Una evaluación económica a los incentivos fiscales a la inversión en Uruguay

Investment promotion through tax incentives has been a key component of the last two governments' strategy to stimulate the accumulation of productive assets. A public policy mechanism such as the Investment Promotion Regime (IPR, established by Decree 455/007) inevitably raises questions about its effectiveness (i.e., the capacity to achieve its objectives), efficiency (i.e., capacity to achieve those objectives minimizing the waste of resources and generation of unnecessary distortions), and the unintended and undesirable outcomes. For this document, the effects of tax incentives on investment, employment and the productivity of labor are estimated. The method used is Matched Differences in Differences, on the panel of firms affected by the main corporate income tax (IRAE), between 2005 and 2011. The evidence shows that the IPR had significant positive effect on investment and employment. The effect on investment increases until the third year and then declines. The effect on employment is increasing and persists over the first five years. No positive effects on productivity were found.