Tax and development aid: Would you commit 0.7% of your tax expertise?

The OECD hosted a discussion on tax and development on 5 May, with contributions from business, government and NGOs. You can watch the broadcast here and I’ve Storified a few of the key points (I didn’t manage to see the whole thing).

There was an interesting exchange between Zeinab Badawi and Alan McLean, who is executive vice president, taxation and corporate structure at Royal Dutch Shell plc (Netherlands) and a vice chair of the taxation and fiscal policy committee at the business and industry advisory committee (BIAC) to the OECD.

Much of the discussion had focused on capacity-building in developing countries. McLean noted that BIAC provides technical assistance to Tax Inspectors Without Borders, and the OECD’s latest edition of “Better Policies for Development” sets out a number of capacity building programmes involving the OECD and others.

Badawi posed a question submitted by a viewer: “Could business commit 0.7% of their tax expertise to developing country governments to boost their tax take?”

McLean replied: “I think business is happy to do whatever it takes to ensure that tax capacity in developing countries is accelerated and grown to the level that’s required for [their tax systems] to operate effectively … that’s the majority of business. Whether that’s 0.7%, I’ll [suggest that it should be] what’s relevant and appropriate in the circumstances and context of any particular country.”

We’ve heard much about the UK government providing “expert advice to drive up tax revenues” but less about business involvement in “educating tax administrations about multinational business models”.

Chris Lenon, a former chairman of BIAC’s tax committee, said last month that his successor Will Morris “doesn’t seem to be getting much support from business in making this type of initiative work”.

Lenon had heard “suggestions that business couldn’t fund people to participate and should consider webcasts to developing countries”.

He added: “I’m not sure how many developing country tax administrations use webcasts? What they clearly do want is an interaction with business … So this is all very sad as this initiative has the potential to bridge the gulf of misunderstanding between tax authorities and business.”

Understanding between tax authorities and business will develop, Lenon said, if business does engage. “The answer that this is too expensive doesn’t pass the laugh test.”

There was a lot of talk about capacity building at the OECD forum. But multinationals, some of which have reaped huge benefits from the gaps in the current, outdated international tax system, should be playing an active role in helping to improve understanding among tax officials in developing countries.

Other concerns have been raised about the OECD’s BEPS project. According to Winnie Byanyima, executive director of Oxfam International, said OECD’s negotiations “have failed so far to include any developing countries in the process on an equal footing”. I have not seen the OECD’s to response to that claim. But it would not make any sense to exclude developing countries from negotiations about major reforms intended to protect those countries and help them to grow their tax base.

Update: Oxfam’s claim remained unanswered, according to Catherine Olier of Oxfam’s EU Office.

One comment

  1. There has been an interesting response on Twitter from tax professionals Hans van den Hurk, Iain Campbell and Heather Self:

    and from Beck Smith, senior policy adviser to the shadow exchequer secretary Shabana Mahmood:

    In his very first tweet, Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, has responded to Oxfam’s question concerning the involvement of developing countries in the BEPS project – prompting further questions from tax campaigners:

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