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Diamond Smuggling and Taxation in Sub-Saharan Africa
Author:
Mr. Matthias Vocke
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and
Nienke Oomesnull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2003: Issue 167
Language:
English
Publication Date:
01 Aug 2003
DOI:
https://doi.org/10.5089/9781451858204.001
ISBN:
9781451858204
ISSN:
1018-5941
Pages:
25
Keywords:
WP; number of sellers; market price; diamond; mining; nonrenewable resource; optimal taxation; tax evasion; export company; diamond production; export levy; export value; Mining sector; Anti-smuggling; Exports; Corporate taxes; Sub-Saharan Africa; Africa; mining productivity; diamond tax regime; diamond sector taxation; diamond mining
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper provides an overview of diamond mining in sub-Saharan African countries, and explores the reasons for substantial differences in their tax rates and fiscal revenues from the sector, which mainly arise from differences in the incentives for smuggling. In a theoretical model, we show that optimal diamond tax rates increase with the degree of competition among diamond buyers, as well as with the corporate share of diamond production, which is confirmed by the data. We then discuss policies to increase revenue, including by enhancing mining productivity, stimulating the exploration of new areas, reducing barriers to entry, and attracting investment into value-adding downstream operations.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2003: Issue 167