Cover IMF Working Papers
Tax Concessions and Foreign Direct Investment in the Eastern Caribbean Currency Union
Author: Ms. Jingqing Chai and Rishi Goyalhttps://orcid.org/0000-0002-5853-9207
Series:
IMF Working Papers
Volume/Issue:
Volume 2008: Issue 257
Language:
English
Publication Date:
01 Nov 2008
DOI:
https://doi.org/10.5089/9781451871159.001
ISBN:
9781451871159
ISSN:
1018-5941
Pages:
33
Keywords:
WP; firm; investor; net profit; tax rate; cost
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Tax concessions have been employed as a central component of the development strategy in the small island states comprising the Eastern Caribbean Currency Union. This paper compares the costs of concessions in terms of revenues forgone with the benefits in terms of increased foreign direct investment. The costs are very large, while the benefits appear to be marginal at best. Forgone tax revenues range between 9½ and 16 percent of GDP per year, whereas total foreign direct investment does not appear to depend on concessions. A rethinking of the use of concessions in the region is needed urgently.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund