A New GCC Fiscal Era – A Look at the Macro and Firm-Level Impact of Tax Reforms
IMF Working Papers, April 11, 2025
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- A New GCC Fiscal Era – A Look at the Macro and Firm-Level Impact of Tax Reforms
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Bibliographic details
- Authors: Anja Baum, Dorothy Nampewo, Greta Polo
- Published: April 11, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229006804.001
Background and scope
- In 2014, the collapse of global oil prices and the resulting increase in fiscal deficits and debt triggered a wave of spending cuts, tax policy and subsidy reforms.
- The introduction of excises and VAT, broadening of CIT, and subsidy reform have changed the GCC fiscal landscape.
- The paper first highlights the fiscal history and current fiscal landscape across the GCC.
Data and methods
- Utilizes both macroeconomic and firm-level financial data to analyze the impact of tax policy reforms on economic and firm-level outcomes.
- Empirical approach: panel data techniques.
Key findings
- The different reforms have had a minor impact on GDP growth, inflation, and other economic variables.
- The impact on firms is more nuanced:
- VAT is not found to impact firm financials, suggesting well-functioning VAT refund systems.
- Changes to CIT have some impact especially on smaller companies.
- The impact of excises depends on analyzed subgroups.
- Emerging conclusion: tax policy reforms have had an overall rather small impact on the GCC economies, but care should be taken in exact policy design.
Policy implications and emphasis
- Careful policy design is important given heterogeneous firm-level effects (notably for smaller companies and specific subgroups affected by excises).
- The apparent effectiveness of VAT refund systems is associated with no detectable adverse effects on firm financials.
Publication and metadata
- Authors: Anja Baum, Dorothy Nampewo, Greta Polo
- Date: April 11, 2025
- Series: IMF Working Papers
- Working Paper No.: 2025/074
- Volume: 2025
- Issue: 074
- Pages: 28
- DOI: https://doi.org/10.5089/9798229006804.001
- Stock No: WPIEA2025074
- ISBN: 9798229006804
- ISSN: 1018-5941
- Subjects: Corporate income tax, Excises, Income and capital gains taxes, Oil prices, Prices, Taxes, Value-added tax
- Keywords: ANNEX I. GCC tax incentives, Corporate income tax, Eastern Europe, Excises, firm financials, firms times years data, GCC, GCC firm, Global, Income and capital gains taxes, Oil prices, tax policy reform, tax reform, Value-added tax
IMF Working Paper — "A New GCC Fiscal Era – A Look at the Macro and Firm-Level Impact of Tax Reforms", April 11, 2025.
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