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Tax incentives are provisions in tax laws that deviate from the standard tax system and aim to benefit a specific sector, activity, or group of taxpayers. These incentives can come in the form of deductions, exemptions, credits, or allowances. Their purpose is to encourage certain behaviors or stimulate economic growth by providing financial advantages to targeted entities. For instance, a tax incentive may offer a tax break to companies that invest in renewable energy sources. These incentives play a crucial role in shaping the economic landscape and promoting certain industries.
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