## wpiea2019104

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---

### Introduction and scope
- LICs collect about 16 percent of GDP in taxes on average, compared with 18 percent in emerging markets (EMs) and 26 percent in advanced economies (AEs).
- Non-tax revenues and grants in 2016 were estimated at 2 percent of GDP and 3.7 percent of GDP, respectively in LICs.
- Many LICs would need to increase tax revenue by 5 percentage points of GDP in the next decade to fund the SDGs.
- Paper analyzes seven episodes of large tax revenue mobilization in LICs: Burkina Faso, The Gambia, Maldives, Mauritania, Rwanda, Senegal, and Uganda.
- Episodes identified based on Akitoby et al. (2018) criteria, focusing on noncommodity-related tax revenues and recent episodes (last ten years) excluding fragile states.
- Analysis uses FAD Tax Policy Revenue Analysis Tool (RAT) database and IMF country reports and staff inputs; cases examined for tax policy and revenue administration reforms, and outcomes.

### Key statistics from selected episodes
- Burkina Faso — Before reform: 2009-2013 — Tax collection (percent of GDP) before reform: 11.9; after reform: 16.8; Tax increase: 5.0
- The Gambia — Before reform: 2011-2015 — Tax collection (percent of GDP) before reform: 13.2; after reform: 17.6; Tax increase: 4.4
- Maldives — Before reform: 2011-2017 — Tax collection (percent of GDP) before reform: 8.8; after reform: 20.9; Tax increase: 12.1
- Mauritania — Before reform: 2010-2014 — Tax collection (percent of GDP) before reform: 11.1; after reform: 17.2; Tax increase: 6.1
- Rwanda — Before reform: 2010-2015 — Tax collection (percent of GDP) before reform: 11.9; after reform: 15.6; Tax increase: 3.7
- Senegal — Before reform: 2010-2017 — Tax collection (percent of GDP) before reform: 18.0; after reform: 20.9; Tax increase: 2.9
- Uganda — Before reform: 2013-2017 — Tax collection (percent of GDP) before reform: 10.5; after reform: 14.0; Tax increase: 3.5
- Sources: Country authorities and IMF staff estimates.

### Broad lessons (synthesized across cases)
- No one-size-fits-all solution; diverse country experiences nonetheless reveal broadly generalizable features that contributed to substantial revenue increases.
- Tax policy reforms and revenue administration reforms both played roles; IMF technical assistance was instrumental in many cases.
- Design and implementation of reforms require country-specific analysis, including distributional impacts and detailed taxpayer compliance measures.
- Overarching lessons emphasized:
  - Political commitment and stakeholder buy-in are critical.
  - Combining revenue administration and tax policy reforms yields larger and more persistent gains.
  - Early-impact fiscal measures can build momentum for broader reform.
  - Cautions: reforms must match institutional capacity; removing exemptions can be reversible; revenue increases should be examined for effects on economic efficiency and fairness.

### Case study highlights — Burkina Faso (2009–2013)
- Background and outcomes:
  - Tax revenue (excluding natural resources) increased by 5 percent of GDP between 2009–2013.
  - Income taxes increased by about 2 percent of GDP; taxes on goods and services increased by about 2½ percent of GDP.
  - Increase in VAT on imports (by 1½ percent of GDP) partially driven by mining-related import boom.
  - Tax revenue declined sharply after 2013 owing to political crisis in 2014; growth slowed from 6.6 percent in 2013 to 4 percent in 2014; tax collection returned to pre-crisis level after 2015 elections.
- Tax policy measures:
  - Comprehensive tax reform strategy to streamline tax incentives, simplify income tax legislation, create single tax code (implemented in 2011).
  - Introduced corporate income tax (CIT) at 25 percent; eliminated 20 percent withholding tax (accompte); broadened VAT by revising exemptions.
  - Increased excise tax for alcoholic beverages from 25 to 30 percent; limited deductibility of investment spending from profit taxes; applied VAT on imports of operational mining companies and companies with government contracts.
- Tax administration measures:
  - Diversified audit types; tax census in six urban communes; set up medium-sized enterprises unit; communication activities to foster civic responsibility.
  - IT: two management systems to improve information sharing between tax and customs; Computerized Tax Information System; SINTAX to notify late-filers; Automated System for Customs Data connected five additional border posts.
  - Performance contract (“approche unité de recouvrement, AUR”) introduced between 2009–12 to improve collection of tax arrears; contract ended in 2012.

### Case study highlights — The Gambia (2011–2015)
- Revenue outcomes:
  - Tax-to-GDP ratio rose from about 13 percent in 2010 to 17½ percent in 2015 (increase of about 4½ percentage points of GDP).
  - Taxes on goods and services contributed 2 percentage points; taxes on international trade and transactions increased by 2¼ percentage points during the period.
  - After 2016, revenue collection sharply fell; tax-to-GDP ratio declined by almost 1 percentage point of GDP in 2016.
- Tax policy measures:
  - Introduced VAT in 2013 to replace general sales tax at same rate of 15 percent; VAT lifted revenues by 1–1 .5 percent of GDP.
  - Introduced specific excise on tobacco (changed cigarette excise base from weight to number of packs, increasing equivalent tax rate on cigarettes by about 25 percent); introduced weight-based excise on non-cigarette tobacco.
  - Eliminated fuel subsidies by reforming fuel pricing formula; fuel subsidies had reached 0.8 percent of GDP in 2011.
- Tax administration measures:
  - Implemented new tax and customs procedures for VAT launch; Gambia Revenue Authority strengthened audit capacity.
  - Large taxpayer filing increased from 79 percent in 2011 to 86 percent in 2012.
  - Customs upgraded IT to ASYCUDA++.

