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United nations of tax incentivestax-incentives engForms 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
23
Part I: Theoretical Background
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