Legislation on foreign direct investment often provides special tax regimes to encourage foreign investments (tax exemptions, reductions, benefits). Such regimes should be carefully analysed and provided only when they benefit the Project or are needed to attract investors. Examples of such benefits include:
(a) Exemption from corporate tax of the concession period (tax holiday);
(b) Exemption from income tax for foreign project staff/lenders;
(c) Exemption or reduction from real estate tax;
(d) Exemption from or reduction of import duties on equipment, raw materials and components of the construction and operation and maintenance of the project;
(e) Tax concessions on royalties;
(f) Tax refund for foreign investors reinvesting their profits in new infrastructure projects in the country;
(g) Deductions from taxable income for the cost of certain expenses such as electricity, water and transport; and
(h) Capital/allowances in the form of depreciation or amortization.