Tax collection help for developing countries proving effective

An international initiative that assists developing countries to effectively tax multinational businesses has met with considerable success in generating additional revenue

Tax Inspectors Without Borders (TIWB)a joint initiative of the OECD and the United Nations Development Programme (UNDP), is ‘boosting domestic revenue mobilisation’ through improving tax auditing and toughening compliance efforts across Africa, Asia, Europe, Latin America and the Caribbean.

Increased tax revenues directly attributable to TIWB programmes and TIWB-style support as of April 2018 are estimated at $414m, according to its latest report of the second full year of operations under the OECD/UNDP partnership arrangements.

The initiative leaders say the scheme is extremely efficient with $100 raised in tax revenue for every dollar spent running it.

‘TIWB has fully completed 10 programmes, while 34 programmes are ongoing and a further 20 are in the pipeline. TIWB is on track to meet its goal of delivering 100 deployments of tax auditor experts to developing countries by 2020,’ says the report.

‘TIWB programmes are driven by the needs of host administrations and cover a range of technical issues and industry sectors. Current programmes specialise in risk-based audit case selection, audit processes and negotiation of advance pricing arrangements. Audits under TIWB programmes mainly deal with different issues of transfer pricing and international taxation, including permanent establishment, validation of management and service fees and the valuation of intellectual property.’

TIWB audits cover a cross-section of industry sectors including agriculture, construction, financial services, information technology and communications, hospitality, manufacturing and mining.

TIWB Head of Secretariat James Karanja said the initiative was excellent value for money and that he expected further success over time.

‘The transfer of skills now underway is driving organisational change in tax authorities worldwide, which will prompt much great taxpayer compliance in the future. We are developing a model for systemic change that puts developing countries in the driver's seat for better using taxation to raise the revenues so badly needed for economic and social development,’ he said.

The Tax Inspectors Without Borders Annual Report is here.

Report by Rob Munro

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