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(In)efficiency of corporate income tax expenditures on underdeveloped areas of special tax treatment in Croatia

Author

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  • Vjekoslav Bratic

    (Institute of Public Finance, Zagreb, Croatia)

Abstract

The introduction of various tax expenditures by the tax authorities, mostly in corporate income taxation (CIT), in order to kick start development in areas affected by the war as well as in economically underdeveloped areas has been characteristic of the Croatian tax system since 2000. Although the purpose of such forms of state aid was to foster economic development and equalize the level over the entire country, at the same time they caused forgone tax revenues and it is therefore necessary to analyze their advantages and disadvantages and evaluate their possible positive or negative effects. This paper deals with the analysis of tax expenditures in the system of CIT in Croatia and it investigates their effect on the budget and the possible advantages brought by their introduction. The main purpose of the paper is to answer the questions as to whether the expenditures that have been introduced in CIT justify their purpose and the goal of their introduction and what can be done to improve the existing CIT expenditures system.

Suggested Citation

  • Vjekoslav Bratic, 2012. "(In)efficiency of corporate income tax expenditures on underdeveloped areas of special tax treatment in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 36(4), pages 373-394.
    • Handle: RePEc:ipf:finteo:v:36:y:2012:i:4:p:373-394
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    References listed on IDEAS

    as
    1. Vjekoslav Bratic & Ivica Urban, 2006. "Tax expenditures in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 30(2), pages 129-195.
    2. Hana Polackova Brixi & Christian M.A. Valenduc & Zhicheng Li Swift, 2004. "Tax Expenditures--Shedding Light on Government Spending through the Tax System : Lessons from Developed and Transition Economies," World Bank Publications - Books, The World Bank Group, number 15067.
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    Cited by:

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