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![](/i/favi32.png) United nations of tax incentivesparticipation in a joint audit may be considered an appropriate mattertax-incentives eng participation in a joint audit may be considered an appropriate matter
for a Memorandum of Understanding. Similarly, coordination as to
the manner and form in which information about the impact of a
tax incentive is collected and how it is provided to the MoF is often a
suitable subject for a Memorandum of Understanding.
3 .
Legal basis
When it comes to translating detailed policy for a tax incentive into
law the focus is on the operational features of the incentive and they
are considered in subsequent headings of the
Checklist
. However, in
structuring legal implementation of a tax incentive there are also some
preliminary design matters that need to be addressed.
3 .1
Tax law, separate law, other law, agreements
The first matter that needs to be addressed when implementing the
tax incentive is where to locate the legal rules providing the incentive.
This requires careful thought and planning. The most common
position is that tax incentives appear in the tax law that they are to
affect, and this may be viewed as good practice. This is less obvious
when what is involved is a package of incentives that affect a range of
taxes. Rather than split up the package, it may be considered that they
are best addressed in a separate or new tax law. This may be a general
tax incentives law that contains not just this package but also other tax
incentives or it may be a dedicated law for a particular tax incentive.
It is rarely a good idea to locate tax incentives in sector
legislation. One of the reasons for this is that the ministry responsible for
introducing amendments to the sector legislation is not the same as that
which is responsible for amending tax law, that is to say the MoF. This
can lead to tension and inaction, and many countries have examples of
inconsistent tax rules in sector legislation and tax legislation.
In the worst cases, there are attempts to address inconsistencies
in the tax law alone, without amending the sector legislation provision.
The point is that as discussed above tax incentives often involve multiple
government stakeholders and their respective responsibilities with
respect to an incentive need to be coordinated carefully from the start.
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