Free Zones create 3 times more jobs, but at a cost
Santo Domingo.- Free Zone companies create three times more employment, but each job costs five times more in terms of the income that is no longer received than each job created under the standard tax regime.
The figures, which is the result of a World Bank study, is contained in the analysis “Tax incentives for companies in Latin America and the Caribbean,” conducted by Oxfam and the Economic Commission for Latin America and the Caribbean (ECLAC ).
The report reiterates that due to tax incentives, Free Zone companies create a significantly higher number of jobs than companies that are outside this regime, but at a very high fiscal cost.
The analysts stress that the results of the investigation seem to indicate that tax incentives are not an efficient means of promoting job growth, especially in the Free Zones. “Fiscal incentives aren’t the main determinants of foreign investment in the region, but economic growth, the existence of infrastructure and economic openness are the elements that investors take most into account when making decisions.”