Taxation policy

 

The tax policy guidance encourages a careful weighing of the advantages and disadvantages of alternative tax policy choices and design options in meeting the twin goals of offering an attractive tax system, while at the same time raising revenues to support infrastructure development and other pillars of an enabling environment for investment.  This Toolkit provides supplementary material accompanying a set of questions for policy makers to address in formulating an appropriate tax strategy supportive of investment.


‌Download the full text of tax policy guidance
  
Download a 
more technical treatment of the issues dealt with in the above text.  

 The tax-related questions addressed in the PFI Toolkit are:

  • Has the government evaluated the level of tax burden that would be consistent with its broader development objectives and its investment attraction strategy?  Is this level consistent with the actual tax burden?
     
  • What is the average current tax burden on domestic profits, taking into account statutory provisions, tax-planning opportunities and compliance costs?
     
  • Is the tax burden on the business enterprises of investors appropriate with reference to the policy goals and objectives of the tax system?
     
  • If framework conditions and market characteristics for investors are weak, is it reasonable to assume that a low tax burden can compensate by impacting favorably on investment decisions?
     
  • Where the tax burden on business income differs by firm size, age of the business entity, ownership structure, industrial sector or location, can these differences be justified? Is the tax system neutral in its treatment of foreign and domestic investors?
     
  • Are rules for the determination of corporate taxable income formulated with reference to a benchmark income definition (e.g. comprehensive income), and are the main tax provisions generally consistent with international norms?
     
  • Have targeted tax incentives for investors and others created unintended tax-planning opportunities? Are these opportunities and other problems associated with targeted tax incentives evaluated and taken into account in assessing their cost-effectiveness?
     
  • Are tax expenditure accounts reported and sunset clauses used to inform and manage the budget process?
     
  • Are tax policy and tax administration officials working with their counterparts in other countries to expand their tax treaty network and to counter abusive cross-border tax planning strategies?