Corporate income tax (CIT) incentives are quite prevalent among OECD countries. As of 2024, about 89% of all economies covered offer at least one form of CIT incentive, with tax exemptions being the most common, followed by tax allowances and reduced CIT rates, which are used by 71% and 67% of these economies, respectively.
Specifically, in 2021, 22 out of 38 OECD countries offered income-based tax incentives for R&D and innovation, while 33 countries provided expenditure-based incentives. The widespread use of such incentives reflects a strategy to attract investment and support economic activities, although the OECD expresses concern about the extensive reliance on income-based instruments.
Despite these incentives, there has been a stabilization in statutory corporate tax rates globally, with an average rate of 23.85% among OECD countries in recent years.
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