### Case study highlights — Maldives (2011–2017)
- Revenue outcomes:
  - Tax collection rose from 8.8 percent of GDP before reform to 20.9 percent after reform (Tax increase: 12.1 percentage points of GDP) over 2011–2017.
  - Recovery in tourism helped boost tax revenue collections; goods and services taxes and BPT revenues increased.
- Tax policy measures:
  - Introduced tourism sector goods and services tax (TGST) in January 2011 and general goods and services tax (GGST) in October 2011.
  - Initial GGST rate of 3.5 percent increased to 6 percent in January 2012.
  - TGST initial rate 3.5 percent, raised to 6 percent in January 2012, 8 percent in January 2013, and 12 percent in November (text truncated in source).
  - Introduced business profit tax (BPT) in mid-2011; BPT Act imposed 15 percent on profits exceeding MVR 500,000 (approx. USD 32,425); lower BPT rate of 5 percent applicable to income generated outside of Maldives.
  - In 2015 the authorities increased import duties on some consumer items.
- Tax administration measures:
  - Established Maldives Inland Revenue Authority (MIRA) in 2010 as fully autonomous.
  - Implemented common Taxpayer Identification Number; core IT systems, e-filing/e-payment for TGST, withholding tax, green tax, and remittance of tax returns.
  - Human resource strategy implemented in 2011; audit program resulted in more than 850 audits within two years.

### Case study highlights — Mauritania (2010–2014)
- Revenue outcomes:
  - Total tax revenues increased from 11.1 percent of GDP in 2009 to 17.2 percent of GDP in 2014.
  - Between 2009–2013, VAT (net of refunds) increased by 2.5 percentage points of GDP.
  - Mauritania’s C-efficiency ratio increased significantly by about 35 percentage points during the reform period.
- Tax policy measures:
  - Eliminated the global income tax in 2012 and switched to a dual tax system: proportional tax on capital income and progressive taxation of wages.
  - Removed CIT exemption of the main gold company in 2012, contributing to an increase in CIT by 1.3 percentage points of GDP.
  - Increased excise taxes on tobacco from 10 percent to 30 percent.
  - Implemented a withholding tax of 15 percent on payments to nonresidents in 2013.
- VAT and formalization:
  - Extended VAT to cover the mining sector; mining companies receive reimbursement only if purchases are from formal domestic suppliers.
  - Tax identification numbers increased from 1,789 in 2011 to 5,860 in 2013.
- Redistributive measures:
  - Undertook fuel subsidy reforms and introduced mitigating measures targeted to lower-income groups.
  - Introduced a cash transfer program for targeted households in 2012 following a vulnerability and poverty survey.

### Case study highlights — Rwanda (2010–2015)
- Revenue outcomes:
  - Rwanda’s tax-to-GDP ratio increased by 3¾ percent of GDP between 2010 and 2015.
  - VAT (net of refunds) collection increased by 1¾ percentage points of GDP during the reform period.
  - VAT C-efficiency ratio improved, moving closer towards regional and LIC averages.
- Tax administration measures:
  - Introduced electronic filing and payment systems (2010–2011) and electronic tax registration.
  - Direct bank payment of tax introduced; collection of social security contributions transferred to the Rwanda Revenue Authority (RRA).
  - Automated tax and customs operations and implemented a customs Single Window.
  - Enforced VAT compliance through electronic transactions device (ETD) and withholding VAT at source by government departments; increased collection of tax arrears.
- Tax policy measures:
  - Increased tax rate for imported construction materials from 5 percent to 10 percent from July 2012.
  - Excise duty on airtime increased from 5 to 8 percent, then to 10 percent between 2011 and 2014.
  - Introduced a schedular tax on turnover below 12 million for micro enterprises in September 2012.
  - Reduced turnover tax for small enterprises from 4 to 3 percent and raised the ceiling for this regime from 20 to 50 million in September 2012.
  - FY15/16 budget included an excise tax on petroleum, higher excise tax on tobacco, and import tax on non-EAC products.
  - Removed some tax exemptions and streamlined the investment code.

### Case study highlights — Senegal (2010–2017)
- Revenue outcomes:
  - Tax-to-GDP ratio increased from 18 percent of GDP in 2009 to 20.9 percent of GDP in 2017.
  - Income taxes increased significantly during the period; trade taxes and indirect taxes did not improve much.
  - Tax-to-GDP ratio improved for seven consecutive years.
- Tax policy measures:
  - Consolidated the tax code in 2012; eliminated the proportional PIT and the tax shield (bouclier fiscal) and removed the “quotient familial”.
  - Reformed the ‘’Patente’’ in 2017 and replaced it with the ‘’Contribution économique local (CEL)’’.
  - Reduced tax rate on real estate transaction value from 15 percent to 10 percent in December 2012 and to 5 percent in March 2015.
  - Limited VAT withholding (précomptes) to diminish occurrence of refunds.
- Revenue administration reforms:
  - Strengthened taxpayer segmentation and improved tax collection function.
  - Created the Center for Medium-Sized Enterprises (CMZE) in 2012 covering businesses with turnover of FCFA 200 million to FCFA 1 billion.
  - Compliance improvements under CMZE: increased firms covered by 35 percent within one year; filing and payment noncompliance rates declined to less than 10 percent in 2013 from more than 50 percent previously; 60 percent increase in tax collection for this segment (from 25 to 40 billion FCFA).
  - Strengthened General Directorate of Taxes (DGI) headquarters by creating three sub-directorates and transferred direct tax collection function from the treasury to the tax administration.

