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Business and Economics > Corporate Taxation

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Cover Tax Law Technical Note
Legislating for Fair and Effective Tax Collection
Irving Aw
,
Brendan Crowley
,
Cory Hillier
,
Rose A Nyongesa
,
Lydia E Sofrona
, and
Christophe J Waerzeggers
Fair and effective tax collection is critical to the success of any tax system in raising revenue and should be properly legislated. Voluntary payment of taxes by taxpayers is always preferred and should be encouraged and supported by the tax procedure legal framework. However, the law should also provide for protective measures to prevent taxpayers from frustrating tax collection efforts by taking either themselves or their assets out of the tax administration’s reach. As a last resort, the tax administration should be able to compel the recovery of outstanding tax debts from taxpayers or certain third parties through different legislative measures. Such powers should however be complemented by adequate safeguards for taxpayers. This note focuses on the key issues that should be taken into consideration in designing tax law provisions to support fair and effective tax collection.
Keywords:
Tax Collection; Legislation; Protective Measures; Compelled Recovery; Tax Liens; Installment Arrangements; Crisis Events; clearance mechanism; penalties regime; tax procedure; tax law provision; clearance certificate; tax rulings regime; IT system; Tax administration core functions; Tax arrears management; Tax law; Collateral
Cover IMF Working Papers
Is Tax Policy Costly Industrial Policy in Mozambique?
Santos Bila
,
Utkarsh Kumar
, and
Alexis Meyer-Cirkel
This paper analyzes the use of tax policy as industrial policy in Mozambique. Despite significant foregone tax revenue due to industrial policy in the form of tax incentives, the effectiveness of Mozambique's tax policy remains questionable due to insufficient data and unclear public policy strategy. Through an examination of macro data, tax reports, and data from World Bank Enterprise Surveys, the note underscores the need for a thorough reassessment of existing tax measures. It advocates for a more strategic, targeted and evidence-based design of tax incentives that deliver on industrial policy goals.
Keywords:
Tax Policy; Industrial Policy; Mozambique; Tax Incentives; Foreign Direct Investment (FDI); Revenue Mobilization; Market Distortions; Fiscal Expenditure; Domestic Investment; Mozambique's tax policy; tax report; firm Age; firms in Maputo; accelerated depreciation; Tax expenditures; Corporate income tax; Special economic zones; Global; Africa; Sub-Saharan Africa
Cover IMF Staff Country Reports
Islamic Republic of Mauritania: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
The paper examines domestic revenue mobilization in Mauritania and proposes strategies to enhance tax revenue collection to address fiscal sustainability challenges and finance critical investment projects. Despite recent progress, Mauritania’s tax-to-GDP ratio remains below that of its peers, constrained by a complex legal framework, numerous derogatory tax regimes, and inefficiencies in revenue administration. The analysis indicates that Mauritania could increase tax revenues by up to 3.4% of GDP in the medium term, thus reducing its tax gap by one-third. Key policy recommendations include reducing VAT exemptions, replacing corporate tax exemptions with cost-based incentives, reforming the personal income tax system, broadening the consumption tax base, simplifying tax procedures, managing tax arrears more effectively, and strengthening tax compliance.
Keywords:
tax Potential; tax Effort in Mauritania; VAT revenue; revenue component; rates in Mauritania; Value-added tax; Corporate income tax; Tax administration core functions; Consumption taxes; Global
Cover IMF Working Papers
Citizens Perceptions of Tax Authorities and Tax Efficiency
Telma Yamou
,
Alun H. Thomas
, and
Kaihao Cai
This paper examines the relationship between citizens’ perceptions of tax authorities and the governments’ efficiency in collecting VAT and CIT revenues in Africa. Drawing on data from 32 countries over 2014-2019, we find a negative and significant association between negative perceptions of trust in authorities (the tax department) from the Afrobarometer survey and tax efficiency for these revenue categories. A 1 percent increase in the share of citizens’ perception of little or no trust in the tax department leads to a 0.22 percent decrease in VAT tax efficiency, controlling for macroeconomic indicators. The magnitude of the effect is significantly greater in fragile compared to non-fragile states. For corporate income tax productivity focusing on tax payments of corporates we find a significant effect only in fragile states. Perceptions about corruption in tax authorities have a similar effect on VAT and CIT tax efficiency since perceptions about trust and corruption capture the tendency to misappropriate revenues but we are unable to distinguish the two effects except for fragile states. Our findings suggest that in the face of fragility, policies aimed at improving fiscal capacity should place a high importance on ensuring that citizens believe resources will be used properly, an aspect of tax policy not typically prioritized.
