SEEU Review vol. 6 Nr. 2 (pdf) - South East European University

Haderi S., Prof. Dr.; Kola T., Prof. Asocc. Dr.; Liko E., Dr.transition economies, and found that unit labor costs are negativelyassociated with FDI. Their finding supports the hypotheses that foreigninvestor in developing countries are cost sensitive.The amount of FDI varies a lot between region countries. Even thoughthe statutory corporate tax rate in Albania is in the same line with thatapplied in Serbia, Bulgaria, and Bosnia and Herzegovina, the amount of FDIis substantially low. From the figures reported on the above table, incountries that the statutory corporate tax rate is relatively high, the FDIvolume is high. Therefore FDI flows could not only be affected by statutorycorporate tax rate. This conclusion is supported by (Devereux 2007) thatsupports the idea that investment decisions depend not only on the statutorytax rate, but also on the measurement of the tax base. In some countriesunder survey is used holiday tax as tax incentive.In Croatia even though the statutory corporate tax rate is about 20% sincethe year 2001, this country use as fiscal incentive for foreign investmentholiday tax, which offers a deduced CIT rate of about 10% for investmentuntil 1.5 million euro with the obligation to employ at least 10 newemployees. In this country are offered despite 10% reduced rate, 7%, 3% and0% CIT rates for higher foreign investment volume and numbers of newemployees.In Republic of Macedonia is also applied tax holiday for companies withforeign shareholders with holding at least 20 percent for the first three yearsfollowing that investment. The CIT that the companies should be pay iscalculated in the base of statutory CIT rate multiplied by the differencebetween 100 percent and the percentage of foreign capital invested. Thecompanies that are owned thoroughly by foreigners CIT is zero for the firstthree years. Technological industrial development zones offer the investors acorporate tax holiday for 10 years (with the 10 percent tax rate thereafter).Tax holiday is applied in Serbia. Companies are exempt from corporateprofit tax for a period of 10 years, starting from the first year in which theyreport taxable profit if they invest in fixed assets an amount at least 7.5million euro, and throughout the investment period they employ at least 100additional employees on an indefinite contracts. A five years tax holiday isgranted for concessions related investment, starting from the day theconcession investment has been completed.In Bulgaria is offered 0% corporate tax rate in high unemployment areasfor a period of five years. In Bosnia and Herzegovina CIT could be broughtdown to a percentage of foreign investment into the company’s assets for a142