### Case study highlights — Uganda (2012–2017)
- Background and VAT gap:
  - VAT gap analysis estimated a gap of about 60 percent (equivalent to 6 percent of GDP); 40 percent of the gap was related to compliance issues and 20 percent was attributable to tax policy issues.
- Revenue outcomes:
  - Tax revenues increased from 10½ percent of GDP in 2012 to 14 percent of GDP in 2017.
  - In five years Uganda almost closed its tax revenue collection gap with respect to the average in the EAC.
  - Taxes on goods and services account for half of the increase in tax revenue.
- Tax policy measures:
  - Focus on eliminating tax exemptions and reforming excise taxes.
  - VAT reforms via new tax code to reduce many exemptions, extend VAT to computers, terminate VAT exemptions on hotels, and increase the VAT threshold.
  - Increase by 10 percentage point the marginal rate in the top bracket of the PIT (from 30 to 40 percent).
  - Increase excise duty on locally produced spirits from 45 percent to 60 percent; increase excise duty on cigarettes by almost 60 percent in 2014.
  - Impose excise duty on imported fresh juices; increase excise taxes on fuel, sugar, mobile money transfers, and international calls.
  - 2016: Implemented the Tax Procedures Code.
  - 2017: URA implemented the Regional Electronic Cargo Tracking System (RECTS).
- Tax administration measures:
  - Better segmentation: established HNWI unit and strengthened MTO.
  - HNWI unit results within a year: number of HNWI increased from 17 to 117; numbers of filing in this segment increased from 13 to 78 percent; total taxes collected from this segment increased from USD 0.39 million to USD 5.5 million; share of revenue from HNWI in total tax revenue increased from 0.01 percent in 2015 to 0.2 percent in 2016.
  - Headquarters design and monitoring refined; business processes redesigned and automated; risk management concepts further developed; intensive recruitment expanded the taxpayer register.
  - Adoption initiated of a Medium-Term Revenue Strategy (MTRS) in 2017 to achieve medium-target objective of raising tax revenues to 16 percent of GDP.

### Policy recommendations and recommended directions of reform
- Simplify the tax system.
- Curb exemptions (remove/reduce tax exemptions to enhance base and reduce complexity).
- Reform indirect taxes on goods and services (VAT) and excises.
- Better manage compliance risks through taxpayer segmentation, often beginning with strengthening the LTO and creating MTOs.
- Adopt a comprehensive reform strategy (e.g., MTRS) to sequence and facilitate reforms across tax policy, administration, and legal measures.
- Enhance management, governance, and human resources (headquarters design and monitoring; HR reforms).
- Establish or strengthen taxpayer segmentation (LTO, MTO); medium taxpayer segment often accounts for 20-25 percent of domestic tax collection.
- Enhance compliance risk management covering registration, filing, payment, and reporting.
- Introduce modern business procedures leveraging IT (e-tax, e-filing/e-payment, automated processes) but ensure IT improvements accompany other administrative advances.
- Reform customs administration and customs clearance processes to limit fraud and improve revenue.

*Source: IMF working paper excerpt (wpiea2019104).*

### REFERENCES _________________________________________________________________________ 30

### REFERENCES _________________________________________________________________________ 30

### FIGURES
- 1. Burkina Faso: Total Tax Revenues ______________________________________________________________ 6
- 2. Burkina Faso: Tax Revenues by Item ____________________________________________________________ 6
- 3. The Gambia: Total Tax Revenues _______________________________________________________________ 9
- 4. The Gambia: Tax Revenues by Item_____________________________________________________________ 9
- 5. Maldives: Total Tax Revenues _________________________________________________________________ 12
- 6. Maldives: Tax Revenues by Item _______________________________________________________________ 12
- 7. Mauritania: Total Tax Revenue_________________________________________________________________ 14
- 8. Mauritania: Tax Revenues by Item _____________________________________________________________ 14
- 9. Mauritania: VAT C-Efficiency __________________________________________________________________ 16
- 10. Rwanda: Total Tax Revenue __________________________________________________________________ 17
- 11. Rwanda: Tax Revenues by Item ______________________________________________________________ 17
- 12. Rwanda: VAT C-Efficiency ____________________________________________________________________ 19
- 13. Senegal: Total Tax Revenue __________________________________________________________________ 19
- 14. Senegal: Tax Revenues by Item ______________________________________________________________ 19
- 15. Uganda: Total Tax Revenue __________________________________________________________________ 22
- 16. Uganda: Tax Revenues by Item _______________________________________________________________ 22

### TABLES
- (No tables listed in the provided content.)

*Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019104.pdf*

### 1. Recent Tax Increase Episodes in LICs ___________________________________________________________ 4

### 1. Recent Tax Increase Episodes in LICs

### Introduction
- LICs collect about 16 percent of GDP in taxes on average, compared with 18 percent in emerging markets (EMs) and 26 percent in advanced economies (AEs).
- Non-tax revenues and grants in 2016 were estimated at 2 percent of GDP and 3.7 percent of GDP, respectively in LICs.
- Many LICs would need to increase tax revenue by 5 percentage points of GDP in the next decade to fund the SDGs (references to IMF, 2015c; IMF, 2019 cited in source).
- Paper analyzes seven episodes of large tax revenue mobilization in LICs: Burkina Faso, The Gambia, Maldives, Mauritania, Rwanda, Senegal, and Uganda.
- Episodes were identified based on Akitoby et al. (2018) criteria, focusing on noncommodity-related tax revenues and recent episodes (last ten years) excluding fragile states.
- Analysis uses FAD Tax Policy Revenue Analysis Tool (RAT) database and IMF country reports and staff inputs; cases examined for tax policy and revenue administration reforms, and outcomes.

