Prescriptive Approaches to Taxation: Reclaiming Policy Space

Low-income countries with limited taxation capacity and expertise require simple and context-specific methods to combat commodity trade mispricing and related tax abuses. To varying extents, these alternatives involve the use of reference prices and fixed margins, which make them simpler and easier to apply for tax purposes. The methods are “prescriptive” because they are based on rules that prescribe the applicable price ranges, margins, pricing formulas, and profit allocation methods.