Taxes and declared profits: evidence from gold mines in Africa

in Resources Policy (2022), 78

In this paper, we analyze the effects of tax changes on the declared profits of extractive firms. We consider a country that levies a profit tax and a royalty on the profits of extractive firms to ... [more ▼]

In this paper, we analyze the effects of tax changes on the declared profits of extractive firms. We consider a country that levies a profit tax and a royalty on the profits of extractive firms to maximize its tax revenues. Mining companies located in the country engage in overstating extractive costs to reduce their taxable income. We show that the higher taxes, the lower the declared profit. Then, we estimate the effect of the change of profit taxes and royalties on the extracting firms’ profit in African countries during the period spanning from 2007 to <br />2018. We employ the Mining Intelligence database to constitute an individual data panel of gold mines located in Sub-Saharan countries. Our empirical findings also suggest an inverse relationship between the tax rate change of the tax instruments and the declared profit of the firms. This link indicates that firms decide on how much profit to declare depending on the tax levels. [less ▲]

Random Encounters and Information Diffusion about Product Quality

in Journal of Economics and Management Strategy (2022)

Taxation change in Sub-saharan African gold mines

in Avom, Désiré; Ongo Nkoa, Bruno Emmanuel (Eds.) Pertinence des politiques publiques de développement en Afrique subsaharienne (2021)

In this paper, we analyze empirically the effects of tax changes on firms' profits in extractive industries. We estimate the effect of the profit tax and royalty on the extracting firms' declared profit ... [more ▼]

In this paper, we analyze empirically the effects of tax changes on firms' profits in extractive industries. We estimate the effect of the profit tax and royalty on the extracting firms' declared profit in African countries during the period spanning from 2007 to 2018. We use the Mining Intelligence database to constitute a panel of annual individual data from a database of 363 gold mines located in 21 Sub-Saharan African countries. We obtain an inverse relationship between the tax rate change of the two tax instruments and the profit of the firms. Our results illustrate the crucial role of cost overstatement. From a tax policy point of view, we underline the shortcomings of asymmetry of information for declared profit and consequently for government revenues. [less ▲]

A global carbon tax? Why firm mobility and heterogeneity matters

E-print/Working paper (2021)

The impact of economic complexity on the formation of environmental culture

in Sustainability (2021), 1(1),

Environmental Culture and Economic Complexity

E-print/Working paper (2021)

The solution of the immigrant paradox: aspirations and expectations of children of migrants

E-print/Working paper (2020)

In this paper, we push forward the hypothesis that misalignment between expectations and aspirations crucially affects the educational outcomes of young adults. Using AddHealth, a dataset of 20,774 <br ... [more ▼]

In this paper, we push forward the hypothesis that misalignment between expectations and aspirations crucially affects the educational outcomes of young adults. Using AddHealth, a dataset of 20,774 <br />adolescents between the grades 7-12, we show that the difference in school performance between migrant children and natives lies within the aspirations and expectations that migrant children form. More <br />specifically, we find that positive misalignment between aspirations and expectations is a driving force <br />for higher effort and better education outcomes of immigrant teenagers in the USA. This force resolves <br />the well-known immigrant paradox. Furthermore, this result is specific to migrant children and does not <br />hold for second-generation migrant pupils. [less ▲]

Fiscal effects of migrants in Europe: a quantile regression approach

E-print/Working paper (2020)

In this paper, we explore the fiscal impact of immigrants in Europe applying a quantile regression approach to data from the European Survey on Living Conditions (EU-SILC) for the period 2007-2015. Our ... [more ▼]

In this paper, we explore the fiscal impact of immigrants in Europe applying a quantile regression approach to data from the European Survey on Living Conditions (EU-SILC) for the period 2007-2015. Our estimations show that not only on average but also in almost all income quantiles, the fiscal position of both European and non-European migrants is not significantly different from that of native citizens. Furthermore, non-EU migrants are net contributors as compared to the corresponding native citizens in the Netherlands and Belgium for various quantiles. Lastly, we examine the link between migrants’ fiscal position and the fiscal perception of native European citizens measured using ESS data. We find a conflicting relationship: countries where migrants are perceived negatively are instead countries where they are net fiscal contributors and vice versa. [less ▲]

On the long run sustainability of small jurisdictions

in Journal of Industrial and Business Economics (2020)

Profit taxation and royalties: evidence from gold mines in Sub-Saharan Africa

E-print/Working paper (2019)

In this paper, we analyze theoretically and empirically the effects of tax changes on firms’ profits in extractive industries. In the theoretical part, we assume a country that levies a profit tax and a ... [more ▼]

In this paper, we analyze theoretically and empirically the effects of tax changes on firms’ profits in extractive industries. In the theoretical part, we assume a country that levies a profit tax and a royalty on the profits of extractive firms to maximize its tax revenues. The mining companies may reduce their taxable income by cost manipulation. By analyzing the optimal choice of the government and of the firms, we first establish the optimal tax policy and then we investigate the impact of the optimal fiscal policy on firms’ profits. In the empirical part of the paper, we estimate the effect of the profit tax and royalty on the extracting firms’ profit in African countries during the period spanning from 2007 to 2018. We use the Mining Intelligence database to constitute a panel of annual individual data from a database of 363 gold mines located in 21 Sub-Saharan countries. We obtain an inverse relationship between the tax rate change of the two tax instruments and the profit of the firms. [less ▲]