Corporate Tax Stimulus and Investment in Colombia

This paper uses a yearly dataset of plant-level investment in Colombian firms during the period 1997 to 2007 to assess the impact of a tax incentive for firms that invest in fixed assets implemented in 2004. A positive and statistically significant correlation is found between the boom observed in investment and the adoption of the tax policy. However, the correlation vanishes when year-specific effects are controlled for. This result is robust to changes in the empirical specification, changes in estimation techniques, the inclusion of additional controls, and changes in the data set, among other tests. Overall, it is concluded that the tax stimulus analyzed was ineffective in promoting investment in Colombia.

Bibliographic Details

Main Author:	Inter-American Development Bank
Other Authors:	Arturo Galindo
Format:	Working Papers biblioteca
Language:	English
Published:	Inter-American Development Bank
Subjects:	Investment, Fiscal Policy, E22 - Investment • Capital • Intangible Capital • Capacity H2 - Taxation Subsidies and Revenue, H20 - Taxation Subsidies and Revenue: General, H21 - Efficiency • Optimal Taxation, H22 - Incidence, H23 - Externalities • Redistributive Effects • Environmental Taxes and Subsidies, H24 - Personal Income and Other Nonbusiness Taxes and Subsidies, H25 - Business Taxes and Subsidies, H26 - Tax Evasion and Avoidance, H27 - Other Sources of Revenue, H29 - Taxation Subsidies and Revenue: Other, O54 - Latin America • Caribbean, IDB-WP-173,
Online Access:	http://dx.doi.org/10.18235/0010933 https://publications.iadb.org/en/corporate-tax-stimulus-and-investment-colombia
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