Types of Tax Concessions for Promoting Investment in Free Economic and Trade Areas

Statutory coιporate
tax rate for retained
earnings (t in %)

Free depreciation

Accelerated depreciation

Investment tax allowance

Net present value

10

8.89

5.51

537

15

12.85

7.85

8.18

20

16.45

9.89

11.08

25

19.68

11.65

14.08

30

22.51

13.10

17.16

35

24.91

14.26

20.33

40

26.85

15.11

23.58

45

28.30

15.65

26.92

________50________

__________29.24__________

___________15.88___________

__________30.34___________

Assumptions

Equity finance; C = PVo = 333.33; Ao = 100; r = 10%; α
σ = 50%; Ω = 5 years; β = 20%____________________

= 20%; Γ = 10 years;

Inflation rate

Free depreciation

Accelerated

depreciation

Investment tax allowance

(%)

tC (IE with various tax concessions -

FPo^sld)

t = 20%

t = 40%

t = 20%

t = 40%

t = 20%

t = 40%

1

17.53

15.00

12.59

10.05

10.81

8.28

2

16.87

11.79

11.56

6.48

8.87

3.79

3

16.21

8.56

10.54

2.89

7.00

-0.65

4

15.55

5.30

9.53

-0.71

5.19

-5.05

5

14.88

2.02

8.53

-4.32

3.44

-9.41

6

14.21

-1.28

7.54

-7.96

1.75

-13.75

7

13.53

-4.62

6.55

-11.61

0.10

-18.06

8

12.85

-8.00

5.57

-15.28

-1.50

-22.34

9

12.17

-11.41

4.59

-18.98

-3.05

-26.62

10

11.47

-14.85

3.62

-22.71

-4.56

-30.33

11

10.78

-18.33

2.65

-26.46

-6.03

-35.14

12

10.08

-21.85

1.69

-30.25

-7.46

-39.39

13

9.38

-25.41

0.73

-34.07

-8.86

-43.65

14
.

8.67
.

-29.02
.

-0.23
.

-37.92
.

-10.22
.

-47.92
.

.

.

25

.

0.55

.

-72.44

.

-10.58

.

-83.57

.

-23.60

.

-96.60

Assumptions

Equity finance; C = PVo = 333.33; Ao = 100; r
Ω = 5 years; β = 20%

= 10%; α = 20%; Γ = Γ* =10 years; σ = 50%;