Governments develop and use tax incentives to encourage investment in their country. Investment by companies in countries usually results in job creation and the expansion of infrastructure, aiding social and economic development.
Governments set their fiscal policies and the rules for individual and business taxes. These are typically approved by national parliaments. Governments may develop specific tax laws or offer tax incentives if businesses invest in the country or in a specific location or industry.
Shell uses available and appropriate tax incentives and exemptions where we have a qualifying business activity.
Incentives can include tax relief for capital expenditure on infrastructure, a tax treatment of costs related to research and development activities or exemptions from certain taxes where employment targets are met.
In Krakow, Poland, we employ around 4,000 people within one of the country’s designated economic development zones. By creating new jobs in the zone, we have qualified for tax incentives since 2006 that partially exempt us from paying corporate income tax. The Polish government created these zones to accelerate economic development in certain regions.
While applying tax incentives can result in businesses paying lower corporate income taxes, other taxes paid by businesses – such as property taxes, taxes on goods and services and employment taxes – may increase. This is because governments expect a net economic benefit after they have granted incentives.