Tax incentives as a factor of economic growth

Domazet, Ivana and Marjanović, Darko (2017) Tax incentives as a factor of economic growth. In: The state and the market in economic development: in pursuit of millennium development goals. The International Institute for Development Studies, Brisbane, Australia, pp. 93-107. ISBN 978-0-646-94775-4

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Abstract

Competitiveness of Serbia in attracting foreign capital depends to some extent on tax incentives granted to foreign investors. Therefore, the aim of this paper was to collect data on opinion, values, expectations and perceptions of foreign investors on the importance of tax incentives in certain areas of their business in Serbia. The methodology of empirical research in this paper is based on a quantitative approach to primary data collection through surveys of relevant participants, comparison of the collected data and the analysis of causality of the researched phenomena. According to the results of our research, foreign investors doing business in Serbia consider the most significant tax incentives those relating to the tax on income of legal entities, tax incentives for the employment of new employees and tax incentives for export companies, while the importance of other incentives is far lesser. In order to make the business environment in Serbia suitable for foreign investors and in accordance with their expectations, it is necessary to highlight the importance of these tax incentives. For economic policymakers in Serbia it is extremely important to adequately implement the preferred business incentives which foreign investors expressed in this survey. Analyzing the obtained results it is evident that there are good prospects for increasing the inflow of foreign capital. So as to achieve that, it is necessary to offer investors a wider range of tax incentives as soon as possible, taking into account other variables that may have an impact on investors when choosing Serbia as an investment destination, which would lead to the improvement of the business environment and economic growth.

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