The German Institute of Development and Sustainability (IDOS) and the Council on Economic Policies (CEP) have just released the Tax Expenditures Lab Flagship Report 2025. Focusing on tax expenditure effectiveness, it adds to the inventory of previous editions (originally named GTED Flagship Report).
In addition, the Global Tax Expenditures Transparency Index (GTETI) has been updated for 2025. Both resources were presented during an online panel discussion held on December 4, with the report’s co-authors and other experts.
WATCH THE PANEL DISCUSSION
Tax expenditures (TEs), understood as deviations from a benchmark tax system that reduce the tax burden for specific groups, sectors or activities, are widely used policy instruments, yet their effectiveness is often uncertain. This report examines the determinants of TE performance and reviews the available empirical evidence.
The first chapters of the report provide an overview of TE reporting and usage, drawing on the Global Tax Expenditures Database (GTED) and the Global Tax Expenditures Transparency Index (GTETI), then assess evidence on TE effectiveness across the globe, addresses the growing fiscal importance of value added tax (VAT), where reduced rates and exemptions generate substantial revenue forgone, and zooms in and highlight Ireland’s experience in strengthening TE governance. The importance of high quality data as a cornerstone of sound TE design, monitoring and evaluation is also discussed.
The report also includes a deep dive about institutional arrangements for administering investment tax incentives, followed by two chapters examining about corporate tax incentives aimed at climate and R&D related incentives with innovation objectives, whose impact depends critically on their design and implementation.
See the outline of the report below and read the full report here.
Flagship Report 2025 | Content and co-authors
1. Introduction | Christian von Haldenwang (IDOS)
2. Latest insights from the Global Tax Expenditures Database (GTED) | Flurim Aliu & Sofia Berg (CEP)
3. Key findings from the Global Tax Expenditures Transparency Index (GTETI) | Lucas Millan & Paula Castells (CEP)
4. Tax Expenditure effectiveness: what does the available evidence tells us? | Agustin Redonda, Flurim Aliu, Sofia Berg (CEP) & Orria Goni (UNDP)
5. Who benefits from tax expenditures in the VAT? | Alastair Thomas (World Bank)
6. Tax Expenditure Effectiveness – Implementing Tax Expenditure Guidelines in Ireland | Federica De Blasio, Luke Rehill and Emmet Ryan (Dept. of Finance, Ireland)
7. The critical need for data in understanding tax expenditures | Amina Ebrahim, Kwabena Adu-Ababio, Maria Jouste, Liam Carson, Precious Outwesiga, Raymond Ategyeka (UNU-Wider)
8. Tax incentive administration | Miguel Pecho (IMF)
9. Corporate tax incentives and climate change mitigation | Luisa Dressler (OECD)
10. R&D Tax Incentives Under Pillar Two: Empirical Evidence and Best Practices | Jost H. Heckemeyer, Katharina Nicolay, Christoph Spengel, Daniela Steinbrenner, Sophia Wickel (ZEW Mannheim)