Paul L. Caron

Thursday, September 22, 2022

Countering Complexity's Corporate Bias: Tax Simplification As A Strategy To Reduce Profit Shifting In The African Extractive Sector

Tim Hirschel-Burns (J.D. 2022, Yale), Note, Countering Complexity's Corporate Bias: Tax Simplification as a Strategy to Reduce Profit Shifting in the African Extractive Sector, 47 Yale J. Int'l L. 165 (2022):

Logo-Yale-Journal-ILDespite their immense natural resource wealth and their intense need for revenue, African governments collect little revenue from the extractive sector. One significant reason for this revenue shortfall is that multinational corporations operating in the extractive sector use profit shifting strategies to artificially reduce their tax bills. These companies can typically afford large numbers of highly skilled lawyers and accountants. In contrast, African tax authorities are often highly under-resourced and undertrained. This Note argues that legal reforms that simplify tax administration would put African tax authorities and multinational corporations on a more level playing field.

Simpler tax rules that rely on easily verifiable standards and reduce administrative burdens would reduce multinational corporations’ ability to exploit complexity to shift profits, in turn providing much-needed tax revenue that could be used for poverty alleviation and economic development.

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