Global relations in taxation

Tax and Development

Send

The OECD's Task Force on Tax and Development:

The OECD’s Task Force on Tax and Development was created in January 2010 following the Joint Meeting on Tax and Development between the Committee on Fiscal Affairs (CFA) and the Development Assistance Committee (DAC). Its members - OECD and developing countries, international and regional organisations, civil society and business - have since met in each year, most recently in Cape Town in May 2012. Co-chaired by South Africa and the Netherlands, the role of the Task Force is to advise the OECD Committees in delivering a Tax and Development Programme to improve the enabling environment for developing countries to collect taxes fairly and effectively. The Task Force has identified four areas of work as key for developing countries efforts to mobilise domestic resources:

Pillar 1 - State building, accountability and effective capacity development

Advising international assistance providers on the importance of taxation and governance for development. A series of publications provide a framework for understanding tax and development: Governance, Taxation and Accountability: Issues and Practices; Citizen-State Relations: Improving Governance Through Tax Reform, and Taxation, State building and Aid Fact Sheet. In partnership with the International Tax Compact, the Task Force is setting out the practical steps donor countries can take to support the development of effective and equitable tax systems in developing countries: Tax and Development: Aid Modalities for Strengthening Tax Systems and Draft Principles for International Engagement in Supporting Developing Countries in Revenue Matters.
Addressing the governance and management of tax incentives. The Task Force has produced draft Principles to Enhance the Transparency and Governance of Tax Incentives for Developing Countries. Consequently, several developing countries have requested OECD support to analyse their tax incentives based on these Principles. In-depth studies provide developing countries with practical recommendations to improve the efficiency of their tax system in terms of its ability to mobilize revenue and attract the right kind of investment. Tunisia, Ghana and Senegal are the first countries to be reviewed. An earlier pilot study in Zambia illuminated the governance challenges in the management of tax incentives.
Analysing “tax morale”, or citizens’ perceptions and attitudes towards paying and evading taxes. A preliminary version of What Drives Tax Morale? outlines factors that may influence people’s willingness to pay taxes and highlights several policy considerations. Building on this work, the Task Force is gathering information on taxpayer education, literacy and outreach strategies. See Concept Note for work beginning in 2013.
A feasibility study on Tax Inspectors Without Borders is a new initiative designed to make tax experts available to developing countries to help with real time international tax audit cases.

Pillar 2 - More effective transfer pricing regimes in developing countries

Effective transfer pricing rules can enable developing countries collect the right amount of tax from multinational enterprises, counter cross-border profit shifting and create a predictable investment climate. A programme of caacity building is underway in Colombia, Ghana, Honduras, Kenya, Rwanda, Tanzania and Vietnam, along with support to regional organisations such as ATAF. These country initiatives are delivered in partnership with the EU and World Bank, and involve working closely with other international assistance. New tools are helping all stakeholders do their work more effectively: Country Transfer Pricing Needs Assessment Tool [currently under preparation] ; A Suggested Approach to Transfer Pricing Legislation ; Advance Pricing Arrangements – Approaches to Legislation ; Thin Capitalisation: A background Paper for Country Tax Administrations .

Pillar 3 - Increased transparency in the reporting of financial data by MNEs

Work is underway to identify best practices in enabling public access to local statutory accounts (draft report Transparency in Reporting Financial Data by MNCs). The Task Force is also monitoring developments on ongoing government transparency initiatives and in particular the rules for implementing Section 1504 of the Dodd-Frank Act and proposals for revising the EU Transparency Directive.

Pillar 4 - Countering international tax evasion/avoidance and improving transparency and exchange of information by supporting the Global Forum on Transparency and Exchange of Information.

This includes assisting developing countries to build capacity in the area of exchange of information (EOI) the most effective tool to combat international tax avoidance and evasion, and to prepare them for the Global Forum’s peer review of their legal and administrative framework for transparency and EOI.

Pilot projects in Kenya and Ghana are helping these countries to develop an EOI network with relevant partners including jurisdictions which are the possible destination of the proceeds of tax evasion. The Task Force is also working with ATAF to develop a Practical Guide on Exchange of information for developing countries.

Plenary Meetings of the Task Force on Tax and Development:

The Third Meeting of the Task Force on Tax and Development took place in Cape Town on 9-10 May 2012. See here for the Meeting Outcomes and the Co-Chair's Statement

The Second Meeting of the Task Force on Tax and Development took place in Paris on 11-12 April 2011. See here for the Meeting Outcomes and the Co-Chair's Statement

The First Meeting of the Task Force on Tax and Development took place in Paris on 11 May 2010. See here for the Meeting Outcomes and the Co-Chair's Statement

Further documentation

The Task Force has now gained further recognition by the G20 as a forum which brings together all the major players in this field. The Task Force contributed to the international organisations report to the G-20 in 2011. See the full report here

Follow us