### Key statistics from selected episodes (Table 1)
- Burkina Faso — Before reform: 2009-2013 — Tax collection (percent of GDP) before reform: 11.9; after reform: 16.8; Tax increase: 5.0
- The Gambia — Before reform: 2011-2015 — Tax collection (percent of GDP) before reform: 13.2; after reform: 17.6; Tax increase: 4.4
- Maldives — Before reform: 2011-2017 — Tax collection (percent of GDP) before reform: 8.8; after reform: 20.9; Tax increase: 12.1
- Mauritania — Before reform: 2010-2014 — Tax collection (percent of GDP) before reform: 11.1; after reform: 17.2; Tax increase: 6.1
- Rwanda — Before reform: 2010-2015 — Tax collection (percent of GDP) before reform: 11.9; after reform: 15.6; Tax increase: 3.7
- Senegal — Before reform: 2010-2017 — Tax collection (percent of GDP) before reform: 18.0; after reform: 20.9; Tax increase: 2.9
- Uganda — Before reform: 2013-2017 — Tax collection (percent of GDP) before reform: 10.5; after reform: 14.0; Tax increase: 3.5
- Sources: Country authorities and IMF staff estimates.

### Broad lessons (as framed in source)
- No one-size-fits-all solution; diverse country experiences nonetheless reveal broadly generalizable features that contributed to substantial revenue increases.
- Tax policy reforms and revenue administration reforms both played roles; IMF technical assistance was instrumental in many cases.
- Design and implementation of reforms require country-specific analysis, including distributional impacts and detailed taxpayer compliance measures.

### Case studies — Burkina Faso (2009–2013): Simplifying the Tax System and Broadening the Tax Base
- Background
  - Achieved increase in tax revenue by 5 percentage points of GDP between 2008–2013.
  - Overall economic growth 5.3 percent between 2007 and 2012.
  - Public debt stood at 22 percent of GDP in 2007.
  - Tax-to-GDP ratio stood at 12.5 percent of GDP in 2007.
- Reform strategy (tax policy)
  - Comprehensive tax reform strategy adopted in early 2010 to streamline tax incentives, simplify income tax legislation and improve indirect tax management.
  - Created a tax policy unit in the ministry of finance; conducted cost-benefit analysis of tax reforms.
  - Created a single tax code (implemented in 2011).
  - Introduced a corporate income tax (CIT) with a rate of 25 percent to replace former schedular taxes.
  - VAT changes: eliminated the 20 percent withholding tax by way of advance payment (accompte); broadened VAT by revising exemptions (e.g., eliminating many VAT exemptions for NGOs).
  - Other measures: increased excise tax for alcoholic beverages from 25 to 30 percent; limited deductibility of investment spending from profit taxes; introduced a special tax on transactions related to mining stocks; applied VAT on imports of operational mining companies and companies with government contracts.
- Reform strategy (tax administration)
  - Diversified audit types to include issue-oriented audits; implemented a tax census in six urban communes; set up a medium-sized enterprises unit; communication activities to foster civic responsibility.
  - IT measures: two management systems to improve information sharing between tax and customs administrations; Computerized Tax Information System to generate list of LTO filers and non-filers; SINTAX used to notify late-filers and non-filers; Automated System for Customs Data connected five additional border posts.
  - Performance contract (“approche unité de recouvrement, AUR”) introduced between 2009–12 to improve collection of tax arrears; contract ended in 2012.
- Revenue outcomes
  - Tax revenue (excluding natural resources) increased by 5 percent of GDP between 2009–2013.
  - Income taxes increased by about 2 percent of GDP; taxes on goods and services increased by about 2½ percent of GDP.
  - Increase in VAT on imports (by 1½ percent of GDP) partially driven by mining-related import boom.
  - Tax revenue declined sharply after 2013 owing to political crisis in 2014; growth slowed from 6.6 percent in 2013 to 4 percent in 2014; tax collection returned to pre-crisis level after 2015 elections.

### Case studies — The Gambia (2011–2015): Introducing VAT with Strengthened Tax Administration
- Background
  - Achieved increase in tax collection by 4½ percentage points of GDP during 2011–2015.
  - Political system perceived relatively stable under former President Yahya Jammeh (in office since the 1994 coup until the 2016 election), but national ownership of reforms was limited historically.
  - Fiscal deficit widened and total public debt reached 70 percent of GDP by 2011; interest on domestic debt consumed about 18 percent of government revenues in 2011.
- Reform strategy (tax policy)
  - Introduced a VAT in 2013 to replace a general sales tax, supported by IMF TA; VAT replaced sales tax at the same rate of 15 percent and broadened the tax base; VAT lifted revenues by 1–1 .5 percent of GDP (source text spacing preserved).
  - Introduced a simple specific excise on tobacco products: changed cigarette excise base from weight to number of packs in 2013, increasing equivalent tax rate on cigarettes by about 25 percent; introduced weight-based excise on non-cigarette tobacco products.
  - Eliminated fuel subsidies by reforming fuel pricing formula and implementing monthly fuel price adjustments from 2013; fuel subsidies had reached 0.8 percent of GDP in 2011.
- Reform strategy (tax administration)
  - Implemented new tax and customs procedures for VAT launch; established headquarters design and monitoring function; Gambia Revenue Authority (GRA) strengthened audit capacity through hiring and training.
  - Detailed compliance improvement plan for large taxpayers; large taxpayer filing increased from 79 percent in 2011 to 86 percent in 2012.
  - New customs and excise law enacted; customs department upgraded IT to ASYCUDA++.
- Revenue outcomes
  - Tax-to-GDP ratio rose from about 13 percent in 2010 to 17½ percent in 2015 (increase of about 4½ percentage points of GDP).
  - Taxes on goods and services contributed 2 percentage points; taxes on international trade and transactions increased by 2¼ percentage points during the period.
  - Strong increase in fuel tax revenues played an important role in 2013–14 due to rising operational profits in oil company as administered retail prices were raised while international fuel price declined.
  - After 2016, revenue collection sharply fell due to low economic activity, import compression from foreign exchange scarcity, and drop in tourism because of political turmoil; tax-to-GDP ratio declined by almost 1 percentage point of GDP in 2016.

