Double tax treaties and foreign direct investments

This paper has examined the effectiveness of Double Tax Treaties (DTTs) as a tool to attractForeign direct investment (FDI) in the economies of the ASEAN region. The topic has beenstudied in several empirical studies and research, however, the result is still inconclusive, and theliterature on this particular region is limited, hence, this study aims to contribute to a moreeffective and efficient decision-making process of regulators regarding the relationship betweenDTTs and FDI in ASEAN countries. In this paper, the author used the panel data method and aset of data covering the period 1988 – 2018 on the ten ASEAN countries to test the correlationsbetween five control variables – GDP, population, trade openness, number of yearly new DTTsconcluded, and accumulated number of DTTs of the source country – and the dependent variable– FDI inflows into the source country. The empirical study shows that new DTTs signed byASEAN countries with their economic partners have significant positive impact on the FDIinflows into these countries. However, the accumulated DTTs a country has in effect exertnegative impact on the FDI inflows into an ASEAN country, due to the diminishing in value ofDTTs over time.