Tax Havens

Report on International Taxation from Global South Perspectives, October 2021

International Taxation from Global South Perspectives

By Badr Mandri, Sebastien Babou Diasso, and Aaditri Solankii

South Centre (SC) in collaboration with the Policy Center for the New South (PCNS) organized on October 13, 2021, a webinar on the issue of International Taxation from the Global South perspectives.

Tax revenue mobilization plays a key role in financing the economic and social development of countries. When well designed and implemented, tax policy can help developing countries raise revenue and increase their spending, especially in the social sector. Indeed, tax revenue as a share of GDP represent only 15% to 20% in low and middle-income countries, because of obstacles such as the imbalanced and complex international standards designed for developed countries, and the difficulties in collecting taxes in developing countries.

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SC & PCNS Conference, 13 October 2021

Conference: International Taxation from Global South Perspectives 

In Partnership with The Policy Center for the New South

Wednesday 13 October 2021 15h00 – 16h30 GMT+1 Live-Stream (YouTube, Facebook, Live Tweet)

The key questions that will be discussed in this event will be:

  • What reforms are needed to international standards that can strengthen the capacity of governments to raise revenue from MNEs without discouraging economic activity?
  • What is the cost of tax havens for developing countries and what role can international cooperation play in dealing with this issue?
  • What might the future of tax reform look like in the post-COVID-19 era, given the growing digitalization of the economy?

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SouthViews No. 227, 29 September 2021

Ending Extreme Poverty by Ending Global Tax Avoidance                                            

by Abdul Muheet Chowdhary

The world is estimated to lose around USD 500-600 billion in revenues from corporate tax avoidance each year. Ensuring that governments can collect this revenue through ending global tax avoidance will play a major role in ending extreme poverty. Overseas aid provided to developing countries focused on eliminating extreme poverty must therefore incorporate addressing tax avoidance, especially by Multinational Enterprises, as a core component of their efforts.

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Report on Tax Initiative’s Developing Country Expert Group, August 2020

Assessment of the Two-Pillar Approach to Address the Tax Challenges Arising from the Digitalization of the Economy

An Outline of Positions Favourable to Developing Countries

Report by the South Centre Tax Initiative’s Developing Country Expert Group

Irene Ovonji-Odida, Veronica Grondona, Samuel Victor Makwe

This report is written primarily for developing country negotiators in the Inclusive Framework and accordingly contains a technical assessment of Pillars One and Two. The aim is to discuss the positions and principles which can inform the negotiations in developing countries’ best interests. However, it is also written for a larger audience, particularly diplomats involved in financing for development discussions and international trade rule making, so as to sensitise them to the nuances of the ongoing discussion on the taxation of the digitized economy. In the midst of the COVID-19 pandemic and a devastating economic downturn, it is more important than ever to ensure that developing countries obtain their due taxing rights. This report is an initial contribution in that direction.

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Document de Recherche 111, Septembre 2020

Mesures nationales sur l’imposition de l’économie numérique

Par Veronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe

Le Cadre inclusif sur le BEPS de l’Organisation de coopération et de développement économiques (OCDE) envisage une approche fondée sur deux piliers en matière de taxation de l’économie numérique. Les premières estimations concernant l’impact de ses recommandations montrent une modeste augmentation de la collecte de l’impôt sur les sociétés, dont les bénéfices devraient revenir principalement aux pays développés. Dans le même temps, les mesures nationales de taxation de l’économie numérique se multiplient, en conséquence de la pandémie de COVID-19. Le droit international reconnaît pleinement ce droit aux pays, bien que cette approche soit considérée comme une forme d’unilatéralisme. Ce document de recherche met en lumière les mesures de fiscalité directe prises par différents pays et présente les trois approches clés retenues pour taxer l’économie numérique : (1) l’imposition de taxes sur les services numériques ; (2) l’élaboration de règles permettant d’établir un lien fiscal pour les entreprises numériques qui opère par l’intermédiaire d’une présence numérique significative ; (3) des retenues à la source sur les transactions numériques.

