Many developing countries have reported that transfer pricing and other BEPS issues are a significant risk to their tax base. In 2011, in response to these reports, the Tax and Development programme, working in partnership with the European Commission and World Bank Group, started pilot programmes with Colombia, Ghana, Kenya and Vietnam to assist the countries to build effective transfer pricing regimes. Following the success of these pilots, numerous requests have been received from other developing countries for similar programmes. Further programmes are now in place in Botswana, Cambodia, Ethiopia, Jamaica, Malawi, Morocco, Nigeria, Peru, Rwanda, Senegal, Sri Lanka, Tunisia, Zambia and Zimbabwe.
These programmes are already having a significant impact. New transfer pricing rules aligned with international best practice are being implemented in Botswana, Colombia, Ethiopia, Jamaica, Kenya, Rwanda, Zambia and Zimbabwe. Significant increases in revenue collected from tax audits have also been seen in countries. Revenue collected in Colombia has increased ten-fold in three years. In Kenya there has been a doubling of revenue in just two years from US$52m in 2012 to US$107m in 2014. Vietnam collected US$40m additional tax in 2014.
In addition to our country work, the G20 Development Working Group (DWG) mandated the OECD to write a report on the main challenges of base erosion and profit shifting (BEPS) in developing countries, how these are related to the BEPS Action Plan, and how the DWG might assist low income countries to meet those challenges.
Working with other international organisations, the DWG and developing countries, we are currently developing tools to assist developing countries implement BEPS solutions.