Tax Policy in MENA Countries: Looking Back and Forward

IMF Working Papers, May 5, 2015

Source details

Reviews trends in taxation and revenue in MENA countries over 1990-2012, with a focus on non-resource taxes.
Emphasis on comparisons across subregions (Magreb versus Mashreq) and between resource-rich and non-resource countries.

On average, non-resource revenues declined slightly over 1990-2012, while resource revenues soared.
Most oil producers raise little tax revenues—generally less than 5 percent of GDP—and most have reduced them since the late 1990s.
Rates of main taxes and their revenues tend to be higher in the Magreb than in the Mashreq, except for the value-added tax, where lower rates are associated with equal or higher revenue.
Income taxes (not indirect taxes) have partially compensated for lost revenue from trade liberalization—unlike common experience around the world.
Revenues from indirect taxes have remained stable.
Personal income taxes have played an unimportant role as a revenue tool.
Fees and stamp duties are significant revenue sources.

Tax reform challenges will vary across countries:
- The Maghreb needs to focus on efficiency-enhancing reforms, especially in capital income and consumption taxes.
- The Mashreq have some room to increase revenue.
- All countries have ample opportunities to improve equity and reduce complexity of tax systems.
The recent decline in oil prices and revenues underscores that even resource-rich GCC countries need to lay the basis of a tax system for the future.

Source: Tax Policy in MENA Countries: Looking Back and Forward, IMF Working Papers 2015, 098 (2015), Mario Mansour.