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Documento de Investigación 111, Septiembre 2020

Medidas Tributarias Nacionales  sobre la Economia Digital

Por Veronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe

El Marco Inclusivo de la Organización de Cooperación y Desarrollo Económicos (OCDE) está considerando un enfoque de dos pilares en relación con el cobro de impuestos sobre la economía digital. Las estimaciones preliminares acerca de la repercusión de sus recomendaciones indican un modesto incremento en la recaudación de impuestos sobre la renta de las sociedades, cuyos beneficios se prevén que se dirijan principalmente a los países desarrollados. Al mismo tiempo, están proliferando las medidas nacionales en materia de cobro de impuestos sobre la economía digital, un cambio estimulado por el comienzo de la pandemia de COVID-19. Los países también tienen plenos derechos a aplicarlas en virtud del derecho internacional, pese a las etiquetas de “unilateralismo”. En este documento de investigación se ponen de relieve las medidas en materia de impuestos directos que están adoptando diversos países y se exponen tres enfoques fundamentales con respecto al cobro de impuestos sobre la economía digital: 1) impuestos sobre los servicios digitales; 2) normas sobre un nexo en base a una presencia digital significativa; y 3) retenciones en origen sobre las transacciones digitales.

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Research Paper 111, May 2020

National Measures on Taxing the Digital Economy

By Veronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe

The Organisation for Economic Co-operation and Development (OECD)’s Inclusive Framework is considering a two-pillar approach on taxing the digital economy. Preliminary estimates about the impact of its recommendations show a modest increase in corporate income tax collection, the benefits of which are expected to go mostly to the developed countries. At the same time, there is a rise in national measures on taxing the digital economy, a move spurred by the onset of the COVID-19 pandemic. This is also fully within the rights of countries under international law, despite labels of ‘unilateralism’. This research paper highlights the direct tax measures being taken by various countries and finds three key approaches to tax the digital economy: (1) digital service taxes; (2) nexus rules based on significant economic presence ;(3) withholding tax on digital transactions.

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Book by the South Centre, 2019

International Tax Cooperation: Perspectives from the Global South

About the Book:

A substantive reform of the global tax system involving a variety of multilateral platforms is underway.  The question is not whether the tax standards and practices will change, but in which direction.

Developing countries have long sought changes in rules, standards and procedures shaping the allocation of taxing rights among sovereign states. In the wake of the 2008-2010 Great Recession, developed country governments engaged in massive public sector layoffs and channeling enormous public resources to bail out large financial companies and their wealthy investors.  The Panama Papers, the Paradise Papers, the Lux Leaks became household words in the United States and Europe because of the journalistic coverage.  Other scandals, such as the “cum/ex” fraud in Germany involving a loophole in the taxing of dividend receipts were less known but just as materially significant.  Tax reform, particularly as it applied to the treatment of corporations working in multiple tax jurisdictions, thus became not only a problem of developing countries but an issue of global concern.

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Statement, September 2019

South Centre Statement to the United Nations High Level Dialogue on Financing for Development

Four years after its adoption, Agenda 2030, “Transforming Our World,” the United Nations’ (UN) most recent and most ambitious development agenda, is off-track. Various estimates of the spending needed to achieve the Sustainable Development Goals (SDGs) range from $1 to $3 trillion. Domestically mobilized resources are critical to achieve these goals. A main source of the inadequate scale of public revenues are shortfalls in corporate tax collection, which are largely explained by international corporations hosted by or doing businesses in developing countries that take advantage of facilities offered by the international tax standards and practices to avoid full payment of taxes in those countries. A substantive global reform process involving a variety of multilateral platforms is underway.  The question is not whether the system of global tax standards and practices will change, but in what direction it will change.  Drawing lessons from the developing country context will be critical if the ongoing process of global tax reform will benefit developing countries and achieve substantial success in generating the income needed to effectively attain the SDGs.

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Research Paper 94, April 2019

Tax Haven Listing in Multiple Hues: Blind, Winking or Conniving?

By Jahanzeb Akhtar and Verónica Grondona

Tax havens are among the biggest challenges faced by developing countries in achieving their national development goals. States, international organisations, multilateral agencies and non-governmental organisations have all made several efforts at compiling ‘lists’ of tax havens at the multilateral and national levels, with varying levels of seriousness and outcomes. This research paper examines these efforts by analysing the objectivity of criteria used and the clarity of the final outcome in a comparative manner. The paper is organized into four sections dealing with the tax haven blacklisting by the Organisation for Economic Co-operation and Development (OECD), the countries of the South, the European Union (EU) and an analysis across lists. The concluding section offers some suggestions.

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