Article (Scientific journals)
Taxes and declared profits: evidence from gold mines in Africa
Zanaj, Skerdilajda; Bourgain, Arnaud; Zanaj, Skerdilajda
2022In Resources Policy, 78
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Keywords :
Resource taxation; Gold mines; Tax avoidance; Cost misreporting; Royalties
Abstract :
[en] 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.
Disciplines :
Economic systems & public economics
Author, co-author :
Zanaj, Skerdilajda  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
Bourgain, Arnaud ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
Zanaj, Skerdilajda  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
External co-authors :
no
Language :
English
Title :
Taxes and declared profits: evidence from gold mines in Africa
Publication date :
September 2022
Journal title :
Resources Policy
ISSN :
0301-4207
Publisher :
Elsevier, United Kingdom
Volume :
78
Peer reviewed :
Peer Reviewed verified by ORBi
Focus Area :
Sustainable Development
Available on ORBilu :
since 28 September 2022

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