Taxation

Work on taxation at IDS is primarily led by the International Centre for Tax and Development (ICTD), a global policy research network, devoted to improving the quality of tax policy and administration in developing countries, with a special focus on sub-Saharan Africa.

A tax sign in Sierra Leone. Credit: Vanessa van den Boogaard

The International Centre for Tax and Development (ICTD) is led by Professor Mick Moore and funded by the UK Department for International Development and the Bill and Melinda Gates Foundation.

Key areas of research on tax and development

Why should we tax Africa?

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Image credit: Vanessa van den Boogaard

Experimental research on tax compliance in Rwanda

This project conducted a set of large-scale field experiments in Rwanda aiming to understand the determinants of tax compliance. More details

REDD+ and Forest Taxation in sub-Saharan Africa

This research project will map the channels through which REDD+ could impact upon different forest tax systems in sub-Saharan Africa, and develop proposals to increase the probability that these impacts will be positive. More details

UNU-WIDER Symposium on Taxation & Revenue Mobilisation in Developing Countries consultancy

Bruno Martorano will be conducting research on the topic of ‘Tax Changes and Inequality in Latin America, 1990-2010’ More details

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IDS publications on international development research

Boosting Revenue Collection through Taxing High Net Worth Individuals: The Case of Uganda

ICTD Working Paper 45 (2016)

For over a decade Uganda’s tax-to-GDP ratio hovered between 12 per cent and 13 per cent, despite various amendments to tax laws and reforms in tax administration. Part of the low revenue contribution can be attributed to factors external to the Uganda Revenue Authority (URA), such as the structure of the economy – particularly the prevalence of the informal sector and the ubiquity of cash transactions. More details

This is the front cover of ICTD Working Paper 44, Developing Country Revenue Mobilisation: A Proposal to Modify the ‘Transactional Net Margin’ Transfer Pricing Method

Developing Country Revenue Mobilisation: A Proposal to Modify the ‘Transactional Net Margin’ Transfer Pricing Method

ICTD Working Paper 44 (2016)

Developing countries tend to rely more heavily than wealthier countries on corporate tax revenue from multinational companies operating in their jurisdiction. Therefore, the practice that the Organisation for Economic Cooperation and Development (OECD) has labelled ‘base erosion and profit shifting’ (BEPS) – the diversion of taxable income by multinational groups from countries where they conduct business to other, zero- and low-tax countries – poses an especially challenging problem for developing countries. More details

This is the front cover of ICTD Working Paper 43, Business people’s views of paying taxes in Ethiopia

Business people’s views of paying taxes in Ethiopia

ICTD Working Paper 43 (2016)

This study examines factors that determine business people’s attitudes towards paying taxes in Ethiopia. Based on data obtained from a survey of business taxpayers in Addis Ababa, the study finds a statistically significant relation between tax-compliance attitude and factors such as the perception of probability of audit, corruption, satisfaction with the tax administration, peer influence, gender and education. More details

This is the cover of the Journal Article titled Reassessing Tax and Development Research: A New Dataset, New Findings, and Lessons for Research by Wilson Prichard.

Reassessing Tax and Development Research: A New Dataset, New Findings, and Lessons for Research

World Development Vol 80 (2015)

There is growing concern with the weaknesses of economic statistics relating to developing countries, and the risks that poor data have generated misleading research findings and poor policy advice. Cross-country tax data offer a striking example, with existing datasets frequently highly incomplete, analytically imprecise, plagued by errors, and sharply lacking in transparency. More details

This is the front cover of ICTD Working Paper 42, Measuring Misalignment: the Location of US Multinationals’ Economic Activity Versus the Location of their Profits

Measuring Misalignment: the Location of US Multinationals’ Economic Activity Versus the Location of their Profits

ICTD Working Paper 42 (2015)

A major international effort – the OECD Base Erosion and Profit Shifting (BEPS) initiative – aims to reduce the extent of misalignment between the profits of multinational groups, and the location of their real economic activity. Recent research using balance sheet data has shown major misalignments, with a number of small jurisdictions capturing a tax base disproportionate to their economic activity, but has also revealed the limitations of available balance sheet data for lower-income countries. More details

This is the front cover of ICTD Working Paper 41, A Price-Based Royalty Tax?

