United nations of tax incentives

II . 
Checklist for drafting tax incentives legislation
1. Policy
1.1 Develop broad policy (who, what, when, why, which taxes)
1.2 Make the economic and social case (including forecasts, 
projections, externalities)
1.3 Detail policy and draft (addressing the points below)
1.4 Review policy periodically (using reporting require-
ments below)
2. Responsible/administering authority
2.1 Ministry of Trade/Investment Board, Ministry of Finance, 
Tax administration

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Part II: Practical Aspects
2.2 Co-ordination among authorities (need for memoran-
dums of understanding, joint audits)
3. Legal basis
3.1 Tax law, separate law, other law, agreements
3.2 Detail (regulation, rulings, agreements)
3.3 Discretion (who, what criteria, what review)
3.4 Reconciliation with general rules that are sought to 
be modified
3.5 Legal basis for requiring authorities applying general rules 
(for instance, tax authority) to apply the modified rules
4. Eligible persons
4.1 Types (company, individual, trust, partnership, etc.)
4.2 Timing (when formed)
4.3 Location (resident or non-resident, nationality)
4.4 Relationship (connected persons getting multiple 
incentives)
4.5 Change of ownership of entities
5. Qualifying activity
5.1 Primary (business, employment, investment)
5.2 Specific (type of business, for instance defined by regis-
tration, interface with sector laws)
5.3 Timing (existing or new, time limit of incentive)
5.4 Location (international, national, regional)
6. Allocate use of assets to the activity
6.1 Type (tangible, intangible, current, non-current)
6.2 Ownership (owner, finance lease, operating lease)
6.3 Value (historic cost, fair value, depreciation, related party 
transactions)
6.4 Timing (new, second hand, existing ownership, disposals)
6.5 Location (international, national, regional)
7. Allocate use of labour to the activity
7.1 Type (employee, new recruits, graduates, independent 
contractors)

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Design and Assessment of Tax Incentives
7.2 Value / number
7.3 Timing (new, existing, retrenchment)
7.4 Location (international, national, regional)
8. Allocate payments (made or received) to the activity
8.1 Type (cash, in-kind benefits, related party)
8.2 Allocation
8.3 Quantification (transfer pricing)
8.4 Timing (cash, accruals)
8.5 Character (sales proceeds, capital proceeds, investment 
receipts, etc.)
8.6 Location (source of payments)
9. Calculate result from activity
9.1 Separation (treat as separate from other activities)
9.2 Apportionment of external dealings (transfer pricing)
9.3 Intra-entity dealings (transfer pricing)
9.4 Ring-fencing of losses (how to define, what breaches)
10. Apply rates/benefits
11. Provision of information
11.1 Reporting to the tax administration under gen-
eral tax rules
11.2 Specific reporting to responsible authority (proposals and 
performance against criteria)
11.3 Transparency versus confidentiality (public registers and 
public disclosure)
11.4 Reporting by tax authority and responsible authority to 
the Ministry of Finance
11.5 Public reporting of tax expenditure and perceived benefits
12. Dispute Resolution
12.1 Courts (tax court, regular courts, special tribunal)
12.2 Arbitration (domestic, international)
13. Non-compliance
13.1 Regular interest and penalties
13.2 Claw-back of previous benefits

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