Page 2 - Working Paper (Tax Incentives: An Alternative to Revenue Enhancement)

Tax Incentives:

An Alternative to Revenue Enhancement

Adri A. L. Poesoro* 1

The increasing mobility of international TABLE OF CONTENTS
firms and the gradual elimination
of barriers to global capital flows
have stimulated competition among
governments, often through tax incentives. 1. Introduction ............ 3
Tax incentive is a strategy to complement
other government tools to attract foreign
2. Tax Incentives
investment.
in Developing
Economies ............... 4
This paper starts with exploring the
rationale behind providing tax incentives
and empirical evidence across countries. 3. Types of Tax
Incentives ................ 5
The paper also comparing of pros and
cons for each tool of tax incentive. The
4. Economic Analysis
analysis will focus on the economics of
of Tax Incentives ..... 7
tax incentives and then followed by the
Indonesia’s experience with applying
5. Indonesia’s
these strategies.
Experience with Tax
Incentives ................ 8
In the last section, this paper will conclude
and propose recommendation for
Indonesia to enhance the state revenue. 6. Conclusion and
Recommendation .... 10

*Adri A. L. Poesoro is a Chief Economist, DANNY DARUSSALAM Tax
Center and a Doctoral graduate from Claremont Graduate University,
USA.

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