Tax Incentives : Using Tax Incentives to Attract Foreign Direct Investment

Preprint, Unknown OPEN
Jacques Morisset (2003)
  • Publisher: World Bank, Washington, DC
  • Subject: TAX COMPETITION | FOREIGN COMPANIES | CORPORATE TAX | INVESTING | CORPORATE TAXATION | TRANSPARENT TAX RULES | INVESTMENT TAX CREDITS | TAX LAW | COST RECOVERY | FOREIGN INVESTORS | FREE TRADE | INCOME TAX RATE | RENTS | FOREIGN DIRECT INVESTMENT | GLOBAL CAPITAL | TAX RATE | LOSS OF REVENUE | INVESTMENT TAX ALLOWANCES | TAX MEASURES | DOMESTIC MARKET | CAPITAL FLOWS | INDIRECT CONSUMPTION | TAX INCENTIVES | JURISDICTION | INTERNATIONAL FINANCE | TAX INCENTIVE PROGRAMS | GLOBAL CAPITAL FLOWS | COMPETITIVE MARKETS | EXPORT PROCESSING ZONES | ILLICIT BEHAVIOR | INVESTMENT DECISIONS | DEPRECIABLE CAPITAL | INTERNATIONAL ECONOMICS | MACROECONOMIC STABILITY | DIRECT INCOME TAXES | INVESTMENT CLIMATE | GLOBALIZATION | HOST GOVERNMENTS | Macroeconomics and Economic Growth - Investment and Investment Climate Law and Development - Tax Law Taxation and Subsidies Finance and Financial Sector Development - Debt Markets Private Sector Development - Emerging Markets | TAX ADMINISTRATION | INSURANCE COMPANIES | TAX HARMONIZATION | CORPORATION TAX | COMPETITIVE TAX INCENTIVES | FOREIGN INVESTMENT | EXPENDITURE | INSURANCE | STATUTORY TAX | STATUTORY TAX RATE | BIDDING | HOST GOVERNMENT | INTERNATIONAL INVESTORS | ACCOUNTING | EMPLOYMENT TAXES | INDUSTRIAL COUNTRIES | INVESTMENT CODE | TAX SYSTEMS | TAX RATES | CORPORATE TAX RATE | MACROECONOMIC ENVIRONMENTS | CORPORATE INCOME TAX | TAX REBATES | TAX REGIMES | EXPORT | TAX POLICIES | IMPORT DUTY EXEMPTIONS | TAX | PUBLIC POLICY | SMALL ECONOMIES | TAX POLICY | PUBLIC POLICY INNOVATIONS | TAXABLE INCOME | USE TAX TAX INCENTIVES | INVESTMENT EXPENDITURES | TREASURY | INCENTIVE REGIMES | INCOME TAX | TAX INCENTIVE | CORPORATE TAX RATES | TAXATION | MULTINATIONAL COMPANIES | INTERNATIONAL FIRMS | EXPORTS | TAXPAYERS | INSTRUMENT | INVESTMENT PROJECTS | FOREIGN DIRECT INVESTMENTS | TAX HAVENS | INVESTMENT LOCATION DECISIONS | ACCELERATED DEPRECIATION | POLITICAL STABILITY | TAX ALLOWANCES | INCENTIVES | TRANSFER PRICES | MULTINATIONAL FIRMS | TAX CREDITS | EMERGING MARKETS | TAX BASE | CODE OF CONDUCT | TAX SYSTEM | INCENTIVE MEASURES | AFFILIATED ORGANIZATIONS | PRIVATE INVESTMENT | TAX NEEDS | DEVELOPING COUNTRIES | COMMUNICATIONS DEVELOPMENT | TARGETED TAX INCENTIVES | TAX CHANGES | TAX REVENUES | GOVERNMENT REVENUES | INVESTMENT EXPENDITURE ALLOWANCES | INVESTMENT ALLOWANCES

The increasing mobility of international firms and the gradual elimination of barriers to global capital flows have stimulated competition among governments to attract foreign direct investment, often through tax incentives. This note reviews the debate about the effectiveness of tax incentives, examining two much-contested questions: can tax incentives attract foreign investment? And what are the costs of using them?
  • References (6)

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    Ernst & Young. 1994. Investment in Emerging Markets: A Survey of the Strategic Investment of Global 1000 Companies. New York.

    Moran, T. 1998. Foreign Direct Investment and Development. Washington, D.C.: Institute for International Economics.

    Oman, C. 2000. “Policy Competition for Foreign Direct Investment: A Study of Competition among Governments to Attract FDI.” Development Centre Studies. Organisation for Economic Co-operation and Development, Paris.

    UNCTAD (United Nations Conference on Trade and Development). 1995. Incentives and Foreign Direct Investment. Background report. Geneva.

    Wells, L., N. Allen, Jacques Morisset, and Neda Pirnia. 2001. Using Tax Incentives to Compete for Foreign Investment. FIAS Occasional Paper 15. Washington, D.C.: World Bank.

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