Revisiting corporate income tax determinants in Southern Africa

Abstract

The corporate income tax (CIT) systems in place in developing countries can potentially be contributors or impediments to their economic development. This is especially relevant in the SADC region that has a set agenda regarding regional integration goals (SADC, 2019). As part of economic integration, tax harmonisation benefiting all members through tax reform efforts is the central idea. Despite the importance of the topic, empirical literature remains scant, with Robinson (2005) being one of the few papers that directly models the determinants of CIT within SADC. This current paper is an attempt to revisit CIT determinants in the SADC region. With a larger data base at the disposal of the authors, existing empirical literature could be suitably updated. The sample period includes varying fortunes for developing countries in general and SADC specifically, namely, commodity booms and slumps following the global financial crises. Furthermore, given lower economic growth together with variable commodity prices since 2008, there is a concern that corporate tax revenue may continue to erode. A cross-section panel is utilised to find those factors that may best explain changes in corporate taxes in Southern Africa over time from 1980 to 2017.