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    Key Facts: Trade Liberalisation

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    Maika J. Pudadera
    Trade liberalization has led to declining trade tax revenues as a share of GDP in many countries. Resource-rich countries tend to collect more overall tax revenue but it is also more volatile. Developing countries have large informal economies, around 40-60% in some cases, that are difficult to effectively tax. Many low-income countries rely on a narrow tax base and few taxpayers, including multinational corporations, which can minimize their tax liability and exacerbate revenue challenges. Both developing and developed countries face challenges in taxing multinationals and international citizens.

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    Key Facts: Trade Liberalisation

    Uploaded by

    Maika J. Pudadera
    16 views1 page
    Trade liberalization has led to declining trade tax revenues as a share of GDP in many countries. Resource-rich countries tend to collect more overall tax revenue but it is also more volatile. Developing countries have large informal economies, around 40-60% in some cases, that are difficult to effectively tax. Many low-income countries rely on a narrow tax base and few taxpayers, including multinational corporations, which can minimize their tax liability and exacerbate revenue challenges. Both developing and developed countries face challenges in taxing multinationals and international citizens.

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    Trade liberalization has led to declining trade tax revenues as a share of GDP in many countries. Resource-rich countries tend to collect more overall tax revenue but it is also more volatile. Developing countries have large informal economies, around 40-60% in some cases, that are difficult to effectively tax. Many low-income countries rely on a narrow tax base and few taxpayers, including multinational corporations, which can minimize their tax liability and exacerbate revenue challenges. Both developing and developed countries face challenges in taxing multinationals and international citizens.

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    © All Rights Reserved
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    16 views1 page

    Key Facts: Trade Liberalisation

    Uploaded by

    Maika J. Pudadera
    Trade liberalization has led to declining trade tax revenues as a share of GDP in many countries. Resource-rich countries tend to collect more overall tax revenue but it is also more volatile. Developing countries have large informal economies, around 40-60% in some cases, that are difficult to effectively tax. Many low-income countries rely on a narrow tax base and few taxpayers, including multinational corporations, which can minimize their tax liability and exacerbate revenue challenges. Both developing and developed countries face challenges in taxing multinationals and international citizens.

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    Key facts[edit]

    The below facts were compiled by EPS PEAKS researchers:[56]

     Trade liberalisation has led to a decline in trade taxes as a share of total revenues and GDP.
    [56][62]

     Resource-rich countries tend to collect more revenue as a share of GDP, but this is more
    volatile. Sub-Saharan African countries that are resource rich have performed better tax
    collecting than non-resource-rich countries, but revenues are more volatile from year to year.
    [62]
     By strengthening revenue management, there are huge opportunities for investment for
    development and growth.[56][63]
     Developing countries have an informal sector representing an average of around 40%,
    perhaps up to 60% in some.[64] Informal sectors feature many small informal traders who may not
    be efficient in bringing into the tax net, since the cost of collection is high and revenue potential
    limited (although there are broader governance benefits). There is also an issue of non-
    compliant companies who are 'hard to tax', evading taxes and should be brought into the tax net.
    [56][65]

     In many low-income countries, the majority of revenue is collected from a narrow tax base,
    sometimes because of a limited range of taxable economic activities. There is therefore
    dependence on few taxpayers, often multinationals, that can exacerbate the revenue challenge
    by minimising their tax liability, in some cases abusing a lack of capacity in revenue authorities,
    sometimes through transfer pricing abuse.[further explanation needed][56][65]
     Developing and developed countries face huge challenges in taxing multinationals and
    international citizens. Estimates of tax revenue losses from evasion and avoidance in developing
    countries are limited by a lack of data and methodological shortcomings, but some estimates are
    significant.[56][66]
     Countries use incentives to attract investment but doing this may be unnecessarily giving up
    revenue as evidence suggests that investors are influenced more by economic fundamentals
    like market size, infrastructure, and skills, and only marginally by tax incentives (IFC investor
    surveys).[56] For example, even though the Armenian gov

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