United nations of tax incentives

Forms of tax incentives
The present chapter examines three different types of tax incentives: 
tax holidays, investment credits and allowances, and tax credit 
accounts. Whereas the first two types of incentives are used frequently, 
the tax credit account approach has received too little attention from 
policymakers. Designing tax incentives requires a determination of 
the types of investment that qualify and the form of tax incentive to 
adopt. Tax incentives for investment take a variety of forms, the most 
common of which are set out in the table below.
Tax holidays
In developing countries, tax holidays are by far the most common form 
of tax incentive for investment. A tax holiday may take the form of a 
complete exemption from profits tax and occasionally also from other 

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23
Part I: Theoretical Background
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