Use and abuse of tax breaks: how tax incentives become harmful

Taxation is essential to raise sufficient, equitable and accountable financing for development. Only through taxation can governments fund public spending on the essential services at the quality and scale necessary to realise the rights of all citizens. Yet many Southern governments decide not to tax certain corporations and companies in the hope that this will attract cross-border investment.

Despite mounting evidence that the practice of offering tax incentives is both largely ineffective and detrimental to development, it is widespread.

This report explains how tax incentives can become harmful, and discusses what can be done to stop their abuse.