Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives

This background paper describes five different tools that can be used for the assessment of tax incentives by governments in low income countries’ (LICs). The first tool (an application of cost-benefit analysis) provides an overarching framework fo...

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Main Authors:	International Monetary Fund, OECD, United Nations, World Bank
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	TAX INCENTIVES INTERNATIONAL INVESTMENTS HOLDING LIABILITY MARKET STRUCTURE EQUIPMENT ACCOUNTING INTANGIBLE ASSETS TAX DEDUCTIBLE STOCK VALUATION CORPORATE TAX RATE WITHHOLDING TAX TAX BURDENS INTEREST COMPLIANCE GAP LIFE INSURANCE RATE OF RETURN GUARANTEES INTEREST RATE EXCHANGE GOVERNMENT REVENUES DISCOUNT RATE DEVELOPING COUNTRIES TAX BASES REAL INTEREST REVENUES TAX COMPLIANCE BONDS LOAN TAX PROVISIONS DISCOUNT TAX SYSTEMS TAX RULES CAPITAL STOCK TAX INCOME TAX TAXABLE INCOME BUDGETING BENEFICIARIES CORPORATE INCOME TAX INFLATION MICRO-DATA DEVELOPING COUNTRY INSTRUMENTS BUDGET INVESTMENT BEHAVIOR GLOBAL ECONOMY BENEFICIARY CURRENCY INTEREST EXPENSE TAX WEDGE TELECOMMUNICATIONS PARTIAL CREDIT TAX PLANNING CORPORATE INCOME TAXES PUBLIC FUNDS CORPORATE TAX RATES DOMESTIC CAPITAL PERSONAL INCOME TAX REGIME TAX REGULATIONS TAX LIABILITIES TAX EXEMPTIONS INVESTMENT TAX CREDIT OPTIONS GLOBALIZATION MONETARY FUND DEBT MARKETS RETURN INFLATION RATE TAX BASE PUBLIC FINANCE DIRECT INVESTMENT TAX REVENUES REAL INTEREST RATE INVENTORIES ASSET CLASSES INVENTORY RULE OF LAW SUBSIDIES LEGAL FRAMEWORK FINANCE CORPORATE TAX TAX POLICIES TAXES TAX REFORMS INVESTMENT DECISIONS EXPENDITURE EQUITY ALTERNATIVE INVESTMENTS INCOME TAXES INVESTORS MACROECONOMIC DATA TAX CREDIT OPPORTUNITY COST GOOD TAX INCENTIVE TAX RATE TRANSPARENCY TURNOVER FUTURE TAX LAWS FOREIGN DIRECT INVESTMENT RETURNS CAPACITY CONSTRAINTS LEGAL INSTRUMENTS BUDGETS FOREIGN INVESTMENT TAX REGIMES INVESTMENT PROJECTS LOAN GUARANTEES TAX CONCESSIONS GOVERNMENT REVENUE EXPENDITURES TAX COMPETITION PROPERTY INVESTMENT TAX CREDITS PROPERTIES TAX EXPENDITURE TAX RATES TAX EXPENDITURES BALANCE SHEET TAX LIABILITY MARKET INVESTMENT CHOICES TAX REVENUE TAX SAVINGS TAX DEDUCTION SHAREHOLDERS INSURANCE TAXATION PERSONAL INCOME TAX TAX LAW GOVERNMENT BONDS TAX CODE TAX CREDITS GOODS INVESTOR EFFECTIVE TAX RATES INTANGIBLE STOCKS INVESTMENT FEDERAL TAX HOST COUNTRY INCOME TAX REFORMS SHARE TAX SYSTEM TAXPAYERS BUSINESS TAX TAX ADMINISTRATION REVENUE TAX POLICY PROFIT INVESTMENTS PERSONAL INCOME TAXES DEDUCTIONS CHECK TAX REFORM TAX ALLOWANCES TAX RETURN INSTRUMENT PROFITS CAPITAL INVESTMENT CASH SUBSIDIES LIABILITIES GOVERNMENT ACCOUNTS TAX RETURNS TAX PROVISION CASH FLOW WITHHOLDING TAXES
Online Access:	http://documents.worldbank.org/curated/en/2015/11/25251583/options-low-income-countries’-effective-efficient-use-tax-incentives-investment-tools-assessment-tax-incentives http://hdl.handle.net/10986/22924

