Tax Inspectors Without Borders: ready to assist developing countries recover from COVID-19

By Pascal Saint-Amans, Director of the Centre for Tax Policy and Administration

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

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In the aftermath of the 2008 financial crisis, governments came together to fight for tax transparency and begin the battle against base erosion and profit shifting. It was that crisis that also inspired Tax Inspectors Without Borders (TIWB), which became a joint initiative of the OECD and UNDP at the Addis Finance for Development conference. The initiative helps developing countries to collect the taxes due from multinational enterprises, with countries coming together to assist each other in building tax audit capacity.

We now face an even greater global health and economic crisis, with profound implications for lives and livelihoods. The sharp decline in global and domestic trade and commerce is leading to a commensurate drop in tax revenues, hitting poorer countries hardest due to their reliance on corporate income taxes. Those that depend heavily on tourism, hospitality and remittances from their diaspora may suffer the worst.

Governments around the world are using the tax system to ease pressure on households and businesses, rightly judging that small and medium enterprises in particular are struggling, although some multinational enterprises, those that are highly digitalised for example, may be better placed to cope. But as fiscal space tightens, a dominant trend is that the tolerance for international tax avoidance and evasion is hitting rock bottom as developing countries desperately need tax revenues.

With a track record of quick revenue wins, Tax Inspectors Without Borders has never been more relevant.  Additional tax revenues raised by developing countries attributable to TIWB programmes now amount to USD 537 million, and overall tax assessments in excess of USD 1.84 billion.  More details can be found in TIWB Annual Report 2020,launched at a ministerial event in the margins of the 75th United Nations General Assembly on 28 September.

For the aid donors, on whom TIWB depends, and that face their own financial pressures, TIWB programmes represent good value for money. On average, USD 70 in additional tax revenues[1] have been recovered by host countries for every dollar spent on TIWB operating costs to date.

Despite the current travel restrictions, Tax Inspectors Without Borders remains open for business. TIWB partners are resilient and most operations have switched to remote mode, with procedures in place to protect taxpayer confidentiality.  Not only is TIWB open for business, we are expanding.  Our latest report shows the TIWB model is viable in the area of criminal investigations, which will help in the global fight against Illicit Financial Flows (IFFs). New programmes are also planned on the effective use of automatic exchange of information, taxation and natural resource contracts, tax and the environment, and tax treaty negotiation and administration.

As we look ahead to uncertain times, we must welcome the current global effort to relieve debt and provide aid to the poorest countries. We should not forget, however, that tax is the sustainable source for financing development, and we must help build tax systems the world over.

[1] Based on estimates by the TIWB Secretariat.