A Price-Based Royalty Tax?

ICTD Working Paper 41 (2015)

This paper considers the merits of a price-based royalty, a royalty for which the rate varies with the product price, as a fiscal instrument for taxing extractive industries. In light of the literature on natural resources taxation, the case for a price-based royalty is appealing. A price-based royalty captures some of the desirable attributes of an income or resource rent tax, but in comparison to such taxes, it is easier to administer since revenue is much less sensitive to transfer price manipulation and tax avoidance efforts. More details

This is the front cover for Working Paper 9, Low Government Revenue from the Mining Sector in Zambia and Tanzania: Fiscal Design, Technical Capacity or Political Will?

Low Government Revenue from the Mining Sector in Zambia and Tanzania: Fiscal Design, Technical Capacity or Political Will?

ICTD Working Paper 9 (2015)

The contribution of mining to economic and social development in Sub-Saharan Africa is under increased scrutiny and criticism. Minerals are non-renewable resources, and production represents a transformation from a subsoil to a financial asset. Unless the gains are efficiently captured, saved and invested by the ultimate owner of the resource, the country in question could experience a net reduction in its national wealth. More details

This is the front cover of ICTD Working Paper 40, Limitations of the BEPS Reforms: Looking Beyond Corporate Taxation for Revenue Gains

Limitations of the BEPS Reforms: Looking Beyond Corporate Taxation for Revenue Gains

ICTD Working Paper 40 (2015)

This paper argues that global corporate tax policies have long been dominated by a political consensus among governments of countries at all levels of economic development, to the effect that forces of tax competition render taxation of the cross-border income of multinational companies both infeasible and unwise. Current tax laws around the world, which permit widespread tax avoidance through shifting corporate profits to tax havens, reflect the implementation of this political consensus. More details

This is the front cover of ICTD Working Paper 39, What Do We Know about Mineral Resource Rent Sharing in Africa?

What Do We Know about Mineral Resource Rent Sharing in Africa?

ICTD Working Paper 39 (2015)

Governments that lack the capacity to mine resources themselves have to attract foreign direct investment. However, since resources are not renewable countries need to capture a ‘fair’ share of mineral resource rent to promote their development. While the sharp rise of the world prices of most minerals (in particular, gold, copper, iron and bauxite) multiplied the global turnover of the mining sector by 4.6 between 2002 and 2010, tax revenue earned by African governments from the non-renewable natural resource sector only grew by a factor of 1.15 (Mansour 2014). The sharing of mineral resource rent between governments and investors is often criticised for being unfavourable to African governments. More details

IDS publications on international development research

Tax and the Governance Dividend

ICTD Working Paper 37 (2015)

It is now widely believed that taxation contributes to the quality of governance. There are a number of variants of the broad argument. The most general proposition is that, if governments are dependent on broad general taxation for their incomes, they will, for reasons of self-interest, be more responsive to the needs of their citizens and more likely to allow citizen representatives to share in governance. From a broad historical perspective, that argument is probably valid. More details

This is the front cover of ICTD Working Paper 38, Taxing the Urban Boom: Property Taxation and Land Leasing in Kigali and Addis Ababa

Taxing the Urban Boom: Property Taxation and Land Leasing in Kigali and Addis Ababa

ICTD Working Paper 38 (2015)

Much contemporary economic growth in Africa is driven by urban service sectors including construction and real estate. This manifests in rapidly transforming landscapes and the proliferation of valuable property in the continent’s booming large cities, often accompanied by growing socio-economic inequality. In this context, improving systems for property taxation is an urgent and growing need – something that national and international policymakers increasingly recognise. More details

This is the front cover of ICTD Working Paper 36, Limitations on Interest Deductions: A Suggested Perspective for Developing Countries

Limitations on Interest Deductions: A Suggested Perspective for Developing Countries

ICTD Working Paper 36 (2015)

This paper evaluates the efforts of the Organisation for Economic Co-operation and Development (OECD), in its project on base erosion and profit shifting (BEPS), to control profit shifting by members of multinational groups through payments of interest on related-party loans. Currently, members of groups appear be shifting large amounts of income from countries around the world to affiliates in zero- or low-tax countries, More details

