Managing Tax Incentives in Developing Countries
Technical Notes and Manuals, November 21, 2024
Source details
- Canonical URL
- Managing Tax Incentives in Developing Countries
Other formats
Bibliographic details
- Authors: Miguel Pecho, Stoyan E Markov, Philip R Wood, Rachel Auclair, Fernando Velayos
- Published: November 21, 2024
- Series: Technical Notes and Manuals
- DOI: https://doi.org/10.5089/9798400289590.005
Overview
- This Technical Guidance Note sets out the essential elements to effectively manage tax incentives in developing countries.
- Emphasis on the important role that revenue authorities must play in preventing abuses and revenue leakages.
- Presents considerations for a risk-based compliance program on tax incentives that combines various supportive, preventative, and corrective practices and approaches.
- Delineates key enablers, such as a whole-of-government approach, robust transparency and accountability practices, and a modern compliance risk management framework.
Major findings and emphasis
- Revenue authorities play a central role in preventing abuses and revenue leakages associated with tax incentives.
- Effective management of tax incentives requires combining supportive, preventative, and corrective practices within a risk-based compliance program.
- Key enablers identified include:
- whole-of-government approach,
- robust transparency and accountability practices,
- modern compliance risk management framework.
Elements of a risk-based compliance program on tax incentives
- Combine supportive, preventative, and corrective practices and approaches.
- Implement risk differentiation to focus resources on higher-risk taxpayers and incentive arrangements.
- Strengthen due diligence and reporting obligations tied to incentive administration.
- Integrate compliance activities across revenue administration functions and, where relevant, customs authorities.
Policy recommendations and approaches
- Adopt a whole-of-government approach to coordinate tax incentives policy and administration across relevant agencies.
- Enhance transparency and accountability around the granting, use, and monitoring of tax incentives.
- Modernize compliance risk management frameworks to better detect, prevent, and correct abuses and revenue leakages.
- Ensure that semi-autonomous revenue bodies and special economic zones are incorporated into broader compliance strategies where applicable.
Content in this bundle
- Managing Tax Incentives in Developing Countries; November 2024; TNM 2024/07