UK gives £47m to improve developing