Low-income countries often offer tax incentives to induce foreign investment, but the effectiveness of these measures may he limited by the domestic tax practices of investors' high-income home countries. Most high-income countries provide a tax credit for the amount of tax paid to a foreign jurisdiction on the international profits of resident companies or individuals. Where no tax, or reduced tax, is paid to the foreign jurisdiction because of a tax incentive, the result is that the investor pays the same amount of tax they would have paid in the absence of the tax incentive, but simply pays a larger proportion of it to the resident (high-income) state. In other words, the tax incentive offered by the low-income country has operated as a revenue transfer from the treasury of the low-income state to the treasury of the high-income state. A tax sparing provision, included in a tax treaty negotiated between the two countries, preserves the tax incentive by reducing the tax owed to the high-income country by the amount of tax that would have been paid to the low-income country, but for the tax incentive. In theory, by incorporating tax sparing provisions into tax treaties with low-income countries, high-income countries assist those countries in their efforts to attract investment by protecting their ability to offer effective tax incentives. However, there has been much de-bate over whether these provisions are effective in practice. The author outlines the history of tax sparing provisions in Canada, Australia, the U.K. and the U.S., and illustrates the early reluctance of these countries to follow the recommendations of international bodies regarding tax sparing. The OECD has opposed these incentives and has concluded they have long-term shortcomings: they are vulnerable to abuse, may erode tax bases and may fail to achieve their purported goal -- attracting investment to low-income countries. The author argues that despite some recent empirical evidence to the contrary, tax sparing provisions are ineffective in preserving tax incentives designed to attract foreign investment. She concludes that tax sparing provisions used to support tax incentives are an ill-designed mechanism through which to improve social and economic conditions in low-income countries. Cognizant that some low-income countries will continue to seek tax sparing provisions in their tax treaties, the author recommends design features of those provisions that should maximize their contribution to the development of the low-income countries while minimizing the potential for their abuse.