What are the challenges of taxation in developing countries?

What are the challenges of taxation in developing countries?

Developing countries face several challenges in taxation, including a large informal economy, limited administrative capacity, and political instability.

How does the informal economy affect tax collection?

The informal economy often operates outside government regulation, making it difficult to track income and enforce tax compliance.

What strategies can be used to improve tax collection?

Strategies include enhancing tax administration, increasing public awareness about tax benefits, and simplifying tax codes to encourage compliance.

Are there successful examples of tax reform in developing countries?

Yes, countries like Rwanda and Ethiopia have implemented successful tax reforms that increased revenue and improved compliance.

What role does international aid play in taxation?

International aid can help strengthen tax systems by providing resources for capacity building and technical assistance.