id	okr-10986-22924
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	TAX INCENTIVES INTERNATIONAL INVESTMENTS HOLDING LIABILITY MARKET STRUCTURE EQUIPMENT ACCOUNTING INTANGIBLE ASSETS TAX DEDUCTIBLE STOCK VALUATION CORPORATE TAX RATE WITHHOLDING TAX TAX BURDENS INTEREST COMPLIANCE GAP LIFE INSURANCE RATE OF RETURN GUARANTEES INTEREST RATE EXCHANGE GOVERNMENT REVENUES DISCOUNT RATE DEVELOPING COUNTRIES TAX BASES REAL INTEREST REVENUES TAX COMPLIANCE BONDS LOAN TAX PROVISIONS DISCOUNT TAX SYSTEMS TAX RULES CAPITAL STOCK TAX INCOME TAX TAXABLE INCOME BUDGETING BENEFICIARIES CORPORATE INCOME TAX INFLATION MICRO-DATA DEVELOPING COUNTRY INSTRUMENTS BUDGET INVESTMENT BEHAVIOR GLOBAL ECONOMY BENEFICIARY CURRENCY INTEREST EXPENSE TAX WEDGE TELECOMMUNICATIONS PARTIAL CREDIT TAX PLANNING CORPORATE INCOME TAXES PUBLIC FUNDS CORPORATE TAX RATES DOMESTIC CAPITAL PERSONAL INCOME TAX REGIME TAX REGULATIONS TAX LIABILITIES TAX EXEMPTIONS INVESTMENT TAX CREDIT OPTIONS GLOBALIZATION MONETARY FUND DEBT MARKETS RETURN INFLATION RATE TAX BASE PUBLIC FINANCE DIRECT INVESTMENT TAX REVENUES REAL INTEREST RATE INVENTORIES ASSET CLASSES INVENTORY RULE OF LAW SUBSIDIES LEGAL FRAMEWORK FINANCE CORPORATE TAX TAX POLICIES TAXES TAX REFORMS INVESTMENT DECISIONS EXPENDITURE EQUITY ALTERNATIVE INVESTMENTS INCOME TAXES INVESTORS MACROECONOMIC DATA TAX CREDIT OPPORTUNITY COST GOOD TAX INCENTIVE TAX RATE TRANSPARENCY TURNOVER FUTURE TAX LAWS FOREIGN DIRECT INVESTMENT RETURNS CAPACITY CONSTRAINTS LEGAL INSTRUMENTS BUDGETS FOREIGN INVESTMENT TAX REGIMES INVESTMENT PROJECTS LOAN GUARANTEES TAX CONCESSIONS GOVERNMENT REVENUE EXPENDITURES TAX COMPETITION PROPERTY INVESTMENT TAX CREDITS PROPERTIES TAX EXPENDITURE TAX RATES TAX EXPENDITURES BALANCE SHEET TAX LIABILITY MARKET INVESTMENT CHOICES TAX REVENUE TAX SAVINGS TAX DEDUCTION SHAREHOLDERS INSURANCE TAXATION PERSONAL INCOME TAX TAX LAW GOVERNMENT BONDS TAX CODE TAX CREDITS GOODS INVESTOR EFFECTIVE TAX RATES INTANGIBLE STOCKS INVESTMENT FEDERAL TAX HOST COUNTRY INCOME TAX REFORMS SHARE TAX SYSTEM TAXPAYERS BUSINESS TAX TAX ADMINISTRATION REVENUE TAX POLICY PROFIT INVESTMENTS PERSONAL INCOME TAXES DEDUCTIONS CHECK TAX REFORM TAX ALLOWANCES TAX RETURN INSTRUMENT PROFITS CAPITAL INVESTMENT CASH SUBSIDIES LIABILITIES GOVERNMENT ACCOUNTS TAX RETURNS TAX PROVISION CASH FLOW WITHHOLDING TAXES
spellingShingle	TAX INCENTIVES INTERNATIONAL INVESTMENTS HOLDING LIABILITY MARKET STRUCTURE EQUIPMENT ACCOUNTING INTANGIBLE ASSETS TAX DEDUCTIBLE STOCK VALUATION CORPORATE TAX RATE WITHHOLDING TAX TAX BURDENS INTEREST COMPLIANCE GAP LIFE INSURANCE RATE OF RETURN GUARANTEES INTEREST RATE EXCHANGE GOVERNMENT REVENUES DISCOUNT RATE DEVELOPING COUNTRIES TAX BASES REAL INTEREST REVENUES TAX COMPLIANCE BONDS LOAN TAX PROVISIONS DISCOUNT TAX SYSTEMS TAX RULES CAPITAL STOCK TAX INCOME TAX TAXABLE INCOME BUDGETING BENEFICIARIES CORPORATE INCOME TAX INFLATION MICRO-DATA DEVELOPING COUNTRY INSTRUMENTS BUDGET INVESTMENT