### Case studies — Maldives (2011–2017): Boosting Tax Revenues, Supported by Tourism Industry
- Background
  - Achieved a substantial increase in tax revenues by 12.1 percentage points of GDP over 5 years.
  - Tourism-dependent economy; global financial crisis hit tourism and fiscal revenues leading to fiscal deficit reaching 20 percent of GDP in 2009.
  - Public debt reached about 60 percent of GDP by 2009.
  - Political divergence delayed reforms; following local elections in 2011 and presidential elections in late 2013 political conditions shifted.
- Reform strategy (tax policy)
  - Introduced tourism sector goods and services tax (TGST) in January 2011 and general goods and services tax (GGST) in October 2011.
  - Initial GGST rate of 3.5 percent increased to 6 percent in January 2012.
  - TGST initial rate and subsequent increases: TGST initially set at 3.5 percent, raised to 6 percent in January 2012, 8 percent in January 2013, and 12 percent in November (text truncated in source).
  - Introduced business profit tax (BPT) in mid-2011.
  - In 2015 the authorities increased import duties on some consumer items.
- Reform strategy (tax administration)
  - Established Maldives Inland Revenue Authority (MIRA) in 2010 as fully autonomous under the Tax Administration Act to enforce Taxation Acts and administer tax procedures.
  - Implemented common Taxpayer Identification Number for importers/exporters and MIRA.
  - Core IT systems installed; e-filing/e-payment implemented for TGST, withholding tax, green tax, and remittance of tax returns.
  - Established elements of compliance management system and launched an audit program.
- Revenue outcomes
  - Tax collection rose from 8.8 percent of GDP before reform to 20.9 percent after reform (Tax increase: 12.1 percentage points of GDP) over 2011–2017.
  - Recovery in tourism also helped boost tax revenue collections.

*Source: IMF staff report text from “1. Recent Tax Increase Episodes in LICs.”*

### 2014. Maldives is often recognized as natural amenities of premium tourist destinations.

### wpiea2019104 - 2014. Maldives is often recognized as natural amenities of premium tourist destinations.

### Maldives — Tax Reform, MIRA, and Revenue Outcomes
- Policy actions:
  - Introduced a GST in the form of a broad-based, multi-stage, credit-invoice VAT.
  - Adopted a multistage invoice-and-credit system of value-added taxation to approximate uniform taxation of consumption.
  - BPT Act imposed a tax at the rate of 15 percent on profits exceeding MVR 500,000 (approx. USD 32,425) in a tax year.
  - A lower BPT rate of 5 percent is applicable to income generated outside of Maldives (that is, offshore operations of Maldivian companies).
  - Human resource strategy implemented in 2011 to improve technical skills and quality of MIRA staff; increased staff complement and ongoing training.
- Administration and IT:
  - TGST, GST, and BPT administered using online platforms, including for registration and tax filing.
  - Audit capacity increased significantly: more than 850 audits undertaken within two years after implementing the audit program.
  - MIRA achieved a larger than anticipated tax registration base created across the newly implemented taxes.
- Revenue outcomes:
  - Maldives achieved a substantial and consistent increase in tax revenue after 2011.
  - The tax-to-GDP ratio increased by 12.1 percent between 2011 and 2017.
  - Over the period, revenue from the goods and services taxes (both the GGST and the TGST) increased while revenues from BPT grew even as a proportion of total revenue.
  - After 2015, the revenue increase was sustained on the back of improved collection from goods and services taxes.

### Mauritania (2010–2014) — Shifting Toward Noncommodity Tax Revenues
- Background and rationale:
  - Fiscal position deteriorated due to global food and fuel price increases, a domestic political crisis (August 2008 coup d’état), and declines in commodity prices/demand.
  - Basic non-oil fiscal deficit increased to 7.7 percent of non-oil GDP in 2008 up from 2.2 percent in 2007.
  - Net total public debt at end-2008 amounted to roughly 90 percent of GDP (gross external and domestic debt net of oil fund reserves).
- Tax policy measures:
  - Eliminated the global income tax in 2012 and switched to a dual tax system: a proportional tax on capital income and progressive taxation of wages.
  - Removed the CIT exemption of the main gold company in 2012, contributing to an increase in CIT by 1.3 percentage points of GDP.
  - Increased excise taxes on tobacco from 10 percent to 30 percent.
  - Implemented a withholding tax of 15 percent on payments to nonresidents in 2013.
- VAT and formalization:
  - Extended VAT to cover the mining sector; mining companies receive reimbursement only if purchases are from formal domestic suppliers.
  - Tax identification numbers increased from 1,789 in 2011 to 5,860 in 2013.
- Redistributive measures:
  - Undertook fuel subsidy reforms and introduced mitigating measures targeted to lower-income groups.
  - Introduced a cash transfer program for targeted households in 2012 following a vulnerability and poverty survey (with World Food Program assistance).
- Revenue outcomes:
  - Total tax revenues increased from 11.1 percent of GDP in 2009 to 17.2 percent of GDP in 2014.
  - Between 2009–2013, VAT (net of refunds) increased by 2.5 percentage points of GDP.
  - Mauritania’s C-efficiency ratio increased significantly by about 35 percentage points during the reform period.
  - Noncommodity tax revenues increased significantly, helped by formalization encouraged by VAT liability of the mining sector.

