Governments offer tax incentives to achieve various economic and social objectives. Some of the key reasons include:
- Encouraging Investment: Tax incentives can attract both domestic and foreign investments, leading to job creation and economic growth. - Promoting Innovation: R&D tax credits encourage companies to invest in new technologies and innovations. - Supporting Small Businesses: Reduced tax rates and other incentives can help small businesses thrive, contributing to a more diverse and resilient economy. - Environmental Goals: Incentives for renewable energy projects and energy efficiency can help achieve environmental sustainability targets. - Regional Development: Tax incentives can encourage businesses to invest in economically disadvantaged or rural areas, promoting regional development.