International Monetary FundOECDUnited NationsWorld Bank2015-11-092015-11-092015-10-15https://hdl.handle.net/10986/22924This background paper describes five different tools that can be used for the assessment of tax incentives by governments in low income countries’ (LICs). The first tool (an application of cost-benefit analysis) provides an overarching framework for assessment. Evaluations of the various costs and benefits of tax incentives are vital for informed decision making, but are rarely undertaken, partly because it can be a difficult exercise that is demanding in terms of data needs. The next three tools (tax expenditure assessment, corporate micro simulation models, and effective tax rate models) can be used as part of a comprehensive cost-benefit analysis, to shed light on particular aspects. Effective tax rate models shed light on the implications of tax parameters - including targeted tax incentives - on investment returns and help understand the implications of reform for expected investment outcomes. The document presents two tools for assessing the transparency and governance of tax incentives in LICs. These discuss principles in transparency and governance of tax incentives, and allow for benchmarking existing LIC practices against better alternatives.en-USCC BY 3.0 IGOTAX INCENTIVESINTERNATIONAL INVESTMENTSHOLDINGLIABILITYMARKET STRUCTUREEQUIPMENTACCOUNTINGINTANGIBLE ASSETSTAX DEDUCTIBLESTOCKVALUATIONCORPORATE TAX RATEWITHHOLDING TAXTAX BURDENSINTERESTCOMPLIANCE GAPLIFE INSURANCERATE OF RETURNGUARANTEESINTEREST RATEEXCHANGEGOVERNMENT REVENUESDISCOUNT RATEDEVELOPING COUNTRIESTAX BASESREAL INTERESTREVENUESTAX COMPLIANCEBONDSLOANTAX PROVISIONSDISCOUNTTAX SYSTEMSTAX RULESCAPITAL STOCKTAXINCOME TAXTAXABLE INCOMEBUDGETINGBENEFICIARIESCORPORATE INCOME TAXINFLATIONMICRO-DATADEVELOPING COUNTRYINSTRUMENTSBUDGETINVESTMENT BEHAVIORGLOBAL ECONOMYBENEFICIARYCURRENCYINTEREST EXPENSETAX WEDGETELECOMMUNICATIONSPARTIAL CREDITTAX PLANNINGCORPORATE INCOME TAXESPUBLIC FUNDSCORPORATE TAX RATESDOMESTIC CAPITALPERSONAL INCOMETAX REGIMETAX REGULATIONSTAX LIABILITIESTAX EXEMPTIONSINVESTMENT TAX CREDITOPTIONSGLOBALIZATIONMONETARY FUNDDEBTMARKETSRETURNINFLATION RATETAX BASEPUBLIC FINANCEDIRECT INVESTMENTTAX REVENUESREAL INTEREST RATEINVENTORIESASSET CLASSESINVENTORYRULE OF LAWSUBSIDIESLEGAL FRAMEWORKFINANCECORPORATE TAXTAX POLICIESTAXESTAX REFORMSINVESTMENT DECISIONSEXPENDITUREEQUITYALTERNATIVE INVESTMENTSINCOME TAXESINVESTORSMACROECONOMIC DATATAX CREDITOPPORTUNITY COSTGOODTAX INCENTIVETAX RATETRANSPARENCYTURNOVERFUTURETAX LAWSFOREIGN DIRECT INVESTMENTRETURNSCAPACITY CONSTRAINTSLEGAL INSTRUMENTSBUDGETSFOREIGN INVESTMENTTAX REGIMESINVESTMENT PROJECTSLOAN GUARANTEESTAX CONCESSIONSGOVERNMENT REVENUEEXPENDITURESTAX COMPETITIONPROPERTYINVESTMENT TAX CREDITSPROPERTIESTAX EXPENDITURETAX RATESTAX EXPENDITURESBALANCE SHEETTAX LIABILITYMARKETINVESTMENT CHOICESTAX REVENUETAX SAVINGSTAX DEDUCTIONSHAREHOLDERSINSURANCETAXATIONPERSONAL INCOME TAXTAX LAWGOVERNMENT BONDSTAX CODETAX CREDITSGOODSINVESTOREFFECTIVE TAX RATESINTANGIBLESTOCKSINVESTMENTFEDERAL TAXHOST COUNTRYINCOME TAX REFORMSSHARETAX SYSTEMTAXPAYERSBUSINESS TAXTAX ADMINISTRATIONREVENUETAX POLICYPROFITINVESTMENTSPERSONAL INCOME TAXESDEDUCTIONSCHECKTAX REFORMTAX ALLOWANCESTAX RETURNINSTRUMENTPROFITSCAPITAL INVESTMENTCASH SUBSIDIESLIABILITIESGOVERNMENT ACCOUNTSTAX RETURNSTAX PROVISIONCASH FLOWWITHHOLDING TAXESWorking PaperIMF, OECD, UN, and World Bank10.1596/22924