Taxation and Capital Flight: Role of Corruption Control

This study adopted an endogenous model to analyze the potential role of corruption control in the impact of taxation on capital flight in East African countries. The study used the generalized method of moments (GMM) with panel data from 2009 to 2022 to estimate the study regression model. The estimation results show that taxation and corruption control have positive and direct impact on capital flight. While, the interaction between taxation and corruption control have a negative and indirect impact on capital flight. Therefore, countries with corruption control can compromise the impact of taxation on capital flight. Based on the findings, to maximize mobilization of tax income and reduce capital flight in East Africa, institutional changes aimed at combatting corruption and promoting good governance are essential.