International Cooperation on Tax Joseph Stead – Senior Policy Analyst Global Relations and Development Centre for Tax Policy and Administration Nairobi 13 March 2019

The International Tax Landscape The International Tax Landscape is very different from before 2008 financial crisis Significant increase in tools available to all countries to address tax avoidance and evasion Significant change in participation in international fora where international tax is discussed More change to come Challenges remain – especially for developing countries

New Tools Available – Exchange of Information Previously bilateral treaties Very few with tax havens Often required sacrifice of taxing rights too Multilateral Convention on Mutual Administrative Assistance in Tax Matters 127 signatories (14 African) – facilitates information exchange among them all Much simpler way for developing countries to access information – no need to sacrifice tax base

New Tools Available – Exchange of Information Automatic Exchange of Information Addresses the unknown unknown problem – can’t ask if you don’t know what to ask for Information on financial accounts held offshore (estimates that 30%+ of African owned wealth held offshore) Over USD 90 billion raised globally in voluntary disclosure in advance of first exchanges 102 countries committed Developing countries face political and capacity barriers to benefitting – but progress is being made

New Tools Available - BEPS First major reform in international corporate tax in 60+ years Provides the tools to address a number of the most aggressive forms of MNE tax avoidance Excessive interest deductions Use of certain types of tax incentives Treaty shopping 4 minimum standards providing consistent, widespread implementation of tools that have cross-border impact

Inclusion in international fora Global Forum on Transparency and Exchange of Information for Tax Purposes 154 members – 25 African Inclusive Framework on BEPS 129 members – 23 African

The challenges of digital economies require further changes More changes to come The challenges of digital economies require further changes Where is value in the digital world? Inclusive Framework looking to produce consensus by 2020 Several proposals currently on the table – including GLOBE (akin to global minimum tax)

Challenges Capacity Political will International tax is complex – needs (valuable) skills Political will Legislation, treaties, and changes of behavior are needed – requires political commitment, not always there, not always sustained

Thanks – Questions? Joseph Stead – Senior Policy Analyst Global Relations and Development Centre for Tax Policy and Administration Nairobi 13 March 2019