Will poorer countries benefit from international tax reform?
Yes, but not by as much as they want
INTERNATIONAL TAX reform pits tax-hungry governments against giant multinational companies and their armies of tax advisers. It sets high-tax jurisdictions against low-tax havens. And it requires rich- and poor-country governments to somehow reach agreement. The 139 countries haggling at a forum run by the OECD, a club of mostly rich countries, have yet to reach a consensus. Poorer countries worry that the proposals on the table discussed are too complicated, inflexible and unfair.
Developing countries are thirsty for revenue in general, and reliant on corporate tax in particular. In 2017 African countries raised 19% of their overall revenue from corporation tax, compared with an average of just 9% for OECD members. That is partly because large informal sectors mean that they raise less in, say, personal-income tax.
This article appeared in the Finance & economics section of the print edition under the headline "Fighting for the scraps"
Finance & economics June 5th 2021
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