Mapping Tax Strategies in the FDI Decision Process

Jinning Hong, Keith W. Glaister and Jane Frecknall-Hughes

This study proposes a framework for mapping tax strategies in the developmental and sequential FDI decision process. The authors examined the relative importance of the stages of the FDI decision process with and without tax considerations for a sample of 192 UK MNEs. The stages of identifying investment opportunity, and the FDI legal and management structures are found to be important to the decision process when tax effects are considered. The findings suggest that availability of foreign partners is an important factor to the ownership and entry mode decisions. A favourable tax regime does not distort international organisational structure. Tax is considered both before and after the strategic decisions are made.