The following is an extract from a recent working paper published by the International Monetary Fund (IMF) titled "Tax policy for emerging markets"

"Setting up an efficient and fair tax system is far from simple, particularly for developing countries that want to become integrated in the international economy. The ideal tax system in these countries should raise essential revenue without excessive government borrowing and should do so without discouraging economic activity and without deviating too much from tax systems in other countries"

Required:

In the context of the above extract, discuss five challenges faced by developing countries in establishing efficient tax systems. (10 marks)