The report shows that developing countries are encouraged to aim for a tax-to-gross domestic product (GDP) ratio of at least 15%, a benchmark established under the United Nations\u2019 Compromiso de Sevilla (Seville Commitment), to strengthen institutions, deepen financial markets, and support long-term economic growth.<\/p>\n
<\/p>\n
Despite this, tax revenue in many developing countries remains persistently below 15%, with little improvement over the past decade. Currently, 71 developing countries have tax-to-GDP ratios under this threshold. Among these, 23 are fragile and conflict-affected states, 38 are resource-rich, and 40 fall within the low-income group.<\/p>\n
<\/p>\n
Estimates indicate that low-income developing countries could mobilise an additional 5% of GDP through comprehensive tax reforms. However, achieving the 15% target will also require improvements in institutional capacity, particularly in fragile and conflict-affected states.<\/p>\n
<\/p>\n
Effective revenue mobilisation relies on integrating tax policy, tax law, and revenue administration, a strategy commonly referred to in academic literature as the tax system approach. Guided by this framework, medium-term revenue strategies can chart a path to achieving tax-to-GDP ratios of at least 15%.<\/p>\n
<\/p>\n
For many low-income countries, especially those affected by conflict, a pragmatic, sequenced approach may be more feasible. Reform options include: Tax design, aligning tax structure with economic realities, broadening the tax base, and reducing distortions; Revenue administration, Strengthening institutions, improving compliance, and leveraging digital technologies to enhance efficiency.<\/p>\n
<\/p>\n
Implementing such reforms not only increases government revenue but also builds stronger institutions, promotes fiscal sustainability, and supports inclusive growth.<\/p>\n
By combining careful planning, phased reforms, and capacity building, low-income and fragile countries can gradually move towards a more robust tax system that underpins economic development and stability.<\/p>\n
–IMF\/ChannelAfrica–<\/p>\n","protected":false},"featured_media":12938,"template":"default||default","meta":{"_acf_changed":false},"news-type":[44],"class_list":["post-12937","news","type-news","status-publish","has-post-thumbnail","hentry","news-type-finance","entry"],"acf":{"short_description":"A recent International Monetary Fund research report highlights that a strong tax system is central to state capacity and sustainable development. ||A recent International Monetary Fund research report highlights that a strong tax system is central to state capacity and sustainable development. ","published_date":null,"news_description":"A recent International Monetary Fund research report highlights that a strong tax system is central to state capacity and sustainable development. ||A recent International Monetary Fund research report highlights that a strong tax system is central to state capacity and sustainable development. ","form_embed":"","author":"","image_caption":""},"_links":{"self":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/12937","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news"}],"about":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/types\/news"}],"version-history":[{"count":1,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/12937\/revisions"}],"predecessor-version":[{"id":18296,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/12937\/revisions\/18296"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media\/12938"}],"wp:attachment":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media?parent=12937"}],"wp:term":[{"taxonomy":"news-type","embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news-type?post=12937"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}