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2014 World Tax J. 242 (2014)
An Economic Perspective on Double Tax Treaties with(in) Developing Countries

handle is hein.journals/wldtxjrn2014 and id is 248 raw text is: Julia Braun* and Martin Zagler** An Economic Perspective on Double Tax Treaties with(in) Developing Countries There are about 2,600 double tax treaties in the world, some 500 among industrialized economies, approximately 800 among developing economies and about 1,300 between industrialized and developing economies. Whereas the prior two categories are symmetric, the latter is asymmetric, as capital flows predominantly from industrialized to developing economies, and capital income the other way round. This article asks which developing countries have double tax treaties, whether with other developing countries or with industrialized countries. The results of the econometric analysis suggest that geography, size (GDP) and openness matter. Finally, political variables, such as colonial status, political similarity, and most strikingly development aid are correlated with the existence of a double tax treaty. Contents 1. Introduction 243 2. Literature 244 2.1. Motivations to sign DTTs 244 2.2. Choice of partner for DTTs 246 3. Who Has Double Tax Treaties? 248 3.1. Methodology 248 3.2. Results 248 4. With Whom Do Countries Have Double Tax Treaties? 252 4.1. Data and Methodology 252 4.2. Determinants of DTT conclusion between developing countries and OECD member countries 253 4.3. Determinants of DTT conclusion between two developing countries 257 4.4. Summary 260 5. Advantages and Disadvantages for DTTs: Four Case Studies 260 5.1. South Africa 261 5.2. Brazil 262 5.3. Colombia 263 5.4. Uruguay 264 5.5. Comparative analysis and summary 265 6. Conclusion 266 7. Annex 267 7.1. Tables to section 3.: Who has DTT's? 269 7.2. Tables to section 4.: Whith whom do countries have DTT's? 271 7.3. Tables to section 5.: Case studies 276 * Research Associate, DIBT (Doctoral Program of International Business Taxation). WU Vienna University of Economics and Business, Austria. Financial support from the Austrian Science Fund (FWF grant no. W 1235-G16) is gratefully acknowledged. The author can be contacted at julia.braun@wu.ac.at. ** Professor of Economic Policy, UPO University of Eastern Piedmont, Italy, and Associate Professor of Economics, WU Vienna University of Economics and Business, Austria. Financial support from the Norwegian Science Fund (DeSTaT project) and OeNB Jubilaumsfonds No. 16017 is gratefully acknowledged. The author can be contacted at martin.zager@gmail.com. The authors wish to thank Sebastian Beer, Dale Boccabella, Pasquale Pistone, and the two anonymous refer- ees for their helpful comments, as well as the participants of the DeSTaT Workshop in Cape Town, the WU Department of Economics Research Seminar, and the Staff Seminar at the School of Taxation and Business Law at the University of New South Wales, Sydney. The authors would also like to thank Jennifer Roeleveld for her kind assistance with the data on South African Tax Revenues. WORLD TAX JOURNAL OCTOBER 2014 1 242

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