Revisiting corporate income tax determinants in Southern Africa

Abstract

The corporate income tax (CIT) systems of 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, and where the guiding principle is tax harmonisation that benefits all members through tax reform efforts. Despite the importance of the topic, empirical literature remains scant, and this paper attempted to revisit the CIT determinants in the SADC region. Having a larger database at their disposal, the authors could update the existing empirical literature. The sample period of the study included the commodity booms and slumps following the global financial crises, and illustrated the varying fortunes of developing countries in general, and the SADC specifically. Furthermore, given the lower economic growth, together with the variable commodity prices since 2008, there is a concern that corporate tax revenue may continue to erode. A cross-section panel was utilised to determine those factors that may best explain changes in corporate taxes in Southern Africa over the period of time from 1980 to 2017.