Corporate Tax Holidays and Investment
Governments of developing countries commonly adopt tax holidays to encourage investment. This article evaluates the incentives provided by company income tax holidays and explains the importance of the timing of depreciation allowances in determining the effective tax rates and the cost of capital to firms considering additional investment during the holiday. If an asset is long-lived and depreciation allowances for tax purposes are accelerated, the tax holiday, by preventing depreciation deductions during periods of peak profits, may actually penalize a company for investing during the holiday. The closer the investment to the end of the holiday period, the more severe the penality. If, instead, depreciations allowances may be deferred until after the holiday, this program of incentives is quite generous to the firm. How these sharply contrasting results may emerge is illustrated through estimation of effective tax rates and user costs of capital under tax holiday systems in Bangladesh, Cote d'Ivoire, Malaysia, Morocco, and Thailand. Copyright 1990 by Oxford University Press.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 4 (1990)
Issue (Month): 1 (January)
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Fax: 01865 267 985
Web page: http://wber.oxfordjournals.org/
More information through EDIRC
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:wbecrv:v:4:y:1990:i:1:p:81-102. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.