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Business and Economics > Corporate Taxation

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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 Staff Country Reports
Luxembourg: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper explores implications for safeguarding fiscal space in Luxembourg. The analysis discusses the main drivers of revenues and expenditures in recent years. Against the background of rising ageing costs, the analysis discusses the fiscal outlook, accounting for the announced government plans, as well as fiscal risks. Additionally, it offers options for helping to safeguard ample fiscal space, in view of the spending pressures and risks. In order to preserve its ample fiscal buffers, which will support the government’s commitment of keeping Luxembourg’s AAA rating, a more prudent fiscal policy would be advisable. Recent revenue increases should not be taken as given, and additional tax reforms should be done in a budget-neutral manner. The growth of compensation of employees should be limited, social programs better targeted, and their efficiency increased. Early pension reform would also help limit spending pressures. Finally, a national framework could help anchor fiscal policy and maintain a credible commitment to prudent fiscal policies.
Keywords:
personal income taxation; copyright page; ample fiscal space; spending pressure; CIT revenue; property taxation reform; GDP share; Corporate income tax; Social protection spending; Personal income tax; Global
Cover IMF Staff Country Reports
Ireland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper provides an international perspective to the authorities’ two recent policy measures: setting up new savings and counter cyclical and climate infrastructure funds and reforming the judicial review of planning decisions in Ireland. The first essay presents international best practices in the design and operation of sovereign wealth funds that could inform the setup of the two new funds in Ireland. It highlights the importance of operating the funds within a strong fiscal policy framework. The second essay reviews Ireland’s planning and permitting system, underscoring the key elements that have hindered public investment. It also looks into the government’s proposed Bill to reform the planning system and contrasts its key features with those of other international jurisdictions. It finds that several issues may contribute to the inefficiencies in the planning and judicial review system, such as the loose standing requirements and lack of mandatory timelines related to judicial review, as well as institutional governance issues within the planning board, which the newly proposed reforms and legislative measures seek to address.
Keywords:
housing affordability; D. policy option; savings fund; modernizing judicial review; impulse response; Housing; Housing prices; Pension spending; Global
Cover IMF Staff Country Reports
Ireland: 2023 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. European Dept.
This 2023 Article IV Consultation highlights that Ireland’s economy has shown remarkable resilience in the face of consecutive shocks. The Irish economy has displayed remarkable resilience in the face of recent consecutive shocks and is well-positioned to achieve a soft landing. Growth is expected to moderate to a still solid level in 2023-24, from a very high base, as tighter financial conditions, domestic capacity constraints, and weakening external demand weigh on the economy. Continued fiscal prudence is warranted to complement monetary tightening in sustaining disinflation and to build adequate buffers for the future. As fiscal policy should avoid adding to aggregate demand amid still elevated inflation, tax revenue over performance should be saved. The 2023 fiscal stance is appropriate. Fiscal policy should support growth-enhancing investment and broaden the tax base. The authorities’ decision to save part of excess corporate income tax revenues in two savings funds is welcome. Tighter financial conditions, persistent inflation, and rising vulnerabilities in the commercial real estate market with linkages to leveraged non-banks call for continued heightened vigilance of financial stability risks.
Keywords:
liability positions vis-à-vis nonresident; inflation development; transparency policy; money market rate; quarterly balance of payments; growth-enhancing investment; Medium-term fiscal policy; persistent inflation; Ireland's economy; Housing; Inflation; Corporate income tax; Credit; Global
Cover IMF How To Notes
How to Combat Value-Added Tax Refund Fraud
Cedric Andrew
and
Ms. Katherine Baer
A previous IMF Working Paper on value-added tax (VAT) refunds (WP/07/31, by Keen and Smith) describes the main forms of VAT noncompliance and concludes that VAT is susceptible to evasion and fraud like any other tax. This paper shows the insidious nature and extent of VAT refund fraud in selected EU countries and argues that this type of noncompliance requires tax administrations to adopt a coordinated strategy and deploy a range of countermeasures to combat this threat. Because such fraud is primarily a criminal legal issue, tackling it successfully will require cooperation, both internationally between VAT administrations and nationally between tax authorities and the judiciary. The paper’s focus is primarily on advanced economies in the context of the EU, but many of the recommendations are applicable to emerging market and developing countries. A separate IMF How to Note discusses managing VAT refunds in developing countries.
Keywords:
value-added tax; refund; fraud; strategies; cooperation; refund fraud; acquisition fraud scheme; return fraud; MTIC VAT Contra carousel scheme; Customs and Excise tax office case study; Tax refunds; Tax administration core functions; Middle East
Cover IMF Working Papers
Unpleasant Surprises? Elections and Tax News Shocks
Mr. Antonio David
and
Can Sever
Unanticipated changes in tax policy are likely to have different macroeconomic effects compared to anticipated changes due to several mechanisms, including fiscal foresight and policy uncertainty. It is therefore important to understand what drives such policy surprises. We explore the nature of unanticipated tax policy changes by focusing on a political economy determinant of those events, namely the timing of elections. Using monthly data for 22 advanced economies and emerging markets over the period 1990-2018, we show that implementation lags tend to be significantly longer for tax policy change announcements that are made during the pre-election periods, thereby leading to a lower likelihood of “tax news shocks”. We also find that implementation lags become much shorter for tax policy changes that are announced in the aftermath of elections, generating more frequent tax news shocks. This pattern remains similar for different tax measures or types of taxes. The findings are robust to a number of checks, including alternative definitions of tax news shocks, or to controlling for various economic and institutional factors.
Keywords:
Tax Shocks; Electoral Cycles; Political Economy; news shock; implementation lag; election period; change announcement; tax policy policy change; Probit models; Income tax systems; Consumption taxes; Corporate income tax; Global
Cover Departmental Papers
Revenue Mobilization for a Resilient and Inclusive Recovery in the Middle East and Central Asia
Ms. Genevieve Verdier
,
Brett Rayner
,
Ms. Priscilla S Muthoora
,
Charles Vellutini
,
Ling Zhu
,
Vincent de Paul Koukpaizan
,
Alireza Marahel
,
Mahmoud Harb
,
Imen Benmohamed
,
Mr. Shafik Hebous
,
Andrew Okello
,
Nathalie Reyes
,
Thomas Benninger
, and
Bernard Sanya
Domestic revenue mobilization has been a longstanding challenge for countries in the Middle East and Central Asia. Insufficient revenue has often constrained priority social and infrastructure spending, reducing countries’ ability to reach the Sustainable Development Goals, improve growth prospects, and address climate related challenges. Moreover, revenue shortfalls have often been compensated by large and sustained debt accumulation, raising vulnerabilities in some countries, and limiting fiscal space to address future shocks. The COVID-19 pandemic and the war in Ukraine have compounded challenges to sustainable public finances, underscoring the need for revenue mobilization efforts. The recent global crises have also exacerbated existing societal inequalities and highlighted the importance of raising revenues in an efficient and equitable manner. This paper examines the scope for additional tax revenue mobilization and discusses policies to gradually raise tax revenue while supporting resilient growth and inclusion in the Middle East and Central Asia. The paper’s main findings are that excluding hydrocarbon revenues, the region’s average tax intake lags those of other regions; the region’s fragile and conflict-affected states (FCS) face particular challenges in mobilizing tax revenue; In general, there is considerable scope to raise additional tax revenue; countries have made efforts to raise tax collection, but challenges remain; tax policy design, notably low tax rates and pervasive tax exemptions, is an important factor driving tax revenue shortfalls; weak tax compliance, reflecting both structural features and challenges in revenue administration, also plays a role; and personal income tax systems in the region vary in their progressivity—the extent to which the average tax rate increases with income—and in their ability to redistribute income. These findings provide insights for policy action to raise revenue while supporting resilient growth and inclusion. The paper’s analysis points to these priorities for the region to improve both efficiency and equity of tax systems: improving tax policy design to broaden the tax base and increase progressivity and redistributive capacity; strengthening revenue administration to improve compliance; and implementing structural reforms to incentivize tax compliance, formalization, and economic diversification.
Keywords:
Revenue mobilization; revenue gaps; tax compliance; compliance gaps; tax policy; tax revenue gap; estimated tax; Gini coefficient; revenue challenge; tax revenue shortfall; systems in the region; tax Effort; tax ratio; Personal income tax; Tax administration core functions; Tax collection; Corporate income tax; Middle East and Central Asia; Global; Central Asia and the Caucasus; Middle East; Tax return filing compliance
Cover Fiscal Monitor, April 2022
Fiscal Monitor, April 2022
Fiscal Policy from Pandemic to War
International Monetary Fund

