Part II: Practical Aspects
III . Checklist for drafting tax incentives legislation: commentary This Commentary seeks to expand on and explain the various headings
and subheadings used in the
Checklist .
1 . Policy This heading lists the matters that need to be decided in order to
sufficiently particularise a tax incentive so that it can be accurately
translated into law. It also provides some guidance as to the order in
which those decisions might be made.
1 .1 Develop broad policy (who, what, when, why, which taxes) Typically, the policy for a particular incentive is developed or at least
decided in the Ministry of Finance (MoF), for instance in a tax policy
unit. Depending on the nature of the topic, it is likely that the MoF will
consult with the relevant sector ministry (for instance, Industry, Tourism,
Natural Resources) and other interested ministries and agencies within
the government. The tax administration should also be consulted at an
early stage so that it can provide input into the administrative aspects of
designing the tax incentive. It is likely that discussions with the private
sector are also relevant, but these may also be part of the reason for the
government investigating a particular tax incentive.
The time of developing government policy is not the time for
full public consultation with respect to the proposal. The government
needs to take some time to develop a position before releasing that for
public comment. This is the
who part of this item, that is to say who is
involved or responsible for developing the tax policy underlying a tax
incentive.
The
what part of this item is the first attempt to identify
and articulate the scope of a potential tax incentive. A tax incentive
is often a response to a particular problem (for instance, increasing
employment in a particular sector), but at this stage there needs to be
a plan for how a tax incentive may address the problem.
When just means that from the earliest development stage
there should be a schedule for the time from which the tax incentive
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Design and Assessment of Tax Incentives
will apply (sunrise) and for how long it should apply (sunset). The
schedule should then be detailed as to who must do what in order to
meet the proposed introduction date.
The
why
