IMF Working Papers

Should Tax Be King? The Debate over Tax Priority in Insolvency

By Irving Aw, Brendan Crowley, José M. Garrido

June 13, 2025

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Format: Chicago

Irving Aw, Brendan Crowley, and José M. Garrido "Should Tax Be King? The Debate over Tax Priority in Insolvency", IMF Working Papers 2025, 118 (2025), accessed July 19, 2025, https://doi.org/10.5089/9798229010481.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Countries differ in their approaches to the treatment of tax claims in insolvency. Historically, most countries have granted priority to tax claims. In the late 20th century, however, some countries abolished or reduced tax priorities at the same time that sweeping insolvency reforms were introduced. Since then, the debate over whether tax claims should be afforded priority in insolvency has continued. This paper reviews the various legal techniques used to protect tax claims in a wide range of countries, the arguments in favor and against tax priorities, and advocates for an empirical approach to analyzing this complex problem.

Subject: Financial sector policy and analysis, Revenue administration, Solvency, Tax administration core functions, Tax arrears management, Tax collection

Keywords: Africa, Assessment tool, Bankruptcy, Credit, Global, IMF WP 25/118, Insolvency, Priority in Insolvency, Solvency, Tax administration core functions, Tax arrears management, Tax claim, Tax collection, Tax Policy, Tax priority

Publication Details

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