Technicalities of investment incentives

Abstract

This chapter discusses the technicalities of investment incentives. It is not complete in the sense of discussing all the technical problems posed by all the incentives in our eleven countries. That would go beyond the scope of this monograph. Instead we have chosen an overall survey of problems and solutions illustrated by examples from the various countries. We limit ourselves to tax incentives I–V in the catalogue of Chapter IV, thus omitting subsidies, concessionary tax rates and the like (numbers VI–XI). The technicalities of these incentives are of a different order and require no separate treatment. This chapter starts by discussing the technicalities of incentives constituting a deferral of tax and goes on to incentives constituting an absolute tax reduction. Deferral is provided by the incentives indicated in column (M) of Table 2 in Chapter IV; the others provide tax reductions. Valuation discounts and carry-back (see column (M) of Table 2) are discussed in Chapter VI. The last section of the chapter discusses side-effects of both groups of incentives, that is, their interplay with other elements of the tax system and indicates how undesired side-effects may be avoided.