Effectiveness and Economic Impact of Tax Incentives in the SADC ...

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II Contents (continued) 5.2 Assessment of Alternative Tax Instruments 5-4 5.3 Summary 5-12 6. Economics of Harmful Tax Competition 6-1 6.1 What is Harmful Tax Competition? 6-1 6.2 Theory of Tax Competition 6-4 6.3 Can Jurisdictions Cooperate in Mitigating Harmful Tax Competition? 6-8 6.4 Implications for SADC 6-10 7. Tax Systems and Tax Incentives in the SADC Region 7-1 7.1 Revenue Performance 7-1 7.2 Standard Tax Rates 7-2 7.3 Investment Tax Incentives 7-7 7.4 Successes and Failures 7-17 7.5 Institutional Framework for Tax Incentives 7-19 7.6 Summary 7-22 8. Conclusions and Recommendations 8-1 8.1 General Principles for Agreement 8-2 8.2 Structure of Investment Tax Incentives 8-4 8.3 Transparency 8-6 8.4 Capacity Building 8-7 8.5 Harmful Tax Competition 8-8 References Appendix. Investment Tax Incentives in the SADC Region
Contents (continued) ILLUSTRATIONS Figures Figure 3-1. Tax Incentives and the User Cost of Capital 3-11 Figure 7-1. Standard Company and Dividend Tax Rates, SADC Member Countries, 2003 7-4 Figure 7-1. Illustrative METR with Standard Tax System and with Tax Incentives 7-17 Tables Table 4-1. International Comparisons of the Marginal Effective Tax Rate, circa 1985 4-6 Table 4-2. Relative Cost-effectiveness of Various Tax Incentives 4-7 Table 4-3. Conceptual Basis for Screening Selective Tax Incentives 4-13 Table 5-1. Evaluation of Major Tax Incentive Instruments 5-14 Table 6-1. Prisoner’s Dilemma and Tax Incentives 6-5 Table 7-1. SADC Fiscal Indicators, Three- year Averages, 1999-2001(as % of GDP) 7-3 Table 7-2. Illustrative Marginal Effective Tax Rate Calculations, SADC Member Countries, Standard Tax Systems (non-exporters, without special incentives) 7-6 Table 7-3. Investment Tax Incentives in the SADC Region (2003)—Who Does What? 7-8 Table 7-4. Illustrative Marginal Effective Tax Rate Calculations, SADC Member Countries: Case—Tax Incentives for Projects Manufacturing Goods for Export 7-16 Table 7-5. Elements of Tax Structure Facing Companies in SADC Member Countries 7-23 Table 7-6. Parameters used for METR Calculation in SADC Countries, Exhibits with Tax Incentives 7-28 Exhibit 2-1. A Productivity Package 2-4 Exhibit 2-2. Policies Affecting Investment Risk and Return 2-5 Exhibit 3-1. Success Stories in Malaysia, Ireland, Costa Rica, and Mauritius 3-3 Exhibit 3-2. Small Companies, Giant Loopholes 3-9 Exhibit 3-3. Import Duties, Effective Rate of Protection, and Economic Efficiency 3-12 Exhibit 3-4. Impact of Tax Differentials on the Allocation of Capital 3-13 Exhibit 3-5. Elimination of Tax Incentives in Uganda, 1997 3-19 Exhibit 3-6. Elimination of Tax Incentives for Indonesia, 1984 3-20 Exhibit 4-1. How Different Tax Incentives Affect the Marginal Effective Tax Rate 4-5 III
Page 1: TECHNICAL REPORT Effectiveness and
Page 5: Contents Executive Summary xi 1. In
Page 9 and 10: Glossary ACT additional company tax
Page 11 and 12: Preface The Scope of Work (SOW) for
Page 13: PREFACE IX Export Development & Inv
Page 16 and 17: XII EFFECTIVENESS AND IMPACT OF TAX
Page 18 and 19: XIV EFFECTIVENESS AND IMPACT OF TAX
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Page 25 and 26: 1. Introduction Why should schemes
Page 27 and 28: INTRODUCTION 1-3 well administered.
Page 29 and 30: INTRODUCTION 1-5 from selective to
Page 31 and 32: 2. Taxation, Investment, and Growth
Page 33 and 34: TAXATION, INVESTMENT, AND GROWTH 2-
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3-12 EFFECTIVENESS AND IMPACT OF TA
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4-2 EFFECTIVENESS AND IMPACT OF TAX
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6. Economics of Harmful Tax Competi
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ECONOMICS OF HARMFUL TAX COMPETITIO
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7. Tax Systems and Tax Incentives i
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TAX SYSTEMS AND INCENTIVES IN THE S
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Table 7-5 Elements of Tax Structure
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Table 7-5 (continued) Sheet 3 of 4
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Notes a Mozambique information Coun
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8. Conclusions and Recommendations
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CONCLUSIONS AND RECOMMENDATIONS 8-3
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R-2 EFFECTIVENESS AND IMPACT OF TAX
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A-2 APPENDIX The present investment
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A-4 APPENDIX Democratic Republic of
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A-6 APPENDIX Government revenue in
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A-8 APPENDIX income tax payable by
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A-10 APPENDIX (though they are obli
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A-12 APPENDIX • • • Asset All
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A-14 APPENDIX also get zero import
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A-16 APPENDIX EPZ measure was motiv
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