Corporate Income Tax Competition in the Caribbean

March 1, 2008

Preview Citation

Format: Chicago

Koffie Ben Nassar. Corporate Income Tax Competition in the Caribbean, (USA: International Monetary Fund, 2008) accessed December 26, 2024

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.

Subject: Average effective tax rate, Corporate income tax, Corporate taxes, Tax harmonization, Tax holidays

Keywords: CIT competition, CIT holiday, CIT rate, Rate, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/077
Stock No:

WPIEA2008077
ISBN:

9781451964776
ISSN:

1018-5941

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