Tax incentives as a factor of economic growth ivana domazet and darko marjanović

6. Conclusion 
According to the results of the conducted empirical research, foreign investors 
doing business in Serbia consider the most significant tax incentives relating to the tax 
on corporate profit, tax incentives for hiring new workers and tax benefits for 
companies that export, while other incentives are far less important. In order to create 
business environment in Serbia which would meet expectations of foreign investors, it 
is necessary to highlight the importance of these tax incentives. Tax competition, 
which is reflected in the implementation of tax incentives for foreign investors, 
reduces the tax base in the amount of exemption from payment of income tax. On the 
other hand, tax incentives should stimulate investors to invest capital that will 
contribute to the growth of employment. Employment growth allows the increase of 
effective demand and increase the tax base, due to the increased purchasing power, i.e. 
the increase of revenues from taxes collected on final consumption. 
Economic policy makers in Serbia should adequately implement the 
requirement which foreign investors have expressed through this research. Analyzing 
the results, it is evident that there are good prospects for growth, respectively 
increasing the inflow of foreign capital. In order to achieve that, it is necessary to offer 
investors a wider range of tax incentives as soon as possible, while taking into account 
other variables that may have an impact on investors when choosing Serbia as an 
investment destination. Since the results of the research indicate that tax incentives 
could to some extent contribute to the improvement of business environment in 
Serbia, clearly showing the direction which Serbia should pursue in cooperation with 
foreign investors, hence the contribution of this research is even greater since it will 
provide information which may be useful for any future reform of the tax system in 
Serbia.