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1 Elke Asen, Capital Cost Recovery across the OECD 1 (2021)

handle is hein.taxfoundation/clctryac0001 and id is 1 raw text is: Capital Cost Recovery across the OECD FISCAL Elke Asen FACT Policy Analyst No. 757 Mar. 2021 Key Findings - A capital allowance is the amount of capital investment costs a business can deduct from its revenue through the tax code via depreciation. - Ideally, countries should provide higher capital allowances, as they can boost business investment which, in turn, spurs economic growth. - The average of OECD countries' capital allowances gradually decreased between 2000 and 2017, followed by an increase between 2018 and 2020. - To incentivize business investment following the COVID-19 pandemic, several OECD countries have implemented accelerated depreciation-and in some cases full expensing-for various asset types. - Chile now temporarily allows full expensing of fixed assets and 100 percent amortization of intangibles. This makes Chile the third OECD country after Estonia and Latvia that effectively allows full expensing of industrial buildings, machinery, and intangibles. - Several smaller OECD countries not only allow higher capital allowances but also levy lower corporate income tax rates, making them more attractive for capital investment. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2021 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org

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