Keywords:
Trust in authorities; fragility; tax efficiency; Africa; tax authorities; tax department; payments of corporate; tax payment; CIT efficiency; Corporate income tax; Corruption; Value-added tax
Cover IMF How To Notes
How to Design a Presumptive Income Tax for Micro and Small Enterprises
Jean-François Wen
Turnover taxes are prevalent in developing countries as a simple form of presumptive taxation of business income. Such simplified tax regimes can reduce the relatively high compliance costs of micro and small enterprises, which might otherwise discourage entrepreneurs from formalizing their activities and paying taxes. The note addresses design issues for a turnover tax regime—which taxes it replaces, what the criteria are for eligibility, how to determine the optimal threshold, and how to set the tax rate. A key observation is that, although low turnover tax rates may incite larger firms to artificially reduce their sales, the rate should also not be so high as to discourage formalization of activities. A table of tax rates and turnover thresholds observed internationally is provided. The note concludes by suggesting analytical steps to guide practitioners in designing turnover tax regimes.
Keywords:
Presumptive tax; turnover tax; informal sector; microenterprises; taxpayer Compliance cost; turnover tax rate; turnover tax systems; IMF library; Sales tax; Income and capital gains taxes; Income tax systems; Corporate income tax; Effective tax rate; Africa; South America; Eastern Europe; West Africa; Western Europe
Cover IMF Staff Country Reports
Guinea: Selected Issues
International Monetary Fund. African Dept.
Selected Issues
Keywords:
B. mining revenue; revenue management; tax exemption; A. mining revenue; company Cost Structure; Mining sector; Oil; gas and mining taxes; Corporate income tax; Transfer pricing; Natural resources; Asia and Pacific; Global
Cover Departmental Papers
Tax Avoidance in Sub-Saharan Africa’s Mining Sector
Ms. Giorgia Albertin
,
Boriana Yontcheva
,
Dan Devlin
,
Hilary Devine
,
Mr. Marc Gerard
,
Sebastian Beer
,
Irena Jankulov Suljagic
, and
Mr. Vimal V Thakoor
This paper aims to contribute to the international policy debate around profit shifting, tax avoidance and SSA’s revenue mobilization efforts in three ways. First, it examines the importance of mining, the role of multinational enterprises (MNEs), and mining revenue outcomes in SSA. Second, it assesses the magnitude of profit shifting in mining drawing on new macro level research, supplemented by case studies to illustrate the lived experience of tax avoidance in SSA mining. Third, the paper identifies tax policy reforms that could boost revenue mobilization in SSA.
Keywords:
International Taxation, Corporate Income Taxation, Multinational Enterprises, Profit Shifting, Mining, Developing Countries, Africa, Revenue Mobilization, Tax Incentives, Tax Avoidance.; mining revenue outcome; mining MNE profits; SSA economy; natural resource taxation; MNE tax avoidance; revenue loss; SSA resource-intensive country; profit shifting; Mining sector; Corporate income tax; Corporate taxes; Withholding tax; Tax incentives; Africa; Sub-Saharan Africa; Global
Cover IMF Working Papers
Brazil: Tax Expenditure Rationalization Within Broader Tax Reform
Maria Delgado Coelho
The excessive complexity and burden of the Brazilian tax system, riddled by cumulative indirect taxes and heavy payroll contributions, have led to an accumulation of fiscal incentives aimed at reducing its burden on taxpayers and productive activities. Federal and subnational tax expenditures currently stand at over 5 percent of GDP. Rationalizing them can only be comprehensively feasible in the context of a broader sequenced tax reform, and could reduce resource misallocation and income inequality, as well as provide new revenues.
Keywords:
rationalization experience; Labor tax wedge; sequenced tax reform; cost of capital; zero rating; tax relief; single tax; Tax expenditures; Corporate income tax; Tax incentives; Personal income tax; Social security contributions; Global
Cover IMF Staff Country Reports
Botswana: Technical Assistance Report—National Accounts Mission
International Monetary Fund. Statistics Dept.
A remote technical assistance (TA) mission was conducted by IMF’s Regional Technical Assistance Center for Southern Africa (AFS)1 during April 12–16, 2021 to assist Statistics Botswana (SB) in improving the quality of the national accounts statistics. Reliable national accounts are essential for informed economic policymaking by the authorities. It also provides the private sector, foreign investors, rating agencies, donors and the public in general with important inputs in their decision-making, while informing economic analysis and IMF surveillance. The System of National Accounts, 2008 (2008 SNA) recommends that the national accounts be rebased every five years. Rebasing requires comprehensive surveys and ideally, supply and use tables (SUTs) to support coherent checking of data.
Keywords:
statistic s department; TA provider; SB review; mission SB; statistics Botswana; Value-added tax; Corporate income tax; Southern Africa; Africa
Cover IMF Staff Country Reports
Guinea: Selected Issues
International Monetary Fund. African Dept.
Selected Issues
Keywords:
B. mining revenue; revenue management; tax exemption; A. mining revenue; company Cost Structure; Mining sector; Oil; gas and mining taxes; Corporate income tax; Transfer pricing; Natural resources; Asia and Pacific; Global