Djibouti one of the countries which has the more indirect taxes

(HornTrade) – The African Economic Outlook report, officially launched in Addis Ababa, the Ethiopian capital, Monday, showed countries without minerals and oil were more effective in tax collection.

However, the expansion of the tax systems remains subjects to changes in the international markets such as the recent economic downturn.

‘In these countries, it is the more politically demanding types of taxes – personal and corporate income taxes together with value-added Tax – that have been driving the slow increase in tax shares,’ the report said.

It says although oil-producing countries collect more tax revenue, non-oil producers lead in better quality sources of taxes.

Libya, a leading producer of crude oil, abandoned other sources of tax after earnings from oil exports shot up to 70 percent of the country’s overall wealth in 2007 due to high oil prices.

Countries with higher earnings from oil and other minerals, have mostly abandoned tax revenues and resorted to the tax revenues from crude oil exports.

Algeria, Angola, Botswana, Congo, Chad, Equatorial Guinea, Gabon, Libya and Nigeria fall in the category of countries with lax tax laws.

Burkina Faso, Burundi, Djibouti, Kenya, Lesotho, Mauritania, Morocco, Mozambique, Rwanda, Senegal, South Africa and Zambia, are amongst the countries which have more indirect taxes.

These are taxes based on consumption of certain consumer goods collected for the government by the various companies. These include VAT, sales taxes and excise duties.

These consumer taxes target cigarettes, alcoholic drinks and airtime sales taxes, which are collected by companies and paid directly to the government.

The UN report states the difficulties faced by the countries with no oil wealth include the lack of ability to increase the tax base, mainly to reach the companies not officially covered under the formal tax system.

The report cites complex tax evasion schemes, the difficulties that some oil producing countries face to determine the exact amount of volumes of crude extracted to base the taxes and the over-use of certain taxation measures by the various governments as weaknesses that need correction.

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