THE EFFECTIVENESS OF CORPORATE-TAX INCENTIVES FOR FOREIGN-INVESTMENT IN THE PRESENCE OF TAX CREDITING

The value of corporate tax holiday incentives provided by Central-East ern Europe (CEE) countries to attract foreign investment depends on wh ether a multinational company must pay corporate income taxes to its h ome government on income remitted from abroad (i.e. the multinational is said to be in a deficient credit position if foreign taxes paid are less than the home country tax owing on foreign-source income). This paper examines the value of corporate tax incentives given to manufact uring companies investing in CEE countries taking into account both th e host country tax regime and the U.S. tax treatment of foreign-source investment.