Revisiting Tax Incentives as an Investment Promotion Tool: Q&A for investment policy-makers

Do tax incentives effectively attract investment in developing countries?Tax incentives have, for many years, been considered essential investment promotion tools. Since the early 2000s, however, their effectiveness has been brought into question. Policy-makers, including those responsible for investment law and policy frameworks, have responded by tightening the governance of tax incentives by shortening the duration of incentives or requiring that investors meet additional performance requirements, for example. While this is a valuable and worthwhile exercise, the actual utility and effectiveness of tax incentives have been less explored by governments.