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Tax Platform Urges Countries to Shift Focus to Revenue Increases

Posted on July 13, 2020

Countries will soon need to shift their focus on increasing government revenue, despite the need to prioritize short-term COVID-19 recovery measures, according to a report from the Platform for Collaboration on Tax (PCT).

On July 10 the PCT — a joint initiative of the OECD, IMF, U.N., and the World Bank — published its progress report for 2020, which provides an update on the platform’s work toward tax transparency and facilitating cooperation among the four international organizations on global tax issues.

The PCT report highlights how important it is for governments to balance providing timely stimulus with meeting medium-term revenue goals, emphasizing that a few countries will need to reassess medium-term projections and reprioritize development goals. In a July 9 report, the OECD noted that many developing countries will need to consider formalizing their economies to expand the tax base and social protection systems, increasing the use of property and carbon taxes, and improving the performance of personal income tax among the wealthy.

The PCT’s report also provides an update that the platform is preparing two more toolkits on base erosion and profit-shifting risk assessment and on base-eroding payments. The report mentions that the PCT finalized its toolkit on offshore indirect transfers on June 4 and that the four international organizations are asking for input on draft toolkits aimed at transfer pricing documentation and tax treaty notifications.

The PCT proposes to conduct two workshops in late 2020 and early 2021 in sub-Saharan Africa and Asia, aiming to interact with finance ministry and tax administration officials regarding the adoption of medium-term revenue strategies. The workshops are directed toward countries that may be involved in or are considering tax reform but have not yet adopted revenue strategies.

Many developing nations remain dubious of the benefits to revenue collection that international tax standards like transparency and taxation of multinational enterprises pose to them, according to the OECD report. The PCT said in its report that it is actively seeking input from developing countries and relevant stakeholders in developing its toolkits.

The joint OECD-U.N. initiative, Tax Inspectors Without Borders (TIWB), also released a statement of outcomes regarding the virtual conference held June 22 to 24. According to TIWB, countries are benefiting from its assistance, which has resulted in more than $532 million in additional tax revenue to date. It also said that $1.75 billion in tax assessments has been generated through TIWB and TIWB-style support offered in collaboration with the African Tax Administration Forum and World Bank Group.

According to the TIWB statement, “efforts are underway to use existing OECD baseline surveys on tax morale to measure wider impact of TIWB programs in two to three years.”

Angel Gurría, who has served as secretary-general of the OECD since 2006, tweeted July 10 that he will not be seeking another term. “Proud of our collective achievements, I’ll keep working hard until 06/21, with my great staff, to strengthen OECD & help countries address their many challenges,” he wrote.

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