About the indicator

When a country sets up special economic zones and offers tax holidays to multinational corporations to encourage local investment, these incentives can be easily abused by corporations to shift profits and underpay tax elsewhere. This often comes with little local economic benefit to the country, leading to large, wasteful tax losses. This indicator measures if the country provides time-bound or geographically confined tax incentives to multinational corporations. It measures if these incentives offer partial or full exemptions from corporate income tax and/or capital gains tax. This includes temporary tax holidays and special tax incentives (temporary or permanent) given to corporations in designated economic zones.