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Djibouti Should Rein In Tax Exemptions, Says IMF

by Lorys Charalambous, Tax-News.com, Cyprus

07 April 2017


Djibouti should broaden its tax base by reducing wide-ranging exemptions and special regimes, the International Monetary Fund (IMF) has said.

"The potential for revenue mobilization under the existing tax regime remains limited because of widespread tax exemptions and special regimes, such as tax free zones," the IMF said.

It added that the country has made "significant efforts" to improve its tax system since 2015, introducing measures including exempting the lowest income earners from income tax; broadening the capital gains tax on real estate; reducing import license fees; introducing a differentiated scale for company registration fees; revising stamp duty and licensing fees; and eliminating the excise tax on fruit and vegetable juices and carbonated beverages.

It recommended that the country continue to the process of phasing out the consumption tax in favor of value-added tax and specific excise duties.

The IMF said that while further tax policy and tax administration measures are planned in 2017, "fundamental issues such as tax exemptions and special tax regimes, have yet to be addressed."

Djibouti said it agreed with the IMF's proposals but added that planned reforms will likely face strong opposition from "vested interests."

TAGS: tax | value added tax (VAT) | Djibouti | interest | International Monetary Fund (IMF) | fees | licensing | stamp duty | Tax

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