Department for International Development
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UK plans major boost to tax collection in developing countries

Britiain provides developing countries with advice to increase tax revenues following G8 commitments.

Britain will provide developing countries with expert advice to drive up tax revenues following its commitment made at the G8 Lough Erne summit, International Development Secretary Justine Greening has announced.

New support from the UK will fund 4 international projects to improve revenue collection and help authorities to combat tax evasion and avoidance.

This will include establishing an OECD database of expert tax inspectors who can be deployed to developing countries to advise on complex audits. It will also include advice on transfer pricing rules that will make it harder for multinational companies to avoid tax. Pilots of this project have seen a 76% increase in revenues from multinationals in Colombia and an additional £14.8 million of revenue in Kenya.

The £6 million of support could help to boost revenues by up to £100 million over the next 4 years.

International Development Secretary Justine Greening said:

“An effective tax system is at the heart of an effective state. Sustainable tax revenues provide essential funding for public services and ultimately allow developing countries to stop being aid dependent. At the G8 we committed to increasing our support for developing countries so that they can collect the taxes that are owed. This commitment shows that the UK is leading the way in providing support to developing country tax authorities.”

Exchequer Secretary to the Treasury, David Gauke said:

“This Government put tax and transparency at the heart of the agenda during our G8 presidency in July. We are leading the way in working towards greater international tax transparency and have committed to working with developing countries, helping them with their tax collection. The funding announced today builds on this commitment and will ensure that developing countries can participate in international efforts to combat tax evasion and avoidance.”

The funding delivers on a commitment made at the G8 Lough Erne summit to provide practical support to developing countries in collecting the taxes owed to them and is a key part of DFID’s new strategy to help poor countries to benefit from economic growth and end their dependence on international development assistance.

Working with our partners, the UK will help:

  • The OECD and World Bank Group to provide expert advice to help up to 12 developing countries to adopt and implement transfer pricing rules. This will make it easier for businesses to invest by offering greater certainty on transfer pricing rules and improve the investment climate.

  • Secretariat to lead the OECD’s ‘Tax Inspectors Without Borders’ initiative, which will deploy experienced tax auditors to developing countries to help settle tax cases and secure revenue

  • Developing countries to participate in international exchange of tax information and join the Global Forum on Tax Transparency and Exchange of Information to combat tax evasion. Working with the Global Forum and the World Bank Group, this programme builds on the agreement at the G8 this year to support developing countries wishing to join the Global Forum;

  • The OECD to undertake reviews of developing countries’ tax incentives for investment to improve the transparency and value for money of these incentives.

Pascal Saint-Amans, Director of the Centre for Tax Policy and Administration at the OECD said:

“These resources will go a long way towards helping developing countries to tax more effectively and more fairly and to stem the tide of tax base erosion and profit shifting.”

Tax avoidance and evasion undermine developing countries’ ability to provide public services and increase their reliance on aid. These new projects follow on from the HMRC Developing Countries Capacity Building Unit that Justine Greening announced in her speech at the LSE earlier this year and deliver on a commitment made at the G8 Lough Erne summit to increase support for developing countries to collect taxes.

Notes to editors

  1. At the Lough Erne summit in June, G8 members committed to share tax expertise, and help build capacity in developing countries by engaging in long term partnership programmes. They also expressed their support for the OECD’s Tax Inspectors Without Borders project, agreeing to make practical steps to support the initiative and asked the OECD to find ways to address concerns about the availability of information on comparable transactions needed to administer transfer pricing effectively.

  2. Justine Greening announced at the LSE in March a new capacity building unit, based in HMRC and funded by DFID, which will work in partnership with developing countries to strengthen their tax administrations. The unit will run programmes in Tanzania, Ethiopia Pakistan and in Southern Africa.

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