Tax Instruments for the Mining Sector: Profitbased Taxes Versus Production-Based Taxes

Tax Instruments for the Mining Sector: Profitbased Taxes Versus Production-Based Taxes

by | Jul 3, 2024 | AMTJ, AMTJ 2024 I1

Tax Instruments for the Mining Sector: Profitbased Taxes Versus Production-Based Taxes

Author: Kalo Achille Sanou

ISSN: 2709-8575
Affiliations: Université Clermont-Auvergne, CNRS, IRD, CERDI, F-63000 Clermont-Ferrand, France
Source: African Multidisciplinary Tax Journal, 2024 Issue 1, p. 1–17
https://doi.org/10.47348/AMTJ/V4/i1a1

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Abstract

The sharing of mining rents is a particular challenge for African countries. To explain the determinants of profit-based and production-based taxes, we use a panel of 22 gold-producing countries in Africa between 2000 and 2020 using the ordinary least squares (OLS) method controlled for time and country fixed effects. Our empirical results show that the road distance between the capital of the country and its relevant port is an important indicator in the choice of rent taxation instruments. The road distance between the capital of a country and its relevant port tends to reduce the average effective tax rate (AETR) through the share of profit-based taxes in AETR. Thus, countries that do not have direct access to the sea should favour production-based taxes over profit-based taxes in the taxation of mining rents.

Tax Instruments for the Mining Sector: Profitbased Taxes Versus Production-Based Taxes

Effect of Tax Rates on Industrial Profits on Industrial Production in Sub-Saharan Africa

by | Jul 3, 2024 | AMTJ, AMTJ 2024 I1

Effect of Tax Rates on Industrial Profits on Industrial Production in Sub-Saharan Africa

Authors: Mingnimon Ghislain Gnidehou & Alastaire Sèna Alinsato

ISSN: 2709-8575
Affiliations: Laboratoire d’Economie Publique (LEP), Faculté des Sciences Economiques et de Gestion, Université d’Abomey-Calavi, Benin; Laboratoire d’Economie Publique (LEP), Faculté des Sciences Economiques et de Gestion, Université d’Abomey-Calavi, Benin
Source: African Multidisciplinary Tax Journal, 2024 Issue 2, p. 18–36
https://doi.org/10.47348/AMTJ/V4/i1a2

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Abstract

This paper analyses the effect of the tax rate on industrial profits on industrial production in sub-Saharan Africa. A Seo and Shin dynamic threshold panel model was specified and estimated for this purpose. Using data from the World Bank (WDI) over the period 2005–2021, the results from the estimation of the dynamic threshold model show that there is a threshold from which the effect of the tax rate on profits of industries becomes negative on industrial value added. This is a threshold of 20,47% of the tax rate on industrial profits. Beyond this threshold, the effect of the rate of this type of tax becomes negative on industrial production in Sub-Saharan Africa, precisely in the 25 countries taken into account in this study. The study therefore recommends the implementation of policies favourable to broadening the tax base and moderate tax rates.

