Tax sparing
Tax sparing is a regulatory technique predominantly adopted in double tax treaties between industrialized countries and developing countries. Tax sparing provisions generally enable tax incentives granted by developing countries to accrue to foreign investors, rather than being consumed under the system of eliminating juridical double taxation. The overall rationale of enabling tax incentives to accrue to foreign investors is the notion that it will induce an increase of inbound capital flows to the developing country, which may contribute towards economic development.
The objective
The objective of this thesis is to provide a comprehensive analysis of the concept of tax sparing. This will be done in two main parts. The first part will address the general charac-teristics of tax sparing, its rationale and its role in double tax treaties. The second part will provide an analysis and systematization of, and comments on, the different and variable components of tax sparing provisions.