Diamond Smuggling and Taxation in Sub-Saharan Africa

August 1, 2003

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Matthias Vocke, and Nienke Oomes. Diamond Smuggling and Taxation in Sub-Saharan Africa, (USA: International Monetary Fund, 2003) accessed October 6, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides an overview of diamond mining in sub-Saharan African countries, and explores the reasons for substantial differences in their tax rates and fiscal revenues from the sector, which mainly arise from differences in the incentives for smuggling. In a theoretical model, we show that optimal diamond tax rates increase with the degree of competition among diamond buyers, as well as with the corporate share of diamond production, which is confirmed by the data. We then discuss policies to increase revenue, including by enhancing mining productivity, stimulating the exploration of new areas, reducing barriers to entry, and attracting investment into value-adding downstream operations.

Subject: Anti-smuggling, Corporate taxes, Economic sectors, Exports, International trade, Mining sector, Revenue administration, Tax evasion, Tax incentives, Taxes

Keywords: Africa, Anti-smuggling, Corporate taxes, Diamond, Diamond mining, Diamond production, Diamond sector taxation, Diamond tax regime, Export company, Export levy, Export value, Exports, Market price, Mining, Mining productivity, Mining sector, Nonrenewable resource, Number of sellers, Optimal taxation, Sub-Saharan Africa, Tax evasion, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/167
Stock No:

WPIEA1672003
ISBN:

9781451858204
ISSN:

1018-5941

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