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Ms. Giorgia Albertin, Boriana Yontcheva, Dan Devlin, Hilary Devine, Mr. Marc Gerard, Sebastian Beer, Irena Jankulov Suljagic, and Mr. Vimal V Thakoor
This paper aims to contribute to the international policy debate around profit shifting, tax avoidance and SSA’s revenue mobilization efforts in three ways. First, it examines the importance of mining, the role of multinational enterprises (MNEs), and mining revenue outcomes in SSA. Second, it assesses the magnitude of profit shifting in mining drawing on new macro level research, supplemented by case studies to illustrate the lived experience of tax avoidance in SSA mining. Third, the paper identifies tax policy reforms that could boost revenue mobilization in SSA.
Boriana Yontcheva, Dan Devlin, Hilary Devine, Sebastian Beer, and Irena Jankulov Suljagic

.elibrary.imf.org Contents Acknowledgments Executive Summary Introduction 1. Mining and Multinationals in Sub-Saharan Africa A Key Economic Role A Heavy Reliance on Multinational Enterprises 2. Mining Fiscal Regimes and Tax Revenue Performance—Adequate Fiscal Gains? Fiscal Regime Settings for Mining Investors Fiscal Regime Structure Corporate Taxation and the Pressures of Tax Competition 3. Macro Evidence of MNE Tax Avoidance in SSA Quantifying the Impact of Profit Shifting in SSA—New Evidence 4. Country-Level Experiences: Investment Patterns, Base

Boriana Yontcheva, Dan Devlin, Hilary Devine, Sebastian Beer, and Irena Jankulov Suljagic

tax planning. This domestic tax avoidance focuses on shifting profits from taxable entities to tax-preferred entities, which can be done by both MNEs and domestic firms (examined further in Chapter 4). Chapter 3 Macro Evidence of MNE Tax Avoidance in SSA International profit shifting involves MNE actions to take advantage of tax differentials between countries. At its simplest, this means MNEs seek to allocate corporate tax deductions to countries with higher tax rates, with the corresponding income allocated to lower-tax countries. 1 For example, an

Boriana Yontcheva, Dan Devlin, Hilary Devine, Sebastian Beer, and Irena Jankulov Suljagic

mining inputs and on trade are “lose-lose” for the region, increasing compliance costs for investors and administrative burdens on governments, while harming the overall attractiveness of mining in the region. Whether this pattern of revenue is attributable solely to MNE tax avoidance is unclear, but it is plausible that countries have attempted to “diversify” revenue sources. Combating profit shifting could therefore be associated with material improvements to the fiscal regimes of many countries in the region, which would also have a greater impact on investment

Sebastian Beer and Jan Loeprick
This paper investigates the costs and benefits of concluding double tax treaties with investment hubs. Based on a sample of 41 African economies from 1985–2015, the results suggest that signing treaties with investment hubs is not associated with additional investments; yet, these treaties tend to come with nonnegligible revenue losses. Building on a theoretical model, the paper investigates the role of treaty shopping in driving nominal investment flows and provides indirect evidence for its importance in the sample
Sebastian Beer and Jan Loeprick

) estimate that MNEstax avoidance might reduce CIT revenue in the US by 17 percent; Clausing (2016) puts this number between 19 and 30 percent. 39 Matching and regression-based estimators both presume that all confounding factors are observable or constant across time. While matching estimators relax parametric assumptions, thus potentially increasing the validity of causal inference (Ho and others, 2007), they require that the counterfactual outcome is a convex combination of observed outcomes among the control group. In contrast, regression-based analyses are

International Monetary Fund
This paper explores the nature, significance and policy implications of spillovers in international corporate taxation—the effects of one country’s rules and practices on others. It complements current initiatives focused on tax avoidance by multinationals, notably the G20-OECD project on Base Erosion and Profit shifting (BEPS). The paper draws on the IMF’s experience on international tax issues with its wide membership, including through technical assistance (TA), and on its previous analytical work, to analyze spillovers and how they might be addressed. In doing so, it goes beyond current initiatives to look at a wide set of possible responses.
International Monetary Fund

to transparency in the context of MNE tax avoidance—notably, the question of “country-by-country reporting” on which the G20-OECD project focuses. 5 As explained later, FDI data need to be interpreted with caution. 6 A forthcoming IMF book addresses international tax issues for the extractive industries, which are also touched on in IMF (2012a ). 7 See for instance, Dethier and Madies (2010) , IMF (2011) , Keen and Mansour (2010) and Abbas and Klemm (2013) . 8 Indeed there is something of a puzzle as to why CIT revenues in developing

International Monetary Fund. Fiscal Affairs Dept.

With the appointment of a new government, a lively debate has ensued about redirecting fiscal policies in support of a balanced revenue-raising strategy that is conducive to investment and growth. Currently, Armenia needs to raise more revenues in support of fiscal consolidation and to generate additional funding for developing and maintaining the physical infrastructure with special reference to the need of improving the urban built-up environment. Since the Authorities requested the mission to consider tax measures that are supportive of growth and/or tradeable sector, the proposed restructuring of taxes recognizes that real estate taxes, resource rent taxes, and broad-based consumption taxes (VAT and excises) are least distortive for growth. The 2016 Technical Assistance Mission in its report reviewed already unutilized tax bases as far as excises are concerned (taxation of gambling, mobile air time, waste packaging taxes, alcohol and tobacco taxation). As requested by the authorities, this mission focused on improving personal and business income taxes, presumptive taxation, and the recurrent real estate tax as base-broadening of the latter could support the fiscal program of the new government.

International Monetary Fund. Fiscal Affairs Dept.
With the appointment of a new government, a lively debate has ensued about redirecting fiscal policies in support of a balanced revenue-raising strategy that is conducive to investment and growth. Currently, Armenia needs to raise more revenues in support of fiscal consolidation and to generate additional funding for developing and maintaining the physical infrastructure with special reference to the need of improving the urban built-up environment. Since the Authorities requested the mission to consider tax measures that are supportive of growth and/or tradeable sector, the proposed restructuring of taxes recognizes that real estate taxes, resource rent taxes, and broad-based consumption taxes (VAT and excises) are least distortive for growth. The 2016 Technical Assistance Mission in its report reviewed already unutilized tax bases as far as excises are concerned (taxation of gambling, mobile air time, waste packaging taxes, alcohol and tobacco taxation). As requested by the authorities, this mission focused on improving personal and business income taxes, presumptive taxation, and the recurrent real estate tax as base-broadening of the latter could support the fiscal program of the new government.