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There are three approaches to dealing with tax incentives within common markets: permit them, limit them, or harmonize them. Broadly speaking, the United States (U.S.) follows the first approach, the European Union (EU) adopts the second, and the Gulf Cooperation Council (GCC) pursues the third by harmonizing some tax incentives, particularly those offered to the industrial sector. Unlike the U.S. and EU common markets, where incentives have gained significant scholarly attention, no academic literature exists on the legal framework of tax incentives in GCC common market. This work attempts to compensate for this insufficiency in scholarship and compares the three approaches.

This work also explores the case against locational tax incentives and concludes that the conventional case against tax incentives is overall debatable, and further evidence considering the ongoing changes in international tax policy is needed to better evaluate the case. Furthermore, this work analyzes the advantages and disadvantages of the three approaches to dealing with tax incentives. In particular, this work explores how effective the approaches are in managing bidding wars, increasing tax law predictability, allowing flexibility to reform domestic tax policy as needed, and policing tax incentives. It concludes that each method has its limitations, advantages, and disadvantages. Thus, another contribution that this work offers is the inclusion of a holistic examination of the three approaches that merits focusing beyond the one consideration on which much of the existing literature focuses, that is, bidding wars between competitor states.

Although this work primarily aims to assist GCC policymakers in deciding the best policy option for managing tax incentives, this scholarship is helpful even beyond the GCC. Federal countries and regional blocks that see and experience incentives competition can benefit from this work since it analyzes the merits of different approaches to managing incentives in general.