Tax harmonization and economic development in the Middle East.

Summary In this work, we analyze the impact of a possible tax harmonization in the Middle East. To do so, we first carry out a comparative factual study of the economic and fiscal situations of five member countries selected as a sample. The structural examination of their tax systems shows essentially the absence of a general consumption tax and the concentration of capital taxation on corporate income tax. We also find significant divergence in national tariffs and tax rates. We consult the literature, which is rich in information on the fiscal and budgetary aspects between cooperating countries. We review the different views on tax competition and harmonization. We then propose harmonization measures, which we develop in a formal analysis articulated around two distinct approaches. The first approach considers tax harmonization as an intergovernmental game. The first approach considers tax harmonization as an intergovernmental game. It is conducted within the framework of two macroeconomic models of external partial equilibrium in three countries, and highlights the strategic behavior of public authorities cooperating in the establishment of rates associated with common taxation and taxing principles. The second, which identifies the harmonization process with a tax reform carried out at the international level, makes it possible to evaluate in a national general equilibrium model the consequences of the tax measures indicated by harmonization on the allocation of productive resources in the Middle East.