Evaluation of Tax Exemption's Roles Article 132 in Creating Employment in Iran's Less Developed Regions

Nowadays, in many developing countries tax incentives are used in order to affect the regional economy; however most investors declare that these incentives comparing to the other investment barriers are not somewhat important. Anyway, determining conditions and a coherent framework for using tax concessions like tax exemptions and examining their effects on investment, employment and production, are serious challenges for developing and even developed countries’ economic policy makers. Iran’s tax system is one of the few tax systems, which includes many forms of tax incentives for a wide range of audiences. The aim of this study is to evaluate the impact of tax exemptions, article 132 on employment of Iran’s less developed counties for the period from 1996 to 2008 ( 1375 -1387 corresponding to Iranian calendar).
In the present paper, the method used is Synthetic Control Method (SCM). In this method, first, the proper control units are selected systematically via an optimization process. Then, the treatment effects are estimated by extracting a weighted combination from results of control units, and by considering the treated groups’ experimental outcomes in the absence of the Program execution. Results indicate that tax exemptions Article 132 has no impact on employment of Iran’s less developed counties.