Much of foreign investment is aimed at tax dodging rather than job creation, study finds
The IndependentFor free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Researchers at the IMF and the University of Copenhagen have found that a large share of FDI ends up in empty corporate shells with no real business activities in the host nation. Although a lion’s share of that is hosted by a few tax havens, most economies receive substantial investments from empty corporate shells, with phantom FDI making up over 25 per cent of total flows on average. The researchers write that empty corporate shells still make a contribution to the local economy by buying tax advisory, accounting and other financial services, as well as by paying registration and incorporation fees. The flip side is that empty corporate shells in tax havens “undermine tax collection in advanced, emerging-market and developing economies”.
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