BEHAVIOR GLOBAL ECONOMY BENEFICIARY CURRENCY INTEREST EXPENSE TAX WEDGE TELECOMMUNICATIONS PARTIAL CREDIT TAX PLANNING CORPORATE INCOME TAXES PUBLIC FUNDS CORPORATE TAX RATES DOMESTIC CAPITAL PERSONAL INCOME TAX REGIME TAX REGULATIONS TAX LIABILITIES TAX EXEMPTIONS INVESTMENT TAX CREDIT OPTIONS GLOBALIZATION MONETARY FUND DEBT MARKETS RETURN INFLATION RATE TAX BASE PUBLIC FINANCE DIRECT INVESTMENT TAX REVENUES REAL INTEREST RATE INVENTORIES ASSET CLASSES INVENTORY RULE OF LAW SUBSIDIES LEGAL FRAMEWORK FINANCE CORPORATE TAX TAX POLICIES TAXES TAX REFORMS INVESTMENT DECISIONS EXPENDITURE EQUITY ALTERNATIVE INVESTMENTS INCOME TAXES INVESTORS MACROECONOMIC DATA TAX CREDIT OPPORTUNITY COST GOOD TAX INCENTIVE TAX RATE TRANSPARENCY TURNOVER FUTURE TAX LAWS FOREIGN DIRECT INVESTMENT RETURNS CAPACITY CONSTRAINTS LEGAL INSTRUMENTS BUDGETS FOREIGN INVESTMENT TAX REGIMES INVESTMENT PROJECTS LOAN GUARANTEES TAX CONCESSIONS GOVERNMENT REVENUE EXPENDITURES TAX COMPETITION PROPERTY INVESTMENT TAX CREDITS PROPERTIES TAX EXPENDITURE TAX RATES TAX EXPENDITURES BALANCE SHEET TAX LIABILITY MARKET INVESTMENT CHOICES TAX REVENUE TAX SAVINGS TAX DEDUCTION SHAREHOLDERS INSURANCE TAXATION PERSONAL INCOME TAX TAX LAW GOVERNMENT BONDS TAX CODE TAX CREDITS GOODS INVESTOR EFFECTIVE TAX RATES INTANGIBLE STOCKS INVESTMENT FEDERAL TAX HOST COUNTRY INCOME TAX REFORMS SHARE TAX SYSTEM TAXPAYERS BUSINESS TAX TAX ADMINISTRATION REVENUE TAX POLICY PROFIT INVESTMENTS PERSONAL INCOME TAXES DEDUCTIONS CHECK TAX REFORM TAX ALLOWANCES TAX RETURN INSTRUMENT PROFITS CAPITAL INVESTMENT CASH SUBSIDIES LIABILITIES GOVERNMENT ACCOUNTS TAX RETURNS TAX PROVISION CASH FLOW WITHHOLDING TAXES International Monetary Fund OECD United Nations World Bank Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives
description	This background paper describes five different tools that can be used for the assessment of tax incentives by governments in low income countries’ (LICs). The first tool (an application of cost-benefit analysis) provides an overarching framework for assessment. Evaluations of the various costs and benefits of tax incentives are vital for informed decision making, but are rarely undertaken, partly because it can be a difficult exercise that is demanding in terms of data needs. The next three tools (tax expenditure assessment, corporate micro simulation models, and effective tax rate models) can be used as part of a comprehensive cost-benefit analysis, to shed light on particular aspects. Effective tax rate models shed light on the implications of tax parameters - including targeted tax incentives - on investment returns and help understand the implications of reform for expected investment outcomes. The document presents two tools for assessing the transparency and governance of tax incentives in LICs. These discuss principles in transparency and governance of tax incentives, and allow for benchmarking existing LIC practices against better alternatives.
