Abstract

The aim of this chapter is twofold. The first aim is to provide an overview of tax incentives in developing countries to attract foreign direct investment (FDI) and the challenges for developing countries following the introduction of the OECD-G20 project to tackle base erosion and profit shifting (BEPS) by multinationals. The use of tax incentives has been discussed extensively by scholars and international organizations with different views on the usefulness of tax incentives to promote economic growth and to attract FDI. This chapter argues that tax incentives in developing countries are needed to contribute to development of underdeveloped geographical areas and specific economic sectors or industries. This chapter also argues that developing countries should have a framework to evaluate the usefulness of tax incentives in light of the Sustainable Development Goals (SDGs). This framework should be designed by each country and, if possible, taking into account the practices of other countries in the region so that countries can also exchange best practices. Therefore, the second aim of this chapter is to propose this evaluative framework.

Highlights

  • Tax incentives aim to promote economic activities and to improve the economic growth in countries

  • It has been argued in the past that “developing countries should re-evaluate their tax incentives, stability agreements, and the excessive number of free trade zones that they have, taking into consideration their usefulness in encouraging sustainable investment

  • Tax incentives in developing countries should be re-evaluated to establish their benefit for the country, as such incentives often only result in tax base erosion

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Summary

Irma Johanna Mosquera Valderrama

Mosquera Valderrama evaluate the usefulness of tax incentives in light of the Sustainable Development Goals (SDGs). This framework should be designed by each country and, if possible, taking into account the practices of other countries in the region so that countries can exchange best practices. The second aim of this chapter is to propose this evaluative framework

Introduction
An Overview of Tax Incentives
Tax Incentives in Developing Countries to Attract FDI
Challenges Following the BEPS Project
BEPS Project
Tax Incentives in Developing Countries After BEPS
Challenges Following the Sustainable Development Goals
Findings
Conclusion
Full Text
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