[...]... blank Technology Tran~fer Taxation: Key Issues and Introduction Technology is considered an essential precondition for improving productivity, attaining industrial development and promoting export growth Therefore, technology transfer is seen as a key element for enabling developing countries to integrate into and compete in the global economy as well as to meet their development goals Transfer of technology. .. taxes and customs duties are often important: high duties and taxes on the import of machinery and other capital goods increase the initial cost of investment and may constitute a disincentive to FDI Technology Transfer and Taxation: Key Issues (c) Investment incentives According to conventional wisdom, tax incentives for foreign investment are not recommended (UNCTC, 1992; UNCTAD, 1996; Holland and. .. between technology- importing and -exporting countries than between developed and developing countries The report is organized as follows: Chapter I discusses the ways in which international tax principles apply to and affect technology transfer Chapter I1 examines key issues in formulating a tax policy that promotes transfer of technology Chapter I11 analyses the tax policies of technology- importing and. .. countries and how these could be adapted to facilitate transfer of technology to developing countries A final section provides concluding remarks This page intentionally left blank Technology Transfer and Taxation: Key Issues Chapter I The application of international tax principles to technology transfer The forms of technology can be grouped into three categories: tangible assets, intangible property and. .. by the European Union and the OECD to counter harmful tax competition Technology Transfer and Taxation: Key Issues Chapter I1 Formulating a tax policy to promote technology imports 1 General considerations Formulating a tax policy regarding the importation of technology involves balancing conflicting objectives On the one hand, countries wish to facilitate the acquisition of technology: on the other,... their Technology Transfer and Taxation: Key Issues decisions by market and political factors and that tax policy appears to have little effect on the location of FDI" (Morisset and Pirnia, 2001) Some studies also conclude that the importance of host-country taxation varies considerably according to the type of investment: in particular, there are significant differences between market-oriented and export-oriented... disallowance of expenditures incurred in creating the technology and failure to allow tax-sparing credits Technology Transfer and Taxation: Key Issues In recent years, the international community has focused on whether developed countries' tax systems might do more to facilitate and encourage investment in developing countries and thus promote transfer of technology Various measures have been considered,.. .Technology Transfer and Taxation: Key Issues The formulation of a tax policy with respect to the importation of technology involves the balancing of conflicting objectives On the one hand, countries wish to facilitate the acquisition of technology: on the other, they wish to derive, in the form of tax revenue, a fair share of the profits that accrue to the foreign owner of that technology. .. 1997) Technology Transfer and Taxation: Key Issues (Cm) Personal income tax and social security contributions are of little relevance, except in the case of employment of expatriates (discussed further in Chapter D).' Sales taxes, such as the VAT, should normally be of little c ~ n c e m However, import duties can be a major ~ obstacle to the importation of technology, especially where the technology. .. asset, there is a disposal of the asset and a potential liability to tax on any capital gain, or to recapture of depreciation 12 In some cases there may be a transfer tax or stamp duty Technology Transfer and Taxation: Key Issues allowance^.'^ If, instead, the asset is leased, there will (in most tax systems) be no disposal for capital gains and depreciation purposes, and no immediate tax consequence^.^^ . Transfer of Technology for Successful Integration into the Global Economy Taxation and Technology Transfer: Key Issues United Nations New York and Geneva,. reserved Technology Transfer and Taxation: Key Issues Preface The current study was undertaken in pursuit of UNCTAD's mandate to "idente and disseminate