The Platform for Collaboration on Tax (PCT), under the Organisation for Economic Co-operation and Development (OECD), has initiated a public consultation draft titled “Tax Incentives Principles” on 10 December 2024. The consultation draft seeks feedback on its contents from tax policymakers, practitioners and experts.
Tax incentives—various forms of preferential tax treatment—have been widely used by countries to encourage desired activities and behaviours. However, while tax incentives can be effective in promoting specific goals, they can also erode tax revenue, create unintended distortionary and distributive consequences, and pose governance challenges. Policymakers, therefore, face complex decisions, especially in light of ongoing and fundamental changes in the international tax landscape.
To support these decisions, the PCT partners aim to provide a concise set of high-level principles easily accessible to policymakers and other stakeholders. These principles are designed to help navigate the policy, legislative and administrative issues related to tax incentives. The accompanying more detailed remarks further elaborate on the underlying reasoning for each of the principles and direct readers to sources of further advice and analysis.
To maximise the usefulness of the principles and remarks, responses to the following questions are sought:
- Do you find the principles and remarks presented in the document appropriate and well-balanced in terms of content and coverage? If so, please explain why. If not, please provide any suggestions you may have for refining the document.
- The document references additional material to help apply the principles. Given this, are there areas where you feel more guidance is needed?
- What kind of support might countries require to apply the principles effectively?
- Do you have any recommendations to refine the principles and remarks, given your experiences with tax incentives (either positive or negative)?
- Do you have any other comments or suggestions?
The consultation is set to conclude on 11 February 2025.
