Action Against Tax Evasion Essential To Achieve The MDGs

The High Level Plenary meeting on the Millennium Development Goals (MDGs) will gather in the UN headquarters in New York from 20 to 22 September with a view to assess and accelerate progress towards the achievement of the MDGs.

Prospects for such progress look gloomy since all MDGs are currently off-track. Heads of State and Government will need to move a step forwards and adopt ambitious commitments in order to meet the 2015 deadline. However, according to sources involved in the negotiation of the summit’s final outcome, this agreement is more likely to be a new compilation of abstract commitments than a solid basis for getting the MDGs back on track, particularly with regard to MDG8 “A global partnership for development”, including taxation and domestic resources mobilisation for development.

The final document is expected to acknowledge the necessity to crack down on tax havens, tax evasion and illicit financial flows, which so negatively impact on developing countries’ capacities to mobilise resources to achieve the MDGs, through implementing measures to enhance international cooperation on tax matters, transparency and disclosure of financial information and to fight corruption and recover stolen assets.

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Country by country reporting hailed by World Bank, but can it practice what it preaches?

On the International Accounting Standards Board’s (IASB’s) website, many CSOs including Eurodad have contributed to the IASB Discussion Paper on extractive activities, arguing in favor of a comprehensive country by country reporting standard for the extractive industries, a standard currently being reviewed. There are also contributions from other stakeholders that are openly opposed to such a standard.

Interestingly, the World Bank also made a very assertive contribution, which strongly supports a country by country reporting standard in the extractive sector.

World Bank strongly backs PWYP Proposals on country by country reporting

The entire submission from the World Bank defends Publish What You Pay’s (PWYP) demands to the IASB concerning financial disclosure requirements on a country by country basis for extractive industries. The World Bank aligns itself with the PWYP argument stating that the IASB is far too focused on investors’ opinions and, contrary to its constitution, does not pay enoughattention to the public interest. Moreover, the Bank also requests from the IASB the “inclusion in an IFRS of all the PWYP disclosure proposals on a country by country basis, including payments to governments, and we would argue that it is justifiable on cost/benefit grounds”.

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Gold Mining in Mali: Who Really Profits?

A new IMF working paper entitled “Mining Taxation: an application to Mali” analyses the structure of the mining taxation system in Mali. It follows the regressive path set forth by the World Bank, consisting of attracting Foreign Direct Investments (FDI) by lowering royalty taxes in the gold mining sector at the expense of lower government revenues collected through these royalties.

International gold prices have sharply escalated in the last decade, yet International Financial Institutions (IFIs) are still advising African countries to lower profit taxes and royalties to gold mining firms. They are overlooking the issue of transfer pricing abuse by companies in the extractive sector, a practice consisting of selling goods and services between branches of the same company at knockdown prices in order to shift money out of the country and dodge taxes. This practice deprives developing countries from as much as USD 160 billion of lost tax revenues each year.

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