IDEAS home Printed from https://ideas.repec.org/p/zbw/rwirep/389.html
   My bibliography  Save this paper

Is the Burden Too Small? – Effective Tax Rates in Ghana

Author

Listed:
  • Nguyen-Thanh, David
  • Strupat, Christoph

Abstract

This paper examines capital income taxation in Ghana. We calculate effective marginal tax rates (EMTR) and effective average tax rates (EATR) using an extended Devereux-Griffith methodology to accommodate for tax incentives - an exercise that has not been done so far for Ghana. We find that the wide range of tax incentives leads to a high variation of effective average tax rates in Ghana. Tax holidays and preferential income tax rates lower the effective tax burden to a significant extent and encourage individual tax avoidance strategies. Furthermore our results confirm previous findings that tax holidays, effectively reducing EATR, favor high-profit short-lived investment projects raising doubts about their rationale.

Suggested Citation

  • Nguyen-Thanh, David & Strupat, Christoph, 2012. "Is the Burden Too Small? – Effective Tax Rates in Ghana," Ruhr Economic Papers 389, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:389
    DOI: 10.4419/86788444
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/68159/1/733250475.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.4419/86788444?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Michael P. Devereux, 2003. "Measuring Taxes on Income from Capital," CESifo Working Paper Series 962, CESifo.
    2. Mr. Alexander D Klemm, 2008. "Effective Average Tax Rates for Permanent Investment," IMF Working Papers 2008/056, International Monetary Fund.
    3. Mr. Arto Kovanen, 2011. "Monetary Policy Transmission in Ghana: Does the Interest Rate Channel Work?," IMF Working Papers 2011/275, International Monetary Fund.
    4. Michael Devereux & Alexander Klemm, 2003. "Measuring taxes on income from capital: evidence from the UK," IFS Working Papers W03/03, Institute for Fiscal Studies.
    5. Ulrich Schreiber & Christoph Spengel & Lothar Lammersen, 2002. "Measuring The Impact Of Taxation On Investment And Financing Decisions," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 54(1), pages 2-23, January.
    6. Alexander Klemm & Stefan Parys, 2012. "Empirical evidence on the effects of tax incentives," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 393-423, June.
    7. S. Abbas & Alexander Klemm, 2013. "A partial race to the bottom: corporate tax developments in emerging and developing economies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 596-617, August.
    8. Stefan Parys & Sebastian James, 2010. "The effectiveness of tax incentives in attracting investment: panel data evidence from the CFA Franc zone," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(4), pages 400-429, August.
    9. Dennis Botman & Alexander Klemm & Reza Baqir, 2010. "Investment incentives and effective tax rates in the Philippines: a comparison with neighboring countries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 15(2), pages 166-191.
    10. Zee, Howell H. & Stotsky, Janet G. & Ley, Eduardo, 2002. "Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries," World Development, Elsevier, vol. 30(9), pages 1497-1516, September.
    11. Mervyn A. King, 1974. "Taxation and the Cost of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(1), pages 21-35.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Nguyen-Thanh & Christoph Strupat, 2012. "Is the Burden Too Small? – Effective Tax Rates in Ghana," Ruhr Economic Papers 0389, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    2. repec:zbw:rwirep:0389 is not listed on IDEAS
    3. Mr. Manuk Ghazanchyan & Mr. Alexander D Klemm & Yong Sarah Zhou, 2018. "Tax Incentives in Cambodia," IMF Working Papers 2018/071, International Monetary Fund.
    4. Alvaro Cuervo-Cazurra & Bernardo Silva-Rêgo & Ariane Figueira, 2022. "Financial and fiscal incentives and inward foreign direct investment: When quality institutions substitute incentives," Journal of International Business Policy, Palgrave Macmillan, vol. 5(4), pages 417-443, December.
    5. Garsous, Grégoire & Corderi, David & Velasco, Mercedes & Colombo, Andrea, 2017. "Tax Incentives and Job Creation in the Tourism Sector of Brazil’s SUDENE Area," World Development, Elsevier, vol. 96(C), pages 87-101.
    6. Laudage, Sabine, 2020. "Corporate tax revenue and foreign direct investment: Potential trade-offs and how to address them," IDOS Discussion Papers 17/2020, German Institute of Development and Sustainability (IDOS).
    7. Athiphat Muthitacharoen, 2017. "Assessing the Importance of Taxation on FDI: Evidence from South-East Asian Developing Countries," PIER Discussion Papers 65, Puey Ungphakorn Institute for Economic Research.
    8. Garsous, Grégoire & Corderi, David & Velasco, Mercedes, 2015. "Tax Incentives and Job Creation in the Tourism Industry of Brazil," IDB Publications (Working Papers) 7324, Inter-American Development Bank.
    9. Athiphat Muthitacharoen, 2023. "Location Choice And Tax Responsiveness Of Foreign Multinationals: Evidence From Asean Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(01), pages 217-242, March.
    10. Michael Devereux, 2003. "Measuring taxes on income from capital," IFS Working Papers W03/04, Institute for Fiscal Studies.
    11. Thomas Goda & Sebastián Ballesteros,, 2020. "The impact of effective corporate tax rates on investment," Documentos de Trabajo de Valor Público 18212, Universidad EAFIT.
    12. Munongo, Simon & Akanbi, Olusegun Ayo & Robinson, Zurika, 2017. "Do tax incentives matter for investment? A literature review," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(2).
    13. Segundo Camino‐Mogro, 2023. "Tax incentives, private investment and employment: Evidence from an Ecuadorian reform," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(7), pages 2129-2156, October.
    14. Masaaki Suzuki, 2013. "Corporate Effective Tax Rates in Asian Countries," KIER Working Papers 875, Kyoto University, Institute of Economic Research.
    15. S. Abbas & Alexander Klemm, 2013. "A partial race to the bottom: corporate tax developments in emerging and developing economies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 596-617, August.
    16. Estian Calitz & Sally Wallace & Le Roux Burrows, 2013. "The Impact of Tax Incentives to Stimulate Investment in South Africa," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1306, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    17. Suzuki, Masaaki, 2014. "Corporate effective tax rates in Asian countries," Japan and the World Economy, Elsevier, vol. 29(C), pages 1-17.
    18. Félix Domínguez Barrero & Julio López Laborda & Fernando Rodrigo Sauco, 2005. "Do Corporate and Personal Income Taxes Affect Incorporation?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 174(3), pages 55-86, September.
    19. Alexander Klemm & Stefan Parys, 2012. "Empirical evidence on the effects of tax incentives," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 393-423, June.

    More about this item

    Keywords

    effective tax rates; tax holidays; Ghana;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H10 - Public Economics - - Structure and Scope of Government - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:rwirep:389. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/rwiesde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.