Introducing International Tax Cooperation for Development: Are We Getting it Right?

Abstract

The 2000 United Nations Millennium Declaration and the 2008 financial crisis have resulted in governments and international organizations addressing the contribution of taxation to development.Political leaders in the G20 and G8 meetings addressed the importance for developing countries to benefit from the sea change in international tax cooperation as well as their willingness to help developing countries to strengthening their tax systems to increase their own revenue resources. In order to achieve these objectives, organizations such as the European Union (EU), the Organization for Economic Cooperation and Development (OECD) and the United Nations (UN) have presented proposals to improve international tax cooperation and good governance at international tax level and within a country’s tax system. These proposals are applicable to OECD countries, EU countries, and third countries including developing countries receiving EU development aid. Amongst the outcomes of these proposals are the use of international standards for transparency and exchange of information to promote international tax cooperation, the use of the concept of good governance in the field of international tax cooperation, the importance to develop a joint action to promote tax and development, and the importance of good governance in tax reforms. This article summarizes the past (since 2000) and current work of international organizations on international tax cooperation and development, and it advocates for one coherent approach towards international tax cooperation for development by the OECD, the EU, and the UN. Moreover this article calls for more participation by the UN not only in international tax cooperation but also in the proposals presented for tax and development by the OECD and the EU. The overall aim of this analysis is to describe the current challenges that developing countries face in the field of taxation, and to present the current solutions by the OECD, the EU and the UN to tackle tax evasion; to enhance international tax cooperation and good governance in tax matters; and to strengthen the tax systems of developing countries.