19/05/2021 - The OECD released a new report today – Tax Co-operation for Development: Progress report in the COVID-19 era – looking back on the past year showing how developing countries have interacted with the OECD on a range of tax policy and administration issues. These include participating in the development and implementation of inclusive international standards; country-level capacity building programmes delivered through a variety of platforms and modalities; guidance and data developed and analysed by world-class experts on tax policy and administration; and through partnerships with international organisations, regional tax organisations and other stakeholders.
The COVID-19 pandemic has had a huge impact on the health of both people and economies, with developing countries hit the hardest. Developing countries already struggle with limited fiscal space – for example, average tax-to-GDP ratios in African countries is 16.5%, as compared to the OECD average of 34.3%, and have less scope for borrowing or quantitative easing. Developing countries tend to rely more heavily on VAT and corporate income tax, both of which have been negatively affected by the shocks to the economy in 2020.
The report shows how the OECD is working with developing countries to maximise revenue collection and develop targeted and effective tax policy measures, particularly as they adjust to the challenges of the COVID-19 pandemic. Following the suspension of travel in March 2020, the OECD made a rapid adjustment to providing virtual support, including e-learning and virtual workshops, to replace face-to-face events. In 2020, the OECD’s tax capacity building service covered more than 30 000 tax officials from the developing world, compared to 5 000 in a typical year.
The progress report covers the full range of assistance that the OECD provides to developing countries on facilitating knowledge sharing of tax policy and administration responses to the pandemic, preventing tax avoidance and combating tax evasion, and supporting them on a range of tax issues relevant to achieving the Sustainable Development Goals.
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