Investment tax incentives dashboard

Investment tax incentives can take different forms, including CIT exemptions and reduced CIT rates (income-based incentives), accelerated depreciation, enhanced tax allowances, and tax credits (mostly expenditure-based incentives).

CIT exemptions are the most widely used instrument across all world regions. Reduced CIT rates are less common and relatively evenly distributed across regions. Accelerated depreciation is relatively more common in LAC and Sub-Saharan Africa and enhanced tax allowances in South and East Asia, while tax credits are particularly common in LAC countries, but remain limited in other regions.

Income-based incentives are often permanent. Even when they are time-limited, they last for many years.

OECD (2026) reports that income-based tax incentives have been found to provide limited value for money and risk windfall gains for investors that would have invested anyway. Long durations of these incentives can increase revenue loss.

When income-based incentives come with additional eligibility criteria related to substance they can mimic expenditure-based incentives, which are typically considered to be more cost-effective.

Expenditure-based incentives more often support capital expenditure (e.g. investments in equipment) than current expenditure (e.g. payroll costs), While accelerated tax allowances always relate to capital expenditure, enhancements and tax credits can be linked to either expenditure type, or target both at the same time.

OECD (2026) reports that well-designed expenditure-based incentives can provide tax relief in direct proportion to desired firm investment. They more directly reduce the cost of capital and are more likely to be effective at promoting additional investment. 

A few countries offer enhanced tax allowances and tax credits that are not proportional to expenditure. These types of incentives can come with similar cost-effectiveness-risks as income-based tax incentives (tax exemptions and reduced rates).

Most countries use multiple pieces of legislation to introduce tax incentives,  often in complex combinations of different sources of primary law and secondary legislation (e.g. regulations, decrees, orders). 

When a single law is used, it is typically the tax law.

OECD (2026) reports that consolidating incentives into one law can support transparency and certainty, support better parliamentary and stakeholder scrutiny and facilitate investor access to relevant information.

Almost all countries offer at least one sector-specific incentive, though half of these require additional conditions to be met.

OECD (2026) reports that more targeted incentives may more strongly support policy objectives and come with lower revenue losses, but they may also increase administrative and compliance costs, create market distortions, and add complexity for investors.

Other common targeting approaches include linking incentives to economic outcomes (such as job creation requirements), to special economic zones, particular geographical regions or requiring a specific investment size upfront.

About a third of all tax incentives in the database relate to one of six sustainable development (SD) areas.

An incentive is classified as being linked to a specific SD area based on incentive design features, not its stated policy objectives Relevant design features are qualifying income or expenditure, sector and outcome conditions.

For example, incentives with a requirement to maintain or create a minimum number of jobs are counted towards supporting employment and job creation; measures only applicable to export income are reflected as promoting exports, etc.