Tax Policy in MENA Countries: Looking Back and Forward

Tax Policy in MENA Countries: Looking Back and Forward

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This paper reviews trends in taxation and revenue in MENA countries over 1990-2012, with a focus on non-resource taxes. On average, non-resource revenues declined slightly, while resource revenues soared. Country experiences vary: 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; most oil producers raise little tax revenuesa€”generally less than 5 percent of GDPa€”and most have reduced them since the late 1990s. But there are similarities: unlike common experience around the world, income taxes (not indirect taxes) have partially compensated for lost revenue from trade liberalization; revenues from indirect taxes have remained stable; personal income taxes have played an unimportant role as a revenue tool; and fees and stamp duties are significant revenue sources. Looking forward, tax reform challenges will also 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; and, there are ample opportunities to improve equity and reduce complexity of tax systems in all countries. Finally, the recent decline in oil prices and revenues is a reminder that even resource-rich GCC countries need to lay the basis of a tax system for the future.Behar and Freund (2011) find that MENA exports have increased since the early 1990s, but the regiona#39;s exports are two-thirds below its ... to trade in MENA; they find high transportation costs, and inefficient and slow customs clearance procedures to be significant. ... to expand the tax base to services and reduce cascading by enhancing refunds of taxes on intermediates and capital goods; (2) new VATsanbsp;...

Title:Tax Policy in MENA Countries: Looking Back and Forward
Author:Mario Mansour
Publisher:International Monetary Fund - 2015-05-05


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