Tax Policy in MENA Countries: Looking Back and Forward

Mario Mansour

No 2015/098, IMF Working Papers from International Monetary Fund

Abstract: 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 revenues—generally less than 5 percent of GDP—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.

Keywords: WP; excise tax; tax system; resource country; income tax; tax administration; tax revenues; resource revenues; tax reform; MENA; personal income; trade tax; building tax institution; tax competition; tax law; Corporate income tax; Tax incentives; Value-added tax; Taxes on trade; Maghreb (search for similar items in EconPapers)
Pages: 51
Date: 2015-05-05
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Citations: View citations in EconPapers (12)

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