### Rwanda (2010–2015) — Comprehensive Reform with Gradual but Sustained Gains
- Background and objectives:
  - Heavy dependence on donor aid with total external grants exceeding 40 percent of total fiscal revenues in 2008; domestic revenues at 12.5 percent of GDP.
  - Need to reduce aid dependency and create fiscal space for development spending and infrastructure.
- Reform strategy:
  - Supported under two three-year Policy Support Instrument (PSI) programs (approved in June 2010 and in December 2013).
  - Target to increase domestic revenues by 2 percent of GDP over the PSI period.
- Tax administration measures:
  - Introduced electronic filing and payment systems (2010–2011) and electronic tax registration.
  - Established a headquarters design and monitoring function; implemented basic risk management and self-assessment procedures.
  - Direct bank payment of tax introduced to reduce leakages; integrated tax and business registration processes.
  - Collection of social security contributions transferred to the Rwanda Revenue Authority (RRA).
  - Automated tax and customs operations and implemented a customs Single Window for trade facilitation.
  - Enforced VAT compliance through electronic transactions device (ETD) and withholding VAT at source by government departments; increased collection of tax arrears.
- Tax policy measures:
  - Increased tax rate for imported construction materials from 5 percent to 10 percent from July 2012.
  - Excise duty on airtime increased from 5 to 8 percent, then to 10 percent between 2011 and 2014.
  - Introduced a schedular tax on turnover below 12 million for micro enterprises in September 2012.
  - Reduced turnover tax for small enterprises from 4 to 3 percent and raised the ceiling for this regime from 20 to 50 million in September 2012.
  - In 2015, increased tariffs for water and electricity by 19 and 35 percent, respectively.
  - FY15/16 budget included an excise tax on petroleum, higher excise tax on tobacco, and import tax on non-EAC products.
  - Removed some tax exemptions and streamlined the investment code; VAT exemptions on imports for investment certificate holders removed.
- Revenue outcomes:
  - Rwanda’s tax-to-GDP ratio increased by 3¾ percent of GDP between 2010 and 2015.
  - VAT (net of refunds) collection increased by 1¾ percentage points of GDP during the reform period.
  - VAT C-efficiency ratio improved, moving closer towards regional and LIC averages, though it stayed below peers.

### Senegal (2010–2017) — Policy and Administration Reforms
- Background and objectives:
  - External shocks (food and energy price run-up during 2006–2008) and fiscal pressures led to reform agenda.
  - Aimed to raise tax revenue beyond 20 percent of GDP to create fiscal space for infrastructure and social spending.
- Tax policy measures:
  - Consolidated the tax code in 2012 to recentralize tax policy and streamline tax expenditures.
  - Eliminated the proportional PIT and the tax shield (bouclier fiscal) and removed the “quotient familial”.
  - Reformed the ‘’Patente’’ in 2017 and replaced it with the ‘’Contribution économique local (CEL)’’ based on rental value of premises and value added.
  - Reduced tax rate on real estate transaction value from 15 percent to 10 percent in December 2012 and to 5 percent in March 2015.
  - Limited VAT withholding (précomptes) to diminish occurrence of refunds.
- Revenue administration reforms:
  - Strengthened taxpayer segmentation and improved tax collection function.
  - Created the Center for Medium-Sized Enterprises (CMZE) in 2012 covering businesses with turnover of FCFA 200 million to FCFA 1 billion.
  - Compliance improvements under CMZE: increased firms covered by 35 percent within one year; filing and payment noncompliance rates declined to less than 10 percent in 2013 from more than 50 percent previously; 60 percent increase in tax collection for this segment (from 25 to 40 billion FCFA).
  - Strengthened General Directorate of Taxes (DGI) headquarters by creating three sub-directorates: case management service, enforce collection service, and audit service.
  - Transferred direct tax collection function from the treasury to the tax administration.
  - Adopted an inclusive consultation approach with employers and labor unions on tax code reforms.
- Revenue outcomes:
  - Tax-to-GDP ratio increased from 18 percent of GDP in 2009 to 20.9 percent of GDP in 2017.
  - Income taxes increased significantly during the period; trade taxes and indirect taxes did not improve much.
  - Tax-to-GDP ratio improved for seven consecutive years, reflecting modest but long-lasting impacts.

*Italic: Source — IMF working paper (excerpt provided).*

### 2017. During the period, and supported by political will, tax revenues increased by 3.5 percentage

### 2017. During the period, and supported by political will, tax revenues increased by 3.5 percentage points of GDP, largely through removing tax exemptions.

