The investment deduction is a tax incentive that allows companies to exempt part of their profits for specific new investments made during the taxable period. This mechanism is designed to encourage companies to invest in innovative projects and growth, benefiting not only individual companies but also the wider economy.
The investment deduction works by granting a percentage of investment costs as a deduction from taxable profits. This results in a reduction of the tax base, which in turn leads to lower tax liabilities for the company. The purpose of the investment deduction is to stimulate economic activity, promote innovation and support specific sectors, such as environmentally friendly investments and research and development.
Companies can benefit from one-off investment deductions or staggered investment deductions, depending on the type of investment and tax regulations at the time.
