The Journal of Accounting and Management, Vol 7, No 3 (2017)

Do tax incentives attract foreign direct investment? The case of the Southern African Development Community

Simon Munongo, Zurika Ribinson

Abstract


the problem of low savings is inherent in southern Africa. this has motivated SADC countries to institue policies that seek to attract foreign mobile capital to cover the investment deficit arising from low savings. In separating individual tax incentives used in SADC region, this study gives a robust analysis of the impact of each tax incentive to the attraction of FDI into SADC. The tax incentives used in the study are tax holidays, Corporate Income Tax, losses carried forward and reduced CIT in specific sectors. The estimated results show that tax holidays positively explain FDI, CIT nagatively affect FDI inflows into SADC. Losses carried forward are insignificant while reduced CIT in specific sectors nagatively affects FDI inflows into SADC.

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