Tax Incentives have been used over the years with the belief that they lead to the attainment of public policy objectives that would ordinarily be accomplished through public (revenue) spending or as an avenue of encouraging activities that will lead to setting up of investments especially FDI that would provide jobs and contribute to future revenues.

We recognise that Foreign Direct Investment (FDI) is critical in fostering economic growth and development.

We are aware that tax incentives can promote investments in the country if they are transparent and equitably accessed, awarded and managed.

However, tax incentives when mismanaged can distort internal market dynamics and breed corruption.

An analysis conducted by the Tax Justice Alliance suggests that developing countries do not need to grant tax incentives to attract Foreign Direct Investment (FDI), because the decision to invest by genuine multinational corporations is largely based on other parameters such as market potential and energy; presence of adequate infrastructure; and the country's overall investment climate.

This has also been confi rmed numerous times by IMF and the World Bank, which state that countries that are most successful in attracting foreign investors did not have to offer tax holidays, but rather invested in other important factors such as good quality infrastructure, low administrative costs of setting up and running businesses, political stability and predictable macro-economic policy.

Furthermore tax incentives and preferential tax treatment also create other unintended and unforeseen taxplanning opportunities that are commonly exploited by corporations.

That is why we welcomed the Government's decision taken in 2013/14 to reduce unnecessary tax incentives since they contribute to narrowing of the tax base and loss of revenue.

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