Tax competition regarding foreign direct investment between transition european countries

Abstract

This paper explores the fiscal measures adopted in the transition European countries in order to encourage the foreign direct investment. There were analysed six countries: Albania, Macedonia, Moldova, Russian Federation, Union of Serbia and Muntenegro, Ukraine, based on the four criteria: corporate and capital gains tax rates, withholding taxes, tax incentives, foreign tax relief and transfer pricing rules. Finally, the conclusion is that all the analysed countries offer favourable fiscal conditions for the foreign direct investment. Serbia, Muntenegro, Macedonia and Moldova have attractive fiscal regimes, showing that the authorities from these countries count on the foreign direct investment as a solution of solving the social and economic problems.