The value added tax (VAT) is supposed to be a tax on consumption that achieves greater economic efficiency than alternative indirect taxes. It is also meant to facilitate enforcement through the ‘self-enforcing mechanism’ – based on opposed incentives for buyers and sellers, and because of the paper trail it creates. Being a rather sophisticated tax,…
Read moreTaxpayers sometimes engage in complex transactions with uncertain tax treatment, such as mergers, acquisitions, demergers and spin-offs. With the rise of global value chains and proliferation of multinational corporations, these transactions increasingly involve transnational financial arrangements and cross-border dealings, making tax treatment even more uncertain. If improperly structured, such transactions could have costly tax consequences….
Read moreSince 2013, the formal structure of global corporate tax policymaking at the OECD has changed. Decisions are no longer made by 37 OECD members, but by 137 countries from all regions and levels of development through the ‘Inclusive Framework’ (IF). Official documentation emphasises that all countries participate on an ‘equal footing’, but some participants and…
Read moreThere is increasingly strong evidence that taxation can contribute to expanded government responsiveness and accountability. However, such positive connections are not guaranteed. Rather, they are shaped by the political and economic context and specific policies adopted by governments and civil society actors. Without an environment that enables tax bargaining, there is a risk that taxation…
Read moreDeveloping countries often lack tax information and enforcement capacity necessary to effectively implement instruments of a modern tax system, such as VAT, income taxes and others. An alternative strategy to increase tax compliance, and thus revenue, in these countries may depend on the capacity of policymakers to harness individual’s civicmindedness, social norms, reciprocity and cultural…
Read moreVery little is known about why taxpayers in sub-Saharan Africa (SSA) remit their taxes. In collaboration with the Eswatini Revenue Authority (SRA), this study implements a nationwide randomised controlled trial nudging more than 20,000 income tax payers with behaviourally-informed mailings. This study attempts to shed new light on the drivers of SSA taxpayers’ compliance, and…
Read moreNational tax administrations in sub-Saharan Africa have undergone considerable reform in recent decades. In a number of respects, they are, on average, more reformed and more efficient than tax administrations in other low income regions of the world. They have responded effectively to a number of major challenges. However, we now have evidence from benchmarking…
Read moreNon-filing refers to taxpayers who fail to submit a tax declaration, thus becoming ghosts in the eyes of tax authorities. It is a widespread phenomenon in sub-Saharan Africa, and has a number of detrimental fiscal effects. Non-filing has been largely unexplored in the literature, which focusses more on active filers. The overall aim of this…
Read moreLow-income countries are increasing their fiscal independence through the improvement of domestic taxation systems. To continue to do so, they must ensure that these systems are perceived as equitable and preserve their integrity. An essential characteristic of an equitable tax system is the treatment of wealthy individuals. In this paper, we use key informant interviews…
Read moreThis paper considers whether the ‘Amount B’ proposal currently being negotiated in the Inclusive Framework, for the attribution of fixed remuneration for the ‘routine’ distribution and marketing activities of MNE affiliates, may offer a useful template for the re-working of the widely used ‘transactional net margin’ transfer pricing method (TNMM). The TNMM has for years…
Read moreThe advent of digitalised business models has considerable potential to improve trade in Africa, however, it has greatly exacerbated the two central challenges of international tax. The first challenge is the definition of taxable presence, and the second is the allocation of business profits of multinational enterprises (MNEs) among the different jurisdictions where they operate….
Read moreNil-filing refers to taxpayers who report zero on all fields of their tax declaration. It is a largely ignored phenomenon in the tax literature, despite being well known to tax administrators. There is almost no evidence on the characteristics of nil-filers and the reasons for their apparently puzzling behaviour. This paper sheds light on this…
Read more