Corporate Income Tax Competition in the Caribbean

Author/Editor:

Koffie Ben Nassar

Publication Date:

March 1, 2008

Electronic Access:

Download PDF. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Motivated by the concern that corporate income tax (CIT) competition may have eroded the tax base, this paper calculates average effective tax rates to measure the impact of CIT competition, including the widespread use of tax holidays, on the tax base for 15 countries in the Caribbean. The results not only confirm erosion of the tax base, but also show that CIT holidays must be removed for recent tax policy initiatives (such as accelerated depreciation, loss carry forward provisions, and tax harmonization) to be effective. These findings suggest that the authorities should either avoid granting CIT holidays or rely more on other taxes (including consumption taxes such as the value-added tax) in order to broaden the tax base.

Series:

Working Paper No. 08/77

Subject:

English

Publication Date:

March 1, 2008

ISBN/ISSN:

9781451964776/1018-5941

Stock No:

WPIEA2008077

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

22

Please address any questions about this title to publications@imf.org