The criteria of tax neutrality: capital export neutrality, capital import neutrality and national neutrality

Question

Quizplus · Accepted Answer

The criteria of tax neutrality, capital export neutrality, capital import neutrality, and national neutrality, are not always consistent with one another. For example, if a country implements a tax policy that provides a tax exemption for foreign investors, it may improve capital import neutrality but harm national neutrality by favoring foreign investment over domestic investment. Therefore, policymakers must make trade-offs between these criteria when designing tax policy.

The Criteria of Tax Neutrality: Capital Export Neutrality, Capital Import