Tax Policy and Planning: Lessons From Developed Countries

Abstract

Abstract One of the fundamental issues in developing countries is how to evolve tax policies that can generate sufficient revenue for government activities. Consequent upon the above, this study examined tax policies and planning in developing sub-Saharan African countries. It adopted table content analysis and descriptive statistics in its methodology. The study observed that aggressive tax planning which the Multi-National Corporations execute through royalty payment, interest payment, strategic transfer pricing and treaty shopping, among others, has caused countries around the globe huge revenue losses annually and has become a matter of serious concern to both the developed and developing economies. The implication of this is that achievement of objectives of tax policies and their reforms will remain a mirage in sub-Saharan African countries. The study concluded that the prevalence of illicit financial outflows in the form of tax evasion and avoidance in the guise of aggressive tax planning by multinational corporations, however, makes Africa’s tax policies worse. It was recommended that the Organization for Economic Corporation and Development, and the G-20 should involve developing countries in the Base Erosion and Profit Shifting project as they are the worst victims of these activities. Keywords: Tax Policy, Aggressive Tax Planning, Developing countries, Africa.