### Background
- Uganda had maintained prudent macroeconomic management for decades.
- Per capita income grew at about 4 percent per annum through 2010.
- Inflation remained in single-digit territory.
- Fiscal deficits had been modest and public debt stood at 25 percent of GDP.
- Main thrust of the 2011/12 budget: address rising inflation, inadequate infrastructure development, and improving social infrastructure and service delivery.
- Uganda had the lowest tax-to-GDP ratio (about 10 percent of GDP) in the East African Community (EAC), despite tax rates being in line with regional standards.
- A VAT gap analysis estimated a gap of about 60 percent (equivalent to 6 percent of GDP), of which 40 percent was related to compliance issues and 20 percent was attributable to tax policy issues.
- Under the National Development Plan (NDP) (2010/11–2014/15), the government targeted to raise the revenue to GDP ratio by about 0.5 percent per year over the medium term through broadening the tax base and improving tax administration.
- Political context: President Museveni re-elected by 68 percent in February 2011; stable political environment supported reforms.

### Reform strategy (tax policy and administration)
- Objective: Enhance tax revenues to secure fiscal space and ensure fiscal sustainability in view of poor tax performance and declining foreign aid.
- Tax policy measures:
  - Focus on eliminating tax exemptions and reforming excise taxes.
  - VAT reforms via a new tax code (‘revenue package’) to reduce many exemptions (e.g., eliminating VAT exemptions on sales of motor vehicles or trailers, extending VAT to computers), terminate VAT exemptions on hotels, and increase the VAT threshold.
  - Increase by 10 percentage point the marginal rate in the top bracket of the PIT (from 30 to 40 percent).
  - Increase excise duty on locally produced spirits from 45 percent to 60 percent.
  - Increase excise duty on cigarettes by almost 60 percent in 2014.
  - Impose excise duty on imported fresh juices.
  - Increase excise taxes on fuel, sugar, mobile money transfers, and international calls.
  - 2016: Implemented the Tax Procedures Code to provide a single regulation on all procedural aspects relating to taxes.
  - 2017: URA implemented the Regional Electronic Cargo Tracking System (RECTS), a web-based system to monitor transit cargo in the EAC and improve revenue collection.
- Tax administration measures:
  - Better segmentation of taxpayers: established a high net worth individuals (HNWI) unit as part of the LTO and strengthened the medium-sized taxpayer office (MTO).
  - URA established a list of potential HNWI taxpayers and conducted outreach; after the unit was established both number of taxpayers and tax collection in this segment increased substantially.
  - Headquarters design and monitoring function refined; business processes redesigned and automated; risk management concepts further developed; intensive recruitment expanded the taxpayer register.
  - Improved taxpayer services using e-tax services to facilitate registration, filing and payments.
  - IMF and AFRITAC East supported URA to establish and strengthen the MTO.
  - Adoption initiated of a Medium-Term Revenue Strategy (MTRS) in 2017 to achieve medium-target objective of raising tax revenues to 16 percent of GDP.

### Revenue outcomes and key statistics
- Tax revenues increased from 10½ percent of GDP in 2012 to 14 percent of GDP in 2017.
- In five years Uganda almost closed its tax revenue collection gap with respect to the average in the EAC.
- Taxes on goods and services account for half of the increase in tax revenue.
- HNWI unit results within a year:
  - Number of HNWI increased from 17 to 117.
  - Numbers of filing in this segment increased from 13 to 78 percent.
  - Total taxes collected from this segment increased from USD 0.39 million to USD 5.5 million.
  - Share of revenue from HNWI in total tax revenue increased from 0.01 percent in 2015 to 0.2 percent in 2016.
- MTRS medium-target objective: raise tax revenues to 16 percent of GDP.
- VAT gap analysis figures reiterated: VAT gap about 60 percent (equivalent to 6 percent of GDP); 40 percent due to compliance, 20 percent due to tax policy.

### Lessons learned and policy recommendations
- Overarching lessons:
  - Tax reforms require political commitment and buy-in from key stakeholders.
  - Pursuing both revenue administration and tax policy reforms tends to yield larger and more persistent gains.
  - A successful strategy often starts with fiscal reform measures with immediate effect to build momentum.
- Recommended directions of reform:
  - Simplify the tax system.
  - Curb exemptions (remove/reduce tax exemptions to enhance base and reduce complexity).
  - Reform indirect taxes on goods and services (VAT) and excises.
  - Better manage compliance risks through taxpayer segmentation, often beginning with strengthening the LTO and creating MTOs.
  - Adopt a comprehensive reform strategy (e.g., MTRS) to sequence and facilitate reforms across tax policy, administration, and legal measures.
- Specific administrative reforms emphasized:
  - Enhance management, governance, and human resources (headquarters design and monitoring; HR reforms).
  - Establish or strengthen taxpayer segmentation (LTO, MTO) to manage compliance risk; medium taxpayer segment often accounts for 20-25 percent of domestic tax collection.
  - Enhance compliance risk management covering registration, filing, payment, and reporting.
  - Introduce modern business procedures leveraging IT (e-tax, e-filing/e-payment, automated processes) but ensure IT improvements accompany other administrative advances.
  - Reform customs administration and customs clearance processes to limit fraud and improve revenue (examples: Automated System for Customs Data connection of border posts).
- Cautions:
  - Political commitment is necessary but not sufficient; reforms must be well-designed and matched to institutional capacity.
  - Removing exemptions can be reversed; careful sequencing and stakeholder engagement are necessary.
  - Revenue increases should be examined for effects on economic efficiency and fairness (e.g., denying VAT refunds can distort production incentives).
  - Comprehensive, country-specific analysis (including distributional impacts) is warranted when designing reforms.

