Resource Rent and Capital Gains Taxes in Africa

Resource rent and capital gains taxes are among the menu of fiscal instruments a resource-rich country may employ to derive its fair share of economic rents. These are mostly useful, particularly in times of resource price hikes and windfall profits or capital gains that may accrue to or derived by an investor from the realisation of a chargeable asset owned by the investor. This chapter explores the evolution of resource rent and capital gains taxes, highlights the underlying considerations for, and comparatively reviews the prevailing practice of introducing these types of taxes in a developing world context. The chapter makes useful recommendations to developing economies on how best to integrate resource rent and capital gains taxes into their fiscal regimes for the management of natural resources without compromising the optimal recovery of their natural resources.