Regional Economics: Theory and Practice
 

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Tax loss carryforwards: Fiscal implications for regional budgets

Vol. 16, Iss. 3, MARCH 2018

PDF  Article PDF Version

Received: 22 November 2017

Received in revised form: 4 December 2017

Accepted: 14 December 2017

Available online: 15 March 2018

Subject Heading: ECONOMIC-MATHEMATICAL MODELING

JEL Classification: C1, H2, H30, H61

Pages: 536–550

https://doi.org/10.24891/re.16.3.536

Anisimova A.A. Financial Research Institute of Ministry of Finance of Russian Federation (FRI), Moscow, Russian Federation
aanisimova@nifi.ru

ORCID id: not available

Importance This article deals with the implications for regional budgets arising from the introduction of tax incentives in terms of damaging the regional budget and attracting investments in the region's economy.
Objectives The article aims to analyze the consequences of applying a benefit of tax loss carryforward for tax revenues of regional budgets.
Methods For the study, I used econometric methods and statistics data of 2016.
Results The article presents the results of analysis of fiscal costs for the regions due to tax loss carryforward and shows the calculation results of the impact of the benefit on investment and regional budgets for two scenarios of fiscal policy.
Conclusions The analysis of the two fiscal policy scenarios for regional budgets shows that introducing a restriction on the benefit in the first case would result in economy of the budget, and in the second case, it would result in the losses from the decrease of investment activity.

Keywords: loss carryforward, investment, tax incentives, tax system, tax revenues, regional budgets

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