Prague Economic Papers 2025, 34(4):442-469 | DOI: 10.18267/j.pep.901

Tax Competition in the Era of Financial Globalization: An Empirical Non-Linear Analysis for European Countries

İrem Didinmez ORCID..., Nazmiye Tekdemir ORCID..., Pelin Varol İyidoğan ORCID...
İrem Didinmez (Corresponding author), Hacettepe University, Faculty of Economics and Administrative Sciences, Department of Public Finance, Ankara, Türkiye
Nazmiye Tekdemir, Kirikkale University, Faculty of Economics and Administrative Sciences, Department of Public Finance, Kirikkale, Türkiye
Pelin Varol İyidoğan, Hacettepe University, Faculty of Economics and Administrative Sciences, Department of Public Finance, Ankara, Türkiye

The aim of this study is to empirically investigate how financial globalization affects tax competition, focusing on implicit and effective tax rates across 29 European countries over the period 2010-2021. Our linear dynamic panel findings suggest that while financial globalization increases implicit tax rates on labor and consumption, it exerts downward pressure on corporate tax rates. The non-linear analysis further reveals threshold effects, where the influence of financial globalization varies depending on its intensity. These results highlight the critical role of tax policy adjustments in response to globalization, emphasizing the need for international regulatory coordination to mitigate the adverse effects of tax competition.

Klíčová slova: tax competition, financial globalization, dynamic panel threshold., Jel codes: C23, F36, H26
JEL classification: C23, F36, H26

Vloženo: 18. srpen 2025; Revidováno: 14. listopad 2025; Přijato: 2. prosinec 2025; Zveřejněno online: 19. prosinec 2025; Zveřejněno: 22. prosinec 2025  Zobrazit citaci

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Didinmez, İ., Tekdemir, N., & İyidoğan, P.V. (2025). Tax Competition in the Era of Financial Globalization: An Empirical Non-Linear Analysis for European Countries. Prague Economic Papers, 34(4), 442-469. doi: 10.18267/j.pep.901
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