Castries, St. Lucia, September 22, 2015 -
IFC, a member of the World Bank Group (WBG), and the Government of
St. Lucia today kicked off the second of three workshops designed to help
government officials measure the costs and benefits of tax incentives and
leverage these incentives to promote productive new investments in the
Caribbean. The workshops are supported by the Department of Foreign Affairs,
Trade and Development of Canada (DFATD) and Switzerland’s State Secretariat
for Economic Affairs (SECO).
Tax incentives have been a key feature of investment promotion strategies
for most countries in the Organization of Eastern Caribbean States
(OECS). However, there is little evidence to suggest that these incentives
correlate with investment flows. While the region offers some of the most
generous incentives packages, there has not been a corresponding increase
in investment. The workshops help key technical personnel in the OECS identify
best practices in tax incentive policy and administration and offer a framework
for analyzing the effectiveness of investment incentives in their countries.
“Finding the right balance between tax incentives that attract investors
and the need for collecting revenues is essential,” said Dr. Sebastian
James, Senior Economist at the World Bank. “This can be achieved by having
an evidence based approach to tax incentives which helps countries understand
the impact of tax incentives and their role in attracting foreign investors.
The goal is to provide governments with all the information they need to
develop effective tax regimes that support their local economies.”
Dr. Reginald Darius, St. Lucia’s Permanent Secretary of the Ministry of
Finance, noted that the country is keenly interested in measuring the fiscal
costs and socio-economic benefits of tax incentives to ensure the competitiveness
and sustainability of its incentives regime.
This week’s workshop will focus on developing detailed country-specific
models to analyse tax expenditures. It will provide OECS participants with
training on how to calculate fuel tax, exempted goods, as well as how to
calculate tax expenditures on income tax.
A previous workshop held in March of this year provided participants with
simple models for tax expenditure reporting and helped them use national
statistics to calculate tax expenditure for VAT, customs duties and exemptions,
and corporate income taxes.
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with more than 2,000 businesses worldwide, we use our capital, expertise,
and influence, to create opportunity where it’s needed most. In FY15,
our long-term investments in developing countries rose to nearly $18 billion,
helping the private sector play an essential role in the global effort
to end extreme poverty and boost shared prosperity. For more information,