A government incentive program that offers a tax
reduction or elimination to businesses. Tax holidays are often used to
reduce sales taxes by local governments, but they are also commonly used by
governments in developing countries to help stimulate foreign
investment.
Used in the hopes of increasing the gross domestic
product (GDP) in developing countries, tax holidays are a way in which
governments attract foreign investors. Tax holidays are often put in place in
particular industries to help promote growth.
