment of ... fixed effects, the coefficients of withholding tax rates and statutory tax rates would not be estimated precisely because are time-invariant in most countries in our data. The estimated coefficient on the tax price of dividends (Pijct) is negative and statistically different from zero at the one- or ...five percent level in the Tobit models.

Dividend Payments as a Fraction of the Total Payments to Japanese Investors

The Impact of Dividend Exemption on Extensive and Inten- sive Margins

The fact that the coefficients on DEt are significantly positive and increase at higher percentages of the distribution of dividend payments implies that there is a heterogeneity in the response to the dividend exemption that is not captured in the baseline specifications. Because dividends are distributed from after-tax profits and retained earnings, dividend payments as well as their response to dividend exemption may differ depending on the profitability of foreign firms.28 To allow for heterogeneity in pro… …for foreign firms, we incorporate pre-tax pro…t scaled with a corresponding sale (recurring pro…tmargin), denoted by Pro…tijct, in the dividend regression equation and examines how dividend repayments respond to ¤really to the saved difference between the Japanese statutory tax rate and the subsidiary average tax rate (Pijct), the withholding tax rate on dividends ( wctD) and the dividend exemption (DEt) depending on the profitability of foreign a¢ associations. Pro…tijct, (Pro…tijct Pijct), (Pro…tijct wDct), (DEt Pro…tijct), (DEt Pro…tijct Pijct) and (DEt Pro…tijct wctD) using a Tobit procedure, OLS … xed-e¤ects estimation and trimmed least squares estimator developed by Honoré (1992) and Alan, Honoré, Hu and Leth-Pedersen (2011).29.

28One could argue that not only profitability but also productivity can influence dividend payments. Therefore, due to limited data availability, we conclude that profitability reflects the productivity of the foreign partner. 29After-tax profits are a more direct measure of the profitability of foreign partners than before-tax profits.

However, we do not use after-tax benefits because they may be endogenous to dividend policies. Foreign a¢ liates that pay more dividends compared to other tax-deductible payments (royalty or interest) will have lower after-tax profits than foreign a¢ liates that use the tax-deductible payments more intensively. Note, however, that while the coefficient on DEt is still negative or estimated to be not significant ... different from zero, the interaction term of DEt and Pro...tijct is positive in all specifications and significant at the one - and ...ve -percent levels in specifications (6) and (4), respectively.

This result implies that more pro…table …rms increase their dividend repatriations in response to the introduction of the dividend exemption regime. Because more pro…table …rms are more likely to pay dividends, this result is also consistent with the results of the quantile regressions in the previous section. We also note that the estimated coefficient on the term (Pro...tijct Pijct) tends to be negative.

The estimated coefficients on Pro…tijct and (DEt Pro…tijct) are positive in all specifications and significantly different from zero in most of these specifications. We confirm that more profitable companies use dividends more intensively as a means of repatriation compared to other payment methods under the new exemption system. We also find that the estimated coefficients on (DEt ct) are positive and significant in specifications (1) and (4).

The Strong Response from Foreign A¢ liates in the United States

This result may suggest that the dividend exemption has some impact on a foreign country's payment mode decisions—how much to pay in terms of dividends, royalties, and interest given total payments—in lower-tax countries, even why the size of their dividend payments did not increase. We provide the first evidence about the behavioral response of multinational corporations to the transition from a worldwide income tax system to a territorial tax system by studying Japan's dividend exemption. However, despite the fact that the dividend exemption significantly reduced corporate tax liabilities for repatriated dividends in Japan, the response of many Japanese citizens to the dividend exemption is heterogeneous.

We … find no evidence that the dividend exemption system stimulated dividend repatriations from the typical …rm that paid no dividends under the global tax system. While the extensive margin was unchanged, the dividend exemption system stimulated dividend repatriations from foreign a¢ liates that paid dividends under the global tax system (the intensive margin). We also find that more pro… table … companies paid larger amounts of dividends under the global tax system and further increased dividend payments in the … first year of the new exemption system.

Japan's global tax system is similar to the US, and both countries have the highest corporate tax rates among OECD countries. First, the effect of the dividend exemption on profit repatriations should depend significantly on the share of foreign affiliates in excess credit positions. Since these related companies do not face repatriation taxes (Pijct) in their home countries under the global tax system, their repatriation behavior would not be significantly changed by the introduction of the dividend exemption.

Foreign companies in those countries may be less liable to the dividend exemption because the tax saving provisions can significantly reduce their repatriation tax costs under the worldwide tax system. However, even with these considerations in mind, ...our findings about the heterogeneous response and different impact of the dividend exemption on extensive margin and intensive margin are of value. As we will show in the next subsection, the dividend exemption lowers the repatriation tax rates on dividends.

These findings imply that Japan's foreign dividend exemption will stimulate dividend repatriations in two ways. As we will show in the next subsection, the dividend exemption lowers the repatriation tax rate, and as a result, Japanese MNCs face the same lowered repatriation tax after the introduction of the dividend exemption system ( D1 >. Bringing It Home: A Study of the incentives surrounding the repatriation of foreign earnings under the American Jobs Creation Act of 2004.” Journal of Accounting Research.

The Initial Impact of the 2003 Reduction in the Dividend Tax Rate." Working Paper, University of Pennsylvania. Examining Investors' Expectations Regarding Tax Savings on Repatriation of Foreign Earnings Under the American Jobs Creation Act of 2004." Journal of the American Taxation Association.

Table 1: Dividend Payments by Foreign A¢ liates (in million yen)
Table 1: Dividend Payments by Foreign A¢ liates (in million yen)

Table 3: Proportion of Foreign A¢ liates Paying Dividends
Table 1: Dividend Payments by Foreign A¢ liates (in million yen)
Table 2: Dividend Payments by Foreign A¢ liates as a Proportion of Sales
Table 4: Descriptive Statistics
+7

参照

関連したドキュメント

Thus, This doctoral research aims to develop indicator and tool designed for the subjective and objective evaluation of Japanese and South Korean systems and policies

Among women, retirement immediately promoted leisure-time physical activity and reduced psychological distress, while it did not affect the rate of change in any health variable

Viewpoint of the Shanghai News (from 1890 to 1891) , a Japanese Newspaper Published in the Late Qing Period,. on the Relationship between Japan and