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Tax Sparing: A Needed Incentive For Foreign Investment In Low-Income Countries Or An Unnecessary Revenue Sacrifice?, Kim Brooks

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Low income countries often offer tax incentives to induce foreign investment, but the effectiveness of these measures may he limited by the domestic tax practices of investors' high income home countries. Most high-income countries provide a tax credit for the amount of tax paid to a foreign jurisdiction on the international profits of resident companies or individuals. Where no tax, or reduced tax, is paid to the foreign jurisdiction because of a tax incentive, the result is that the investor pays the same amount of tax they would have paid in the absence of the tax incentive, but simply pays …