This paper analyses tax harmonisation in the SADC region. Results of first attempt to devise a tax policy harmonisation measure (TPHM) by the use of a cross-sectional and panel data are reported. New methodology of computing optimum tax rates (OTRs) are introduced and a robustness test (via a sensitivity analysis) on the impact of taxation (based on new tax dataset from the TPHM and OTRs computation) on FDI inflows to the SADC is conducted.The research shows a need for the SADC countries to develop policies aimed at collectively expanding their corporate tax base in order to accommodate the relatively low optimum CIT rates. It is also shown that the adoption of an optimum VAT rate by all SADC member countries will reduce the usage of different politically motivated VAT rates by individual member states as instruments to gain voters' confidence. The research shows that, some further policy considerations towards enhanced harmonisation and tax revenue could include developing a benchmarking process with other regional economic groupings such as the EU and the EAC.
Analysis of tax harmonisation in the SADC
Working paper 684
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