Enhancing India CARIFORUM Economic Relations and Prospects for Cooperation

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INVESTMENT FRAMEWORK IN SELECT CARIFORUM COUNTRIES

General Overview The Caribbean governments generally employ a myriad of preferential tax measures or fiscal policy tools to achieve specific socio-economic and in some cases environmental objectives. These tools incentivize savings and investment into local economies in the region, promote specific industries, discourage or promote the consumption or production of specific goods and services, support business growth and development, job creation and the protection of the environment, among others. The implementation of these incentives may lead to a reduction in government revenue streams from taxes, but their use is supported throughout the region due to the perceived benefits that far outweigh the costs. The Caribbean is known globally for its significant generosity in tax benefits, particularly to new investors as the region seeks to compensate for the perceived competitive disadvantages related to geographical size, market size, relatively low internal demand and significant competition from neighboring territories. Within the Caribbean, the main tax incentives used are the following:

Table 14. Most Common Incentives in the Caribbean

Region/ Country Utilized

Incentive

Description

A tax holiday is a government incentive program that offers a tax reduction or elimination to businesses.

Tax Holidays

Caribbean

Accelerated-Depreciation schemes

Allows businessess to deduct the cost of depreciating assets at an accelerated rate Caribbean

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Enhancing India-CARIFORUM Economic Relations and Prospects for Cooperation