{ "title": "Taxing Telecommunications in Developing Countries", "publication": "IMF Working Papers, November 15, 2017", "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349", "canonical": "https://www.imf.org/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349", "overlayPath": "/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349/index.md", "summary": "Developing countries apply numerous sector-specific taxes to telecommunications, whose buoyant revenues and formal enterprises provide a convenient “tax handle”.", "sections": [ { "heading": "Summary", "content": "- Developing countries apply numerous sector-specific taxes to telecommunications, whose buoyant revenues and formal enterprises provide a convenient “tax handle”.\n- The paper explores whether there is an economic rationale for sector-specific taxes on telecommunications and, if so, what form they should take to balance the competing goals of promoting connectivity and mobilizing revenues.\n- A survey of the literature finds that limited telecoms competition likely creates rents that could efficiently be taxed.\n- The authors propose a “pecking order” of sector-specific taxes that could be levied in addition to standard income and value-added taxes, based on capturing rents and minimizing distortions.\n- Taxes that target possible economic rents or profits are preferable, but their administrative challenges may necessitate reliance on service excises at the cost of higher consumer prices and lower connectivity.\n- Taxes on capital inputs and consumer access, which distort production and restrict network access, should be avoided; so should tax incentives, which are not needed to attract foreign capital to tap a local market." }, { "heading": "Key findings and analysis", "content": "- Limited telecoms competition likely creates rents that could efficiently be taxed.\n- Sector-specific taxes are prevalent in developing countries because telecommunications offer buoyant revenues and formal enterprises—a convenient “tax handle”.\n- There is a trade-off between mobilizing revenue and promoting connectivity; tax design should seek to balance these goals.\n- Administrative challenges associated with taxing rents/profits may push policymakers toward simpler service excises, which raise consumer prices and reduce connectivity.\n- Taxing capital inputs and consumer access leads to distortions in production and restrictions in network access and therefore should be avoided.\n- Tax incentives are unnecessary to attract foreign capital to serve a local market and should be avoided." }, { "heading": "Policy recommendations and “pecking order”", "content": "- Prefer taxes that target economic rents or profits, where administratively feasible.\n- Where rent or profit taxation is administratively infeasible, reliance on service excises is a second-best option, acknowledging the cost of higher consumer prices and lower connectivity.\n- Avoid taxes on capital inputs and consumer access because they distort production and restrict network access.\n- Avoid tax incentives aimed at attracting foreign capital for local market provision." }, { "heading": "Publication and metadata", "content": "- Title: Taxing Telecommunications in Developing Countries\n- Authors: Thornton Matheson, Patrick Petit\n- Publication date: November 15, 2017\n- Series: IMF Working Papers, Working Paper No. 2017/247\n- Pages: 42\n- Volume: 2017\n- Issue: 247\n- DOI: https://doi.org/10.5089/9781484324981.001\n- Stock No: WPIEA2017247\n- ISBN: 9781484324981\n- ISSN: 1018-5941\n- Subject: Corporate income tax, Excises, Rent tax, Tax incentives, Taxes, Value-added tax\n- Keywords: ad valorem excise, Africa, Cell, cell phone, cellular, Corporate income tax, excise, Excises, fixed cost, Global, incoming call, international call, phone, rate of return, regulation, rent, Rent tax, Sub-Saharan Africa, tax, tax burden, Tax incentives, telecommunications, telephone call, value-added tax, Value-added tax, WP\n\nSource: \"Taxing Telecommunications in Developing Countries\", IMF Working Papers 2017, 247 (2017).\n\n---\n\n Content in this bundle\n\n- Taxing Telecommunications in Developing Countries, WP/17/247, November 2017\n - Taxing Telecommunications in Developing Countries, WP/17/247, November 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Taxing Telecommunications in Developing Countries, WP/17/247, November 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349" } ], "bullets": [ "[Markdown version](/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349/index.md)", "[Structured JSON version](/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349/index.json)", "[Bundle manifest](/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349/bundle-manifest.json)", "Authors: Thornton Matheson, Patrick Petit", "Published: November 15, 2017", "Series: IMF Working Papers", "DOI: https://doi.org/10.5089/9781484324981.001", "Developing countries apply numerous sector-specific taxes to telecommunications, whose buoyant revenues and formal enterprises provide a convenient “tax handle”.", "The paper explores whether there is an economic rationale for sector-specific taxes on telecommunications and, if so, what form they should take to balance the competing goals of promoting connectivity and mobilizing revenues.", "A survey of the literature finds that limited telecoms competition likely creates rents that could efficiently be taxed.", "The authors propose a “pecking order” of sector-specific taxes that could be levied in addition to standard income and value-added taxes, based on capturing rents and minimizing distortions.", "Taxes that target possible economic rents or profits are preferable, but their administrative challenges may necessitate reliance on service excises at the cost of higher consumer prices and lower connectivity.", "Taxes on capital inputs and consumer access, which distort production and restrict network access, should be avoided; so should tax incentives, which are not needed to attract foreign capital to tap a local market.", "Limited telecoms competition likely creates rents that could efficiently be taxed.", "Sector-specific taxes are prevalent in developing countries because telecommunications offer buoyant revenues and formal enterprises—a convenient “tax handle”.", "There is a trade-off between mobilizing revenue and promoting connectivity; tax design should seek to balance these goals.", "Administrative challenges associated with taxing rents/profits may push policymakers toward simpler service excises, which raise consumer prices and reduce connectivity.", "Taxing capital inputs and consumer access leads to distortions in production and restrictions in network access and therefore should be avoided.", "Tax incentives are unnecessary to attract foreign capital to serve a local market and should be avoided.", "Prefer taxes that target economic rents or profits, where administratively feasible.", "Where rent or profit taxation is administratively infeasible, reliance on service excises is a second-best option, acknowledging the cost of higher consumer prices and lower connectivity.", "Avoid taxes on capital inputs and consumer access because they distort production and restrict network access.", "Avoid tax incentives aimed at attracting foreign capital for local market provision.", "Title: Taxing Telecommunications in Developing Countries", "Authors: Thornton Matheson, Patrick Petit", "Publication date: November 15, 2017", "Series: IMF Working Papers, Working Paper No. 2017/247", "Pages: 42", "Volume: 2017", "Issue: 247", "DOI: https://doi.org/10.5089/9781484324981.001", "Stock No: WPIEA2017247", "ISBN: 9781484324981", "ISSN: 1018-5941", "Subject: Corporate income tax, Excises, Rent tax, Tax incentives, Taxes, Value-added tax", "Keywords: ad valorem excise, Africa, Cell, cell phone, cellular, Corporate income tax, excise, Excises, fixed cost, Global, incoming call, international call, phone, rate of return, regulation, rent, Rent tax, Sub-Saharan Africa, tax, tax burden, Tax incentives, telecommunications, telephone call, value-added tax, Value-added tax, WP", "**Taxing Telecommunications in Developing Countries, WP/17/247, November 2017**" ], "related": [ { "title": "Taxing Telecommunications in Developing Countries, WP/17/247, November 2017", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2017/wp17247.pdf", "summary": { "path": "/-/media/files/publications/wp/2017/wp17247.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/wp/2017/wp17247.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349/index.md", "json": "/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349/index.json", "bundleManifest": "/en/publications/wp/issues/2017/11/15/taxing-telecommunications-in-developing-countries-45349/bundle-manifest.json" }, "generatedAtUtc": "2026-09-18T12:28:42.133Z" }