IMF Releases Regional Economic Outlook for Sub-Saharan Africa

generic-coverOn 10 May, the IMF released its Sub-Saharan Africa economic outlook, Restarting the Growth Engine. The report is available (in English and French) on the IMF’s website.

The report features a comprehensive examination of the informal sector in Sub-Saharan Africa, with the IMF estimating that the informal sector contributes 25%-65% of GDP and 30%-90% of nonagricultural employment. From a domestic revenue mobilization perspective, this significant portion of Sub-Saharan African economies represents potential budget revenues. Institutional challenges remain, however, when it comes to encouraging the conversion of the informal sector into the formal sector. A large tax burden and overly cumbersome compliance requirements are likely to have the paradoxical effect of encouraging economic activity to remain in the informal sector. The transformation of digital technologies and services in many Sub-Saharan Africa economies presents opportunities for converting the informal sector, while not creating onerous tax or administrative compliance burdens.

These topics will be further explored as technical sessions in ITIC’s Africa Tax Dialogue later this year, including examination of successful country case studies.

 

Dan Witt is President of the International Tax and Investment Center (ITIC).

IMF/World Bank Meetings Focus on “Growth-Friendly Fiscal Policy”

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2017 Fiscal Forum: Digital Revolutions in Public Finance

The mood at last weekend’s IMF and World Bank Spring Meetings was the most optimistic since the global financial crisis of 2008-2009, as evidenced by the communiqué issued by the IMF’s Governing Board: “The global economic recovery is gaining momentum, commodity prices have firmed up, and deflation risks are receding.” Nevertheless, there are concerns that political and policy uncertainties (often citing the U.S. and EU) pose risks to improving growth. Concerns were also expressed by government officials, IMF senior representatives and civil society groups about “those who have been left behind” and have not benefited from global economic integration and technological progress.

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Impending VAT in the GCC: Much Still to be Clarified

states-42706_1280The slump in oil prices in the last few years has increased the pressure on the Gulf Cooperation Council (GCC) states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) to seek more sustainable government revenues through taxation. Corporate income tax is currently the only direct tax imposed within the GCC, and even then Bahrain and the UAE only impose the tax on narrow sectors of the economy. Continue reading “Impending VAT in the GCC: Much Still to be Clarified”

GST – Long-Awaited Step in India’s Economic Reforms

borders-2099205_1280After 11 long years, the journey to introduce a Goods and Services Tax (GST) in India is now nearly complete. The Dual GST Model will see the Central Government, 31 State Governments and 5 Union Territories levy and collect GST concurrently on a common tax base. The final hurdle was passed on 29 March when the lower house of the Union Parliament, Lok Sabha, approved the follow-up implementation related to the CGST Act, UTGST Act and IGST Act. Additionally, the act relating to compensation by the Centre to the States for possible revenue loss due to GST has also been passed. Continue reading “GST – Long-Awaited Step in India’s Economic Reforms”

OECD Task Force on Countering Illicit Trade Meets in Paris

The OECD Task Force on Countering Illicit Trade held its fifth meeting on 28-29 March in Paris, with over 80 attendees ranging from Customs and/or Revenue Authorities of OECD Member States, NGOs, academics, and private-sector firms (such as Apple and DHL). A broad range of national government agencies and international organizations – Ministries of Finance and Justice, Her Majesty’s Revenue and Customs, U.S. Department of Homeland Security, Europol, World Customs Organization, and EU Intellectual Property Office – were represented at the meeting. Continue reading “OECD Task Force on Countering Illicit Trade Meets in Paris”

ITIC Comments on Transfer Pricing in the Oil and Gas Industry

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ITIC’s Oil and Gas Taxation and Regulatory Dialogue recently submitted comments on The Platform for Collaboration on Tax’s “Discussion Draft: A Toolkit for Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analysis.” The toolkit “is designed to assist developing countries in navigating an important area of international tax policy: transfer pricing [… and] specifically addresses the ways developing countries can overcome a lack of data on “comparables,” or the market prices for goods and services transferred between members of multinational corporations.”

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Azeri Minister of Taxes Outlines New Challenges

AzerbaijanIn a recent article for the Intra-European Organisation of Tax Administrations (IOTA), Azeri Minister of Taxes Fazil Mammadov analyzed the new challenges faced by Azerbaijan’s Tax Service due to sluggish global growth and its negative impact on resource economies. He depicted Azerbaijan’s response in terms of developing a sustainable national economy.

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