The Network of Bilateral Tax Treaties of the Slovak Republic – Does It Mirror Challenges of the Globalization through Digitalization? A Cluster Analysis Approach

University of Economics in Bratislava, Faculty of national Economy, Department of Finance, Dolnozemská cesta 1, 852 35 Bratislava, Slovakia

^* Corresponding author: jana.kubicova@euba.sk

Abstract

Research background: Globalisations and movement of production factors - especially capital and workforces, call for elimination of double international juridical taxation and consequently for negotiation of bilateral tax treaties. Recently global network of bilateral tax treaties has reached immense size.

Purpose of the article: The purpose of this paper is to analyse the network of bilateral tax treaties of the Slovak republic from the point of view of distance and level of development of the Contracting States.

Methods: To reach this goal a cluster analysis method is applied where clustering variables are distance between capital cities of the Contracting States and measures of economic development.

Findings & Value added: The main finding is that the Slovak republic’s bilateral tax treaties are clustered into 11 clusters, and three of them are the most numerous. This implies, that Slovak republic follows certain pattern when chosing Contracting Party. It is also found, that geographical location and distance have diminishing roles. Instead economic development and atractiveness of the country in terms of GDP per capita and total FDI inflow play more important role. These findings prove, that Slovakia no more follows old-fashioned pattern of chosing Contracting Parties based predominantly on distances, instead it adjust its policy of concluding bilateral tax treaties to globalization through digitalisation trend.