Global relations in taxation

Consultation on Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment




The G20’s Development Working Group (DWG) invited four International Organisations (IMF, OECD, UN and World Bank) to write a report on options for low income countries’ effective and efficient use of tax incentives for investment. The underlying concern of the DWG is that low income countries often face acute pressures to attract investment by offering tax incentives, which then erode the countries’ tax bases with little demonstrable benefit in terms of increased investment. The International Organisations are asked to use their shared expertise—based on many years of country interactions and analysis—to assist low income countries in making better use of tax incentives.


Drawing on recent country experiences and an extensive range of academic and other studies, the report aims to take a fresh look at tax incentive policies in low income countries. The aim is to develop principles for the design and governance of tax incentives and to provide guidance on good practices in these areas. Since much of the pressure to offer incentives stems from an awareness of those offered by other countries, the report also discusses options for international coordination to address the risk of mutually damaging spillovers from such tax competition. Finally, a separate background document reviews practical tools and models that can help assess the costs and benefits of tax incentives, which is essential to enhance transparency and support informed decision making.



We solicited your comments and feedback on the draft Options Paper. The OECD team will review all submitted comments and share them with the other International Organisations collaborating. Input was to be submitted to no later than 5 August 2015.



The final paper will be submitted to the G20 for its Leader Summit in November 2015 and made public through posting on the websites of the International Organisations involved. The report will then be used as a reference point and as guidance in supporting developing countries on effective and efficient use of tax incentives for investment.


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