Abstract:

The impact of tax attraction on direct foreign investment (DYY) entries, which includes many incentives in the study, was studied by panel data analysis for developed and developing countries groups using the 2007-2018 period data. The tax attractiveness index has been published annually since 2007 as the beginning year of this year. The model also includes trade transparency, the economic freedom index, and data of national income increase per person that can affect the DYY entries. For developing and developing countries, the model established has a horizontal cutting dependency and the unit root in the variables has been made with Pesaran (2007). The Hausman test later determined the implementation of a fixed effective model in developed countries and a racial effective model in developing countries. The analysis was predicted by Driscoll Kraay test because the models had varied variations, autocorrelation and horizontal cutting dependency. According to the study, the impact of tax attraction on the DYY entries in both countries has been positive and statistically meaningful. Policy makers can use this information for future tax reforms that may be aimed at increasing the attractiveness of the position. The impact of the increase in national income per person from control variables on DYY entries in developed countries was positive but statistically meaningless, while the impact of other variables was positive and meaningful for both countries.

Keywords: