REASSESSING THE EFFICIENCY OF TAX INCENTIVES FOR DOMESTIC INVESTMENT

This article provides a comprehensive analysis of the impact and efficiency of tax incentives on domestic investment from a macroeconomic perspective. Governments across both developed and developing economies widely employ fiscal instruments such as tax holidays, investment tax credits, and accelerated depreciation to stimulate private sector investment and economic growth. However, the effectiveness of these measures remains controversial due to issues such as fiscal costs, redundancy, and institutional inefficiencies. Drawing on empirical evidence from international organizations including the International Monetary Fund, Organisation for Economic Co-operation and Development, and the World Bank Group, this study evaluates the mechanisms through which tax incentives influence corporate investment decisions. The findings indicate that while tax incentives may generate short-term sectoral investment gains, their long-term efficiency is contingent upon institutional quality, transparency, and overall macroeconomic stability.