The OECD has released the Investment Tax Incentives Database 2024 update on 19 March 2025.

The 2024 update of the OECD Investment Tax Incentives Database (ITID) provides insights into corporate income tax (CIT) incentives for investment in 70 economies, mostly emerging and developing. The database highlights trends on the design, targeting and granting of CIT incentives, notably in terms of instrument-specific design features and eligibility conditions, and whether they support sustainable development objectives. It also provides insights into the evolution of CIT incentives over the 2022–24 period.

The 2024 edition of the ITID shows that:

Between 2022 and 2024, the use of tax incentives to promote investment has increased in the 52 economies that are part of both editions, accompanied by a greater use of tax credits in upper-middle income economies, and a persistent reliance on CIT exemptions across income groups. This underscores ongoing competitive pressures as well as challenges in policy design and governance. Strengthening institutional capacity and evaluation, rationalising and improving the design of incentives, and maintaining consistency with economic objectives remains critical for ensuring that tax incentives effectively promote investment without introducing inefficiencies, windfall gains, undue complexity or undermining domestic resource mobilisation.

In 2024, more than a third of all incentives in the database target sustainable development objectives. Incentives that relate to improving the environmental impact of investments are offered in two thirds the economies (66% of all economies). Tax incentives are also commonly used to support employment and job creation (in 44% of all economies), as well as job quality and skills development (in 36% of all economies). Other sustainable development areas promoted by incentives are related to social inclusion and economic development. Sustainable development objectives are mostly promoted through CIT exemptions and tax allowances (40% and 38%, respectively) and less commonly with reduced CIT rates and tax credits (12% and 9%, respectively).

Tax exemptions are the most widely used CIT incentive instrument across countries in the database. 89% of all economies covered in the 2024 edition use at least one CIT incentive in the form of a tax exemption. Tax allowances and reduced CIT rates are also common but less so than exemptions (71% and 67% of all economies use them, respectively). Tax credits are used in one out of every three economies. Instrument choice has important implications for the efficacy of incentives, given that their effectiveness and costs are strongly design- and context-specific. The widespread reliance on income-based instruments across economies is concerning, as these instruments tend to be less cost-effective than expenditure-based incentives (tax allowances and tax credits).

Tax exemptions typically are generous. Most (91%) tax exemptions grant full relief on all income rather than targeting specific qualifying income (e.g. income derived from operational activities) or limiting the scope of relief to a portion of taxable income.

Tax allowances target specific assets more often than specific activities. Tax allowances apply frequently to capital expenditure (70% of all tax allowances). They more often accelerate capital cost recovery within 100% of the cost (68%) rather than enhance its deduction value above 100% of the capital cost incurred (32%). Only 24% target current expenditure, such as labour and training costs. The remaining 6% target both capital and current expenditure or provide lump-sum deductions, e.g. per new job created.

The size, timing, and flexibility of tax relief depend on a range of design features that influence the generosity and accessibility of incentives. For example, tax exemptions are typically granted on a temporary basis (77% of all exemptions), most commonly for five or ten years (29% and 25% of all temporary exemptions, respectively). In contrast, reduced CIT rates are as often permanent as they are temporary. Tax credits rarely are refundable in the economies covered (2% of all tax credits).

Types of tax incentives vary by economies’ level of economic development. Tax exemptions and reduced CIT rates are relatively more common in lower middle-income and upper middle-income countries, whereas tax allowances are most widely used in low-income economies. Upper middle income countries stand out for their relatively more frequent use of tax credits compared to other country groups, albeit at a modest level compared to their frequent use of tax exemptions. This suggests a link between the choice of tax credits (and more complex expenditure-based instruments) and the increasing institutional capacity associated with higher income levels.

Eligibility for incentives most often is dependent on the sector or the location of activity. Most economies apply a sector condition to at least one of their incentives (96% of all economies). Targeting investments in specific locations, e.g. Special Economic Zones (SEZs) or specific geographic regions, is another widely used strategy (80% and 71% of all economies respectively apply these conditions to at least one of their incentives). Linking eligibility of at least one of their incentives to a specific performance of the investment (81% of economies) is as common as SEZ conditions, and includes creating a minimum number of new jobs or exporting a minimum share of sales. Two thirds of the economies in the ITID have at least one CIT incentive that requires a minimum investment value.

SEZs are more often associated with tax exemptions than with any other instrument. Outside of SEZs the different tax incentive instruments are more evenly distributed.

More than half (58%) of all investment tax incentives in the database combine multiple eligibility conditions. This can support more precise project or investor targeting and reduce fiscal costs, but can result in complex designs that can make incentives less transparent for investors, policymakers and the general public.

The governance of investment tax incentives is complex. In about three quarters of the economies (71%) CIT incentives are scattered across several laws and regulations, which can reduce their transparency for investors and complicate monitoring and evaluation. Only 29% of economies provide more than 90% of their CIT incentives in one single piece of legislation, generally the income tax law (23%) or dedicated investment laws (6%). In many economies, multiple authorities are involved in granting and administering investment tax incentives.