*Sources: Country authorities and IMF staff estimates; case study material as presented in the content unit.*

### References

### References

### IMF working papers, staff notes, and policy papers
- Akitoby, Bernardin, Anja Baum, Clay Hackney, Olamide Harrison, Keyra Primus, and Veronique Salins, 2018, “Large Tax Revenue Mobilization Episodes in  Emerging Markets Low-Income Countries: Lessons from a New Dataset”, IMF Working Paper 18/234, Washington, D.C.: International Monetary Fund.  
- Crivelli, Ernesto, and Sanjeev Gupta, 2014, “Does Conditionality in IMF-Supported Programs Promote Revenue Reform?”, IMF Working Paper, WP/14/206, Washington, D.C.: International Monetary Fund.  
- International Monetary Fund, 2019, “Fiscal Policy and Development: Human, Social, and Physical Investment for the SDGs”, IMF Staff Discussion Note 19/03, Washington, D.C.: International Monetary Fund.  
- __________, 2018a, Regional Economic Outlook: Sub-Saharan Africa. Washington, D.C.:   International Monetary Fund.  
- __________, 2018b, “The IMF and Fragile States: Eight African Country Cases: Background Paper,” Washington, D.C.: International Monetary Fund.  
- __________, 2015a, “Fiscal Policy and Long-Term Growth”, IMF Policy Paper.  
- __________, 2015b, “Current Challenges in Revenue Mobilization: Improving Tax Compliance,” Washington, D.C.: International Monetary Fund.  
- __________, 2015c, “From Ambition to Execution: Policies in Support of Sustainable Development Goals,” IMF Staff Discussion Note 15/18, Washington, D.C.: International Monetary Fund.  
- __________, 2015d, “Current Challenges in Revenue Mobilization: Improving Tax Compliance”, Washington, D.C.: International Monetary Fund.  
- __________, (2013), ‘’Burkina Faso: Ex Post Assessment of Longer-Term Program Engagement—An Update,’’ IMF Country Report No. 13/228, Washington, D.C.: International Monetary Fund.  
- __________, 2012,”Fiscal Regimes for Extractive Industries: Design and Implementation, Washington, D.C.: International Monetary Fund.  
- __________, (2006), “The Gambia: Ex Post Assessment of Longer-Term Program Engagement”, IMF Country Report No. 06/11, Washington, D.C.: International Monetary Fund.  
- __________, (various years), Fiscal Affairs Department: How to Notes, https://www.imf.org/en/Publications/SPROLLs/How-To-Notes

### Country reports, unpublished manuscripts, and regional assessments
- Dell’Erba S. and Gregoire Rota-Graziosi R., 2014, ‘’Tax Revenue Performance in Mauritania’’, IMF Fiscal Affairs Department, unpublished manuscript.  
- __________, (various years), Burkina Faso, IMF Country Reports.  
- __________, (various years), The Gambia, IMF Country Reports.  
- __________, (various years), Maldives, IMF Country Reports.  
- __________, (various years), Mauritania, IMF Country Reports.  
- __________, (various years), Rwanda, IMF Country Reports.  
- __________, (various years), Senegal, IMF Country Reports.  
- __________, (various years), Uganda, IMF Country Reports.  
- Luca O., 2015, ‘’Mauritania: Overview of revenue developments’’, IMF Fiscal Affairs Department, unpublished manuscript.  

### Tax policy, VAT, and revenue mobilization research
- Ebrill, Liam, Michael Keen, Jean-Paul Bodin, and Victoria Summers, 2001, The Modern VAT,   Washington, D.C.: International Monetary Fund  
- Keen, Michael, 2013, “The Anatomy of the VAT”, National Tax Journal, Vol. 66, pp. 423-446.  
- Keen, Michael and Ben Lockwood, 2010, “The value added tax: Its causes and consequences,” Journal of Development Economics, Vol. 92, pp. 138-151.  
- Kangave, Jalia, Susan Nakato, Ronald Waiswa, Milly. I. Nalukwago and Patrick Lumala Zzimbe, 2017, ‘’Taxing High Net Worth Individuals: Lessons from the Uganda Revenue Authority’s Experience’’, International Centre for Tax and Development.  
- Mansour, Mario, 2015, ‘’Tax Policy in MENA Countries: Looking Back and Forward’’, IMF Working Paper WP/15/98, Washington, D.C.: International Monetary Fund.  
- Mansour Mario and Grégoire Rota-Graziosi, 2013, ‘’Tax Coordination, Tax Competition, and Revenue Mobilization in the West African Economic and Monetary Union’’, IMF Working Paper WP/13/163, Washington, D.C.: International Monetary Fund.  
- __________, 2015b, “Current Challenges in Revenue Mobilization: Improving Tax Compliance,” Washington, D.C.: International Monetary Fund.  
- __________, 2015d, “Current Challenges in Revenue Mobilization: Improving Tax Compliance”, Washington, D.C.: International Monetary Fund.  

### Revenue administration, methodologies, and analytical tools
- Kloeden, David, 2011, “Revenue Administration Reforms in Anglophone Africa Since the Early 1990s”, IMF Working Paper 11/162, Washington, D.C.: International Monetary Fund.  
- Mylonas, Victor, 2019, "Revenue Analysis Tool (RAT)" , IMF Technical Notes and Manuals (Forthcoming), International Monetary Fund.  
- von Haldenwang, Christian and Maksym Ivanyna, 2012, “A Comparative View on the Tax Performance of Developing Countries: Regional Patterns, Non-tax Revenue and Governance,” Economics: The Open-Access, Open-Assessment E-Journal, Vol. 6, pp. 1-44.  

### Health sector taxation and other organizational publications
- World Health Organization, 2014, Raising Tax on Tobacco — What you need to know. Geneva, Switzerland.

*Source: wpiea2019104 - References*

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_Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019104.pdf_