Corporate income taxation and business dynamism

In recent decades, concerns have grown over the decline in business dynamism, the process by which firms enter, expand, contract, and exit markets. Part of the OECD Tax Policy Briefs series, this brief explores how corporate income tax (CIT) policies can support business dynamism, examining the effects of tax rates, compliance costs, loss-offset provisions, and tax incentives, as well as the interaction between CIT and dynamism when considering both financing frictions and market competition. It provides an overview of how tax policy can support a more dynamic and competitive business environment.