Corporate Income Tax Competition in the Caribbean

24 Pages Posted: 2 Apr 2008

See all articles by Koffie Nassar

Koffie Nassar

International Monetary Fund (IMF) - African Department

Date Written: March 2008

Abstract

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.

Keywords: Working Paper

Suggested Citation

Nassar, Koffie, Corporate Income Tax Competition in the Caribbean (March 2008). IMF Working Paper No. 08/77, Available at SSRN: https://ssrn.com/abstract=1115608

Koffie Nassar (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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