Tax loss carryforwards: Fiscal implications for regional budgets

Abstract

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.