Countries that provide limited tax relief to loss-making companies risk stifling entrepreneurial risk-taking and the creation of new businesses, the Organization for Economic Cooperation and Development said.
Loss carrybacks, sufficiently generous carryforwards, and refundable provisions can make a tax system more neutral between loss-making and profitable activities, according to an OECD report focused on businesses dynamism published Thursday.
The report, part of the OECD’s work analyzing the role of tax policy on business behavior, said that corporate income tax rates had much larger effects on employment among small and young firms compared with large and mature firms. …