Taxation of E-Commerce Activities and Revenue Potential in Ghana

by | Jul 3, 2024 | AMTJ, AMTJ 2024 I1

Taxation of E-Commerce Activities and Revenue Potential in Ghana

ISSN: 2709-8575
Source: African Multidisciplinary Tax Journal, 2024 Issue 1

Abstract

Electronic commerce (e-commerce) businesses have become a common mode of transaction in Ghana. However, Ghana Revenue Authority (GRA) has struggled to assess and maximise its revenue potential due to technical challenges and the complex nature of the market. The main objective of this research was therefore to identify the entities, goods and services involved in online transactions and estimate the total monetary value and revenue potential of online transactions in Ghana. To achieve this, both qualitative and quantitative research methodologies were adopted. The study found that resident and non-resident entities constitute 19 per cent and 81 per cent, respectively of those entities engaged in e-commerce activities in Ghana. Further, it was found that about 20 per cent of students, 45 per cent of people in formal employment, 30 per cent of the self-employed and five per cent of the unemployed are engaged in e-commerce. In addition, it appears that groceries constitute 47.5 per cent of all goods traded online with the rest of the goods constituting 52.5 per cent. Again, as many as 31 per cent of the e-commerce businesses identified in this study had not registered with GRA. Of those registered with GRA, 45 per cent had not filed their corporate income tax (CIT) or personal income tax (PIT). Thirty-eight per cent had not filed their value added tax (VAT), 28 per cent had not filed or paid their pay-as- you-earn (PAYE) and 72.4 per cent of the businesses did not withhold taxes. The paper recommends creating a database for all e-commerce businesses, including those with resident and non-resident status. The estimated revenue potential for e-commerce transactions by resident persons across all types of tax is over GHȻ 1.39 billion.

Dynamics of Taxation and Economic Governance : What Design for the Uemoa Zone?

by | Jul 3, 2024 | AMTJ, AMTJ 2024 I1

Dynamics of Taxation and Economic Governance : What Design for the Uemoa Zone?

ISSN: 2709-8575
Source: African Multidisciplinary Tax Journal, 2024 Issue 1

Abstract

Financing development is an imperative for any system of governance. Failure in the resource mobilisation process undermines economic growth. The objective of this paper is to analyse the effect of economic governance on public contributions in UEMOA countries. The econometric estimation carried out using the generalised least squares method over the period from 2009 to 2020 shows that governance has a positive and significant effect on total tax revenue. The governments of these WAEMU countries must put in place more effective mechanisms to accelerate the collection of tax revenues while protecting vulnerable taxpayers.

An Appraisal of Carbon Taxes for Alignment to Socio-Economic Realities of Africa

by | Jul 3, 2024 | AMTJ, AMTJ 2024 I1

An Appraisal of Carbon Taxes for Alignment to Socio-Economic Realities of Africa

ISSN: 2709-8575
Source: African Multidisciplinary Tax Journal, 2024 Issue 1

Abstract

Weather fluctuations are negatively impacting global growth; hence, continued calls for global carbon mitigation are being made. Research, especially in the European Union (EU), reveals that carbon pricing and emission trading systems are innovative and flexible enough to address market failures caused by externalities linked to carbon emissions. However, these countries lack proxies in Africa, and there is a research gap on how such taxes could be designed to align with Africa’s socio-economic realities. Through a literature review of open-source, but recent, studies on the subject, this paper seeks to fill this research gap, while creating a foundation for next-generation research in this area. The paper argues that, despite Africa’s low carbon footprint, economic realities and prospects, the implementation of the Carbon Border Adjustment Mechanism (CBAM) by the EU (one of Africa’s major trading partners) has rendered such taxes inevitable in Africa; hence, implementable policy alternatives aligned with the region’s socio-economic realities are needed.

Do Reforms in Automation Reduce Tax Compliance Costs in Africa? A Staggered Double-Difference Approach

by | Jul 3, 2024 | AMTJ, AMTJ 2024 I1

Do Reforms in Automation Reduce Tax Compliance Costs in Africa? A Staggered Double-Difference Approach

ISSN: 2709-8575
Source: African Multidisciplinary Tax Journal, 2024 Issue 1

Abstract

This study evaluates the effect of e-taxation on the costs of tax compliance using a large sample of 53 African countries over the period 2004-2020. The econometric approach based on the staggered difference in difference estimator has allowed highlighting the causal effect. By controlling for heterogeneity and taking into account the dynamics of the effect of e-taxation, the results of the study show that e-taxation reduces the costs of tax compliance. Specifically, the e-taxation reform reduces the average number of tax payments per year in the long term. However, its effectiveness in reducing the time required to prepare and pay taxes is effective in the short and medium run. These results suggest the need to establish a rigorous system for monitoring e-taxation reforms in Africa. Innovations should accompany the reform in order to limit corrupt behaviour and bad governance.