Tax Incentives Offered by Developing Countries : Attracting Foreign Investment or Creating Disaster?

This paper reviews the literature and evidence of tax incentives offered by developing countries to attract foreign investment. Also reviews the consequences of the implementation of these measures, such as harmful tax competition, erosion of tax bases and many other issues arising from these provisions. Additionally, reviews the arguments supporting tax incentives from developing countries, and also the arguments against these fiscal provisions. Developing countries usually face many problems that are not necessarily solved through the implementation of tax holidays and other kinds of benefits to foreign investment. The participation of developed countries and international organizations may be required to help developing countries to achieve development