Methods of assessing of tax incentives effectiveness in special economic zones: An analytical overview
Аналитический обзор методов оценки эффективности налогового стимулирования особых экономических зон

O. A. Sinenko
2016 Journal of Tax Reform  
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper considers two empirical questions about tax incentives: (1) are incentives used as tools of tax competition and (2) how effective are incentives in
more » ... cting investment? To answer these, we prepared a new dataset of tax incentives in over 40 Latin American, Caribbean and African countries for the period 1985-2004. Using spatial econometrics techniques for panel data to answer the first question, we find evidence for strategic interaction in tax holidays, in addition to the well-known competition over the corporate income tax rate. We find no evidence, however, for competition over investment allowances and tax credits. Using dynamic panel data econometrics to answer the second question, we find evidence that lower corporate income tax rates and longer tax holidays are effective in attracting FDI, but not in boosting gross private fixed capital formation or growth. JEL Classification Numbers: H25, H87
doi:10.15826/jtr.2016.2.3.022 fatcat:mjimpc4cf5dixlruvhqoa3k7te