Abstract

Just as uncertainty associated with COVID-19 pandemic was abating, Russia invaded Ukraine. Uncertainty endured, shifting from pandemic to war, affecting all countries but in different ways. Above-target inflation rates and inflation surprises have helped reducing debt-to-GDP ratios but such relief is often temporary. High uncertainty and marked divergences across countries require a tailored and agile fiscal policy response that is ready to adjust as the outlook becomes clearer. Fiscal policy will need to shift focus away from the exceptional pandemic-related measures as central banks increase interest rates to fight inflation. Emerging and developing economies that are net importers of energy and food will be hit the hardest by surging international prices. Many of these countries already experience scarring from the pandemic and have little fiscal space to tackle new spending pressures. Government should focus on those most affected by the crisis and priority areas. Ensuring greater resilience through investment in health, food, and energy security from cleaner sources has become even more urgent. Global cooperation to achieve these objectives is more important now than ever. As countries strive to promote an inclusive and green recovery from the COVID-19 pandemic—and formulate responses to the immediate impacts of increased energy prices—they face shared challenges to secure tax revenues, address inequalities, and reduce greenhouse gas emissions. National tax policies are under pressure to deal with cross-border spillovers—one country’s action affects other countries. Chapter 2 discusses how international coordination on tax matters (i) reduces profit shifting by multinationals and tax competition between countries; (ii) improves tax enforcement by lifting the veil of secrecy to tackle tax evasion; and (iii) limits global warming. The current energy crisis reinforces the case for coordination among major emitters to reduce reliance on fossil fuels, urging countries to not allow near-term responses to detract efforts to establish credible policies for emissions reductions in the medium term.

Keywords:
fiscal policy; public debt; inflation; government support; household savings; fiscal balance; war in Ukraine; commodity prices; poverty; social protection; green public finance management; tax competition; tax coordination; carbon tax; exchange of information; minimum tax
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 Staff Country Reports
Republic of Tajikistan: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
Selected Issues
Keywords:
D. tax incentives; tax incentives in Tajikistan; C. SOE reform effort; Tajikistan's tax incentives; staff team of the International Monetary Fund; Tax incentives; Corporate income tax; Fiscal risks; Public enterprises; Central Asia; Caribbean