Presumptive Taxation in Sub-Saharan Africa: Experiences and Prospects
IMF Working Papers, January 1, 1996
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Bibliographic details
- Authors: Helaway Tadesse, Günther Taube
- Published: January 1, 1996
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451842135.001
Overview
- Purpose: Analyze presumptive taxation methods and their application in sub-Saharan Africa to broaden the tax base and increase tax revenue in an efficient, equitable, and cost-effective manner.
- Definition emphasis: Presumptive taxation involves simple techniques to capture income that frequently escapes conventional taxation.
- Institutional note: Intensified presumptive taxation will need stronger institutional capacity in tax administration.
- Authors: Helaway Tadesse, Günther Taube
- Publication date: January 1, 1996
- Series: IMF Working Papers, Working Paper No. 1996/005, Issue: 005, Volume: 1996
- Length: 49 pages
- DOI: https://doi.org/10.5089/9781451842135.001
- ISBN: 9781451842135
- ISSN: 1018-5941
- Stock No: WPIEA0051996
- 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."
Key Findings
- Presumptive taxation methods could be used more intensively in sub-Saharan Africa.
- The most effective presumptive tax instruments for raising additional tax revenue, in ways commensurate with efficiency, equity, and administrative expediency, are:
- Presumptive taxes on imports
- Withholding schemes
- Graduated business license fees
- Presumptive taxation captures income that frequently escapes conventional taxation by using simple techniques.
- Effective expansion of presumptive taxation requires stronger institutional capacity in tax administration.
Analytical Focus and Themes
- Efficiency, equity, and administrative expediency are the central criteria for evaluating presumptive taxation methods.
- Emphasis on simple techniques suitable for contexts where conventional taxation fails to capture taxable income.
- Consideration of trade-offs between revenue mobilization and administrative burden on tax authorities.
Policy Recommendations and Administrative Implications
- Scale up the use of presumptive taxation in sub-Saharan Africa, prioritizing:
- Presumptive import taxes to capture revenue at points of entry.
- Withholding schemes to secure revenue collection at source.
- Graduated business license fees to align levies with observable business characteristics.
- Strengthen tax administration capacity to implement and manage intensified presumptive taxation effectively.
- Design presumptive measures to balance revenue gains with concerns for equity and cost-effectiveness.
Subjects and Keywords (as provided)
- Subjects: Income and capital gains taxes, Income tax systems, National accounts, Personal income, Presumptive tax, Revenue administration, Tax administration core functions, Taxes
- Keywords: Africa, Asia and Pacific, down payment, imputed income, Income and capital gains taxes, income tax, Income tax systems, license tax, medium-scale enterprise, overburdened tax authorities, Personal income, Presumptive tax, presumptive taxation, Sub-Saharan Africa, tax administration capacity, Tax administration core functions, tax authorities, tax authority, tax levy, tax liability, taxable income, trade tax, withholding tax, WP
Source: Presumptive Taxation in Sub-Saharan Africa: Experiences and Prospects, Helaway Tadesse and Günther Taube, IMF Working Papers 1996, 005 (1996), January 1, 1996, DOI: https://doi.org/10.5089/9781451842135.001