POLICIES OF OTHER COUNTRIES

Many countries have already had in place policies on subsidies and tax deductions, and these policies can be effective in tax competition given the enforcement of the global minimum tax.

For example, India has applied incentive policies since 2020, with three prominent policies: (1) Large-Scale Electronics Production Linked Incentive Scheme (PLI), with a subsidy of 4-6% on additional revenue compared to standard years for priority areas such as mobile phone manufacturing, electronic components prioritized for domestic production; (2) Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) to support 25% of investment costs in factories, machinery, equipment, technology, and R&D; (3) Cluster Development of Electronics Manufacturing Complex (EMC 2.0) to provide financial support related to infrastructure, land funds.

Similarly, China has offered financial support at 3-6% for electric vehicle manufacturing. Thailand has long had cash support policies (along with other incentives) for R&D, innovation, technology development, and human resource development for 10 priority industries under the Enhance Competitiveness Act.

Ireland (a typical tax-competitive country with a standard tax rate of 12.5%) also has many policies such as R&D support (25% of total R&D costs for eligible projects); investment support (5-10% of investment value); employee support (15% of salary costs for new employees within two years); and training support (50% of costs, maximum 2 million euros).