format	Working Paper
author	International Monetary Fund OECD United Nations World Bank
author_facet	International Monetary Fund OECD United Nations World Bank
author_sort	International Monetary Fund
title	Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives
title_short	Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives
title_full	Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives
title_fullStr	Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives
title_full_unstemmed	Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives
title_sort	options for low income countries’ effective and efficient use of tax incentives for investment : tools for the assessment of tax incentives
publisher	World Bank, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/11/25251583/options-low-income-countries’-effective-efficient-use-tax-incentives-investment-tools-assessment-tax-incentives http://hdl.handle.net/10986/22924
_version_	1764452652257640448
spelling	okr-10986-229242021-04-23T14:04:12Z Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives International Monetary Fund OECD United Nations World Bank TAX INCENTIVES INTERNATIONAL INVESTMENTS HOLDING LIABILITY MARKET STRUCTURE EQUIPMENT ACCOUNTING INTANGIBLE ASSETS TAX DEDUCTIBLE STOCK VALUATION CORPORATE TAX RATE WITHHOLDING TAX TAX BURDENS INTEREST COMPLIANCE GAP LIFE INSURANCE RATE OF RETURN GUARANTEES INTEREST RATE EXCHANGE GOVERNMENT REVENUES DISCOUNT RATE DEVELOPING COUNTRIES TAX BASES REAL INTEREST REVENUES TAX COMPLIANCE BONDS LOAN TAX PROVISIONS DISCOUNT TAX SYSTEMS TAX RULES CAPITAL STOCK TAX INCOME TAX TAXABLE INCOME BUDGETING BENEFICIARIES CORPORATE INCOME TAX INFLATION MICRO-DATA DEVELOPING COUNTRY INSTRUMENTS BUDGET INVESTMENT BEHAVIOR GLOBAL ECONOMY BENEFICIARY CURRENCY INTEREST EXPENSE TAX WEDGE TELECOMMUNICATIONS PARTIAL CREDIT TAX PLANNING CORPORATE INCOME TAXES PUBLIC FUNDS CORPORATE TAX RATES DOMESTIC CAPITAL PERSONAL INCOME TAX REGIME TAX REGULATIONS TAX LIABILITIES TAX EXEMPTIONS INVESTMENT TAX CREDIT OPTIONS GLOBALIZATION MONETARY FUND DEBT MARKETS RETURN INFLATION RATE TAX BASE PUBLIC FINANCE DIRECT INVESTMENT TAX REVENUES REAL INTEREST RATE INVENTORIES ASSET CLASSES INVENTORY RULE OF LAW SUBSIDIES LEGAL FRAMEWORK FINANCE CORPORATE TAX TAX POLICIES TAXES TAX REFORMS INVESTMENT DECISIONS EXPENDITURE EQUITY ALTERNATIVE INVESTMENTS INCOME TAXES INVESTORS MACROECONOMIC DATA TAX CREDIT OPPORTUNITY COST GOOD TAX INCENTIVE TAX RATE TRANSPARENCY TURNOVER FUTURE TAX LAWS FOREIGN DIRECT INVESTMENT RETURNS CAPACITY CONSTRAINTS LEGAL INSTRUMENTS BUDGETS FOREIGN INVESTMENT TAX REGIMES INVESTMENT PROJECTS LOAN GUARANTEES TAX CONCESSIONS GOVERNMENT REVENUE EXPENDITURES TAX COMPETITION PROPERTY INVESTMENT TAX CREDITS PROPERTIES TAX EXPENDITURE TAX RATES TAX EXPENDITURES BALANCE SHEET TAX LIABILITY MARKET INVESTMENT CHOICES TAX REVENUE TAX SAVINGS TAX DEDUCTION SHAREHOLDERS INSURANCE TAXATION PERSONAL INCOME TAX TAX LAW GOVERNMENT BONDS TAX CODE TAX CREDITS GOODS INVESTOR EFFECTIVE TAX RATES INTANGIBLE STOCKS INVESTMENT FEDERAL TAX HOST COUNTRY INCOME TAX REFORMS SHARE TAX SYSTEM TAXPAYERS BUSINESS TAX TAX ADMINISTRATION REVENUE TAX POLICY PROFIT INVESTMENTS PERSONAL INCOME TAXES DEDUCTIONS CHECK TAX REFORM TAX ALLOWANCES TAX RETURN INSTRUMENT PROFITS CAPITAL INVESTMENT CASH SUBSIDIES LIABILITIES GOVERNMENT ACCOUNTS TAX RETURNS TAX PROVISION CASH FLOW WITHHOLDING TAXES This background paper describes five different tools that can be used for the assessment of tax incentives by governments in low income countries’ (LICs). The first tool (an application of cost-benefit analysis) provides an overarching framework for assessment. Evaluations of the various costs and benefits of tax incentives are vital for informed decision making, but are rarely undertaken, partly because it can be a difficult exercise that is demanding in terms of data needs. The next three tools (tax expenditure assessment, corporate micro simulation models, and effective tax rate models) can be used as part of a comprehensive cost-benefit analysis, to shed light on particular aspects. Effective tax rate models shed light on the implications of tax parameters - including targeted tax incentives - on investment returns and help understand the implications of reform for expected investment outcomes. The document presents two tools for assessing the transparency and governance of tax incentives in LICs. These discuss principles in transparency and governance of tax incentives, and allow for benchmarking existing LIC practices against better alternatives. 2015-11-09T23:17:30Z 2015-11-09T23:17:30Z 2015-10-15 Working Paper http://documents.worldbank.org/curated/en/2015/11/25251583/options-low-income-countries’-effective-efficient-use-tax-incentives-investment-tools-assessment-tax-incentives http://hdl.handle.net/10986/22924 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ IMF, OECD, UN, and World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research

Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment : Tools for the Assessment of Tax Incentives

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