Under a directive from the World Bank, CRI conducted a Cost-Benefit Analysis (CBA) of five different corporate income tax incentives in Serbia. These tax incentives are (i) tax incentives allowing for a double expensing of research and development expenditures against taxable income, (ii) a tax incentive that exempts 80% of income received from patent leases, (iii) a 10-year income tax holiday incentive for investments that create employment, (iv) tax credits for investments in innovative start-up firms and (v) an employment tax credit that is designed to give firms an incentive to employ members of the labor force that have been unemployed for long periods.

The CBA utilized the Integrated Investment Appraisal (IIA) methodology involving the construction of five detailed integrated models for the selected tax incentives. The CBA aimed to quantify the financial and economic impacts of the applicable incentives with the objective of encouraging Research and Development (R&D), employment, and equity financing of innovative firms.

The results of the analysis, conclusions, and recommendations shared with the World Bank on the impacts of each incentive on the targeted firms serve as input to the discussion of the tax policy for improving Serbia's tax system and providing an analytical framework for evaluating alternative tax policy proposals.