IDS publications on international development research

The Political Economy of Property Tax in Africa: Explaining Reform Outcomes in Sierra Leone

African Affairs 114.456 (2015)

Effective local government taxation is critical to achieving the governance benefits widely attributed to decentralization, but in practice successful tax reform has been rare because of entrenched political resistance. This article offers new insights into the political dynamics of property tax reform through a case study of Sierra Leone, focusing on variation in experiences and outcomes across the country's four largest city councils. More details

This is the front cover of ICTD Working Paper 35, Unitary Taxation in the Extractive Industry Sector

Unitary Taxation in the Extractive Industry Sector

ICTD Working Paper 35 (2015)

This paper analyses whether a global unitary taxation approach to corporate income tax (CIT) can improve the ability of governments to design and administer efficient and effective tax and royalty policies for the extractive industries. Drawing upon experience with unitary approaches to corporate income taxation of the extractive sectors in subnational taxation systems of the United States (US) and Canada, this paper suggests that a unitary CIT should not be used in isolation, or be employed as the dominant source of revenue from the extractive sector. Instead, because of its informational and risk-aligning advantages, a unitary CIT may be best used in combination with other rent/profit-related levies on the extractive sector. More details

Non-IDS publication

Top Income Shares, Business Profits, and Effective Tax Rates in Contemporary Chile

We contribute to research on inequality and world top incomes by presenting the first calculations of Chilean top income shares and effective tax rates using individual tax return microdata from 2005 and 2009. More details

This is the front cover of ICTD Working Paper 34, Unitary Taxation: Tax Base and the Role of Accounting

Unitary Taxation: Tax Base and the Role of Accounting

ICTD Working Paper 34 (2015)

For more than twenty years there have been discussions on the issue of multinational corporations shifting profits from high- to low-tax jurisdictions, with resulting gains to them from the resulting reduction in their effective tax rate. Underpinning much of this debate has been an implicit assumption that, first of all, profits are a fixed and constant known factor in this tax base-shifting equation; and, secondly, that by adopting consistent international financial reporting standards (IFRSs) the risk of arbitraging on tax is removed from this equation. More details

CDIPP11_FrontCover

Tax Experiments in Developing Countries: A Critical Review and Reflections on Feasibility

CDI Practice Paper 11 (2015)

This CDI Practice Paper by Giulia Mascagni provides a critical assessment of the literature on tax experiments to date. More details

This is the front cover of ICTD Working Paper 33, Understanding Low-Level State Capacity: Property Tax Collection in Pakistan

Understanding Low-Level State Capacity: Property Tax Collection in Pakistan

ICTD Working Paper 33 (2015)

This paper is based on a detailed analysis of how field staff in the Excise and Taxation Department of the Punjab Provincial Government collect the (very low-yielding) property tax. In general, informal practices and relationships play a major role. More specifically, field staff enjoy considerable discretion in making key decisions about property tax assessment; the additional earnings that they are able to get from colluding with taxpayers are used in part to employ support staff and cover routine operating costs; and field-level staff are deeply rooted in the locality where they work, typically serving in one office for their entire career, and both monopolise and manipulate the information on the tax base and on collection performance that senior management would need to establish effective control of the system. More details

The Tax Policy Outlook for Developing Countries: Reflections on International Formulary Apportionment

ICTD Working Paper 32 (2015)

The author offers a retrospective analysis of his recently-completed extensive research on the technical feasibility of international formulary apportionment of corporate taxable income, as a replacement for the body of ‘arm’s-length’ transfer pricing rules generally in use around the world. In this retrospective analysis the author considers recent analytical work on base erosion and profit shifting. More details

This is the front cover for Working Paper 31, Information Technology and Fiscal Capacity in a Developing Country: Evidence from Ethiopia

Information Technology and Fiscal Capacity in a Developing Country: Evidence from Ethiopia

ICTD Working Paper 31 (2015)

Governments in developing countries are typically constrained by a limited fiscal capacity to finance the provision of essential public goods – a constraint that has been cited as one of the fundamental challenges to economic development. Several developing countries haverecently implemented electronic tax systems (ETS) to improve monitoring tax compliance using modern information technology (such as electronic sales registry machines (ESRMs)). More details

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Oxfam, Give the IMF a break!

02 Apr 2012
By Mick Moore
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