Assessing the effects of combating illicit financial flows on domestic tax revenue mobilization in developing countries

Jean-Louis Combes, Alexandru Minea and Pegdewende Sawadogo

Working Papers from HAL

Abstract: Using propensity score matching, this paper assesses the effects of tackling illicit financial flows (IFFs) on domestic tax revenue mobilization in developing countries. It uses data on countries' compliance with Financial Action Task Force (FATF) Recommendations as treatment variable and involves 67 developing countries around the world. We find that countries which comply with FATF Recommendations (Cooperatives countries) record higher values of domestic tax revenue in comparison with those which do not comply with those Recommendations (Non-cooperatives countries). Otherwise, Cooperatives countries outperform Non-cooperatives countries in terms of domestic tax revenue mobilization. More interestingly, the extent of this adverse impact depends on tax structure: goods and services taxes are more affected, followed by VAT and excise taxes. Our results suggest that developing countries could mobilize more domestic tax revenue by implementing policies to curtail IFFs. Moreover, they should establish sound institutions.

Keywords: Institutions; Propensity score matching; Illicit financial flows; Tax revenue (search for similar items in EconPapers)
Date: 2019-02-14
New Economics Papers: this item is included in nep-war
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02019073v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://shs.hal.science/halshs-02019073v1/document (application/pdf)

Related works:
Working Paper: Assessing the effects of combating illicit financial flows on domestic tax revenue mobilization in developing countries (2019)
Working Paper: Assessing the effects of combating illicit financial flows on domestic tax revenue mobilization in developing countries (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-02019073

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().