Carolina Osorio Buitron, International Monetary Fund

Intangible Yet Real: Spillovers from Corporate Income Taxation

The globalization of production, the rise of multinational corporations, and the growing importance of intangible assets have transformed the landscape of corporate income taxation. While governments continue to respond strategically to one another’s corporate income tax policies, anti-avoidance rules have weakened incentives for profit shifting, while real investment has become more sensitive to differences in tax rates. This suggests that profits and economic activity are moving back into alignment. The global effects of corporate income tax policy changes depend on how they are financed. Debt-financed tax cuts support domestic activity but can generate negative spillovers abroad in the short term. Over time, spillovers can be positive, thanks to cross-border knowledge transfers, but lower revenues can constrain public investment domestically, particularly in emerging market and developing economies. Stronger anti-avoidance frameworks help mitigate these trade-offs.

This is Chapter 3 of the IMF’s recently launched October 2026 World Economic Outlook: Resilience under Strain, Urgent Choices