A tax holiday is a time-limited exemption from taxation and one of the most commonly employed tax incentives in developing countries. The main objective behind tax incentives is to attract foreign direct investment (FDI), as this is believed to stimulate economic growth and development.
An exemption from taxation under a tax holiday could encourage investors to invest in developing countries. However, this requires that the benefit under the tax holiday actually accrues to the investor and is not washed out by taxation in the investor’s residence country.
The subject of Bjerkestuen's thesis is the interrelation between tax holidays offered in developing countries and the taxation of foreign income in industrialised countries.