In order to complement and operationalize the guidelines contained in the United Nations Handbook on Selected Issues in Protecting the Tax Base of Developing Countries through more in-depth and hands-on practical guidance, as well as to make it accessible to a broader audience of relevant stakeholders in developing countries, the Financing for Development Office developed a series of United Nations Practical Portfolios on Protecting the Tax Base of Developing Countries (Practical Portfolios). These practical materials are intended to assist tax officials in developing countries to recognize the main causes of tax base erosion in their countries and to identify relevant issues in the context of their domestic tax law and network of tax treaties, with a view to assessing the various options available to them to effectively address these issues. The first set of Practical Portfolios deal with base-eroding payments for services, interest, rent and royalties. Based on the demand expressed by developing countries on several occasions, additional practical portfolios will be developed addressing further issues of particular interest and relevance to developing countries, including general anti-abuse rules. The draft Practical Portfolios were shared and discussed with a number of government officials from 57 developing countries, members of the United Nations Committee of Experts on International Cooperation in Tax Matters (UN Tax Committee), as well as representatives of international and regional tax organizations, at three workshops, held in Panama City in June 2015, in Berlin in December 2015, in Nairobi in March 2017 and in Addis Ababa in November 2017. The feedback received during this broad consultation was incorporated in the Practical Portfolios, and the Financing for Development Office plans to continue this consultation process with representatives from developing countries, both on the existing and on additional Practical Portfolios, that will be developed to address other relevant issues in protecting the tax base of developing countries, with a view to more comprehensively capturing and reflecting the point of view of these countries in the final versions of these materials.
Effective tax systems are critical to mobilizing domestic resources for investment in sustainable development. This publication addresses several issues which are of particular importance and relevance to developing countries in protecting and broadening their tax base, with a view to strengthening their capacity to increase tax revenue. This second edition of the Handbookhas been updated and expanded to take into account new and emerging issues and the latest international developments in this area. In recent years, increasing attention has been paid to the issue of tax base erosion and profit shifting (BEPS), which refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations, with the effect of reducing tax revenues available to governments for investment in sustainable development. Within the United Nations, the Committee of Experts on International Cooperation in Tax Matters (United Nations Committee of Experts) has, over the years, been addressing issues in international tax cooperation, giving special attention to developing countries. These have included matters relevant to protecting and broadening the tax base of developing countries, as well as the effective combating of tax evasion and tax avoidance. In February 2013, at the request of the G20 Finance Ministers, the Organisation for Economic Co-operation and Development (OECD) released a report outlining BEPS issues, which was followed, in July of the same year, by an action plan designed to address these issues in a coordinated and comprehensive manner. As a result of this project, in October 2015 the OECD released a final set of reports and recommendations addressing BEPS and providing countries with domestic and international instruments aimed at ensuring that profits were taxed where the economic activities generating the profits were performed and where value was created. In this context, the Financing for Development Office has undertaken a project aimed to strengthen the capacity of developing countries to increase the potential for domestic revenue mobilization by protecting and broadening their tax base. The United Nations Handbook on Selected Issues in Protecting the Tax Base of Developing Countries (the Handbook) is the main output of this project. The Handbook draws upon the work done by the United Nations Committee of Experts, as well as the work of the OECD project on BEPS, with a view to complementing that work from a capacity development perspective for the benefit of developing countries. It aims to simplify, summarize and systematize all relevant materials, with a view to providing information geared towards the needs of developing countries, including through the provision of practical examples tailored to the realities of these countries. The Handbook is intended to assist developing countries in three important areas: (a) engagement and effective participation of developing countries in relevant international policy discussions; (b) assessment of relevance and viability of potential options to protect and broaden their tax base; and (c) effective and sustained implementation of the most suitable among these options. Following the first edition released in 2015, this second edition of the Handbook updates all the chapters to take into account the final outputs of the OECD project on BEPS, as well as the latest developments in the work of the United Nations Committee of Experts in the area of tax base protection for developing countries. It also includes two new chapters, which deal with base-eroding payments of rent and royalties and general anti-avoidance rules (GAARs). Similar to the method adopted in developing the first edition of the Handbook, the work done to produce the present revision reflects the input and feedback received from developing countries, members of the United Nations Committee of Experts and other relevant stakeholders, including those participating in dedicated workshops that were held specifically to discuss the experience and concerns of developing countries with respect to BEPS.
The updated version of the Manual, developed by the UN Tax Committee, aims to address the requests and comments of representatives from developing countries, taking into consideration the outputs of the G20/OECD BEPS Project, including providing revised guidance relevant transfer pricing issues and new guidelines on relevant related topics, such as intra-group services and the treatment of intangibles. The first version of the Manual has already been of great assistance in helping developing countries to counter profit shifting, which deprives them of substantial revenues to finance their development. The Manual was instrumental in delivering capacity development activities to tax officials from 43 developing countries.
This Manual, developed by the UN Tax Committee, is a compact training tool for beginners with limited experience in tax treaty negotiation. It seeks to provide practical guidance to tax treaty negotiators in developing countries, in particular those who negotiate based on the United Nations Model Double Taxation Convention between Developed and Developing Countries. It deals with all the basic aspects of tax treaty negotiation, both from the practical and the substantive point of view, and it is focused on the realities and stages of capacity development of developing countries.
This collection of papers provides practical guidance to developing countries to effectively negotiate double tax treaties, especially those drawing upon the United Nations Model Double Taxation Convention between Developed and Developing Countries.The papers were drafted with attention to the specific needs and priorities of developing countries and build upon inputs provided by officials from Ministries of Finance and National Tax Authorities in 35 developing countries in different regions.
This publication aims to provide National Tax Administrations with a methodology to identify and measure Tax Transaction Costs for taxpayers and tax institutions, assisting in the identification of possible policy reforms aimed at reducing these costs, while fostering greater tax compliance. The recommendations are based on good practices and build upon the inputs from several developing countries and the pilot implementation of the methodology in Costa Rica and Uruguay. Subsequently, the methodology was also used by tax administrations in Brazil and Chile.
The UN Model Convention is a non-binding instrument which aims to provide guidance to countries in designing double tax treaties, as well as in applying and interpreting them. It is developed and updated by the UN Committee of Experts on International Cooperation in Tax Matters, a subsidiary body of the Economic and Social Council, composed by 25 members from developed and developing countries acting in their personal capacity. The UN Model Convention is formulated to take into account the specific needs of developing countries in designing double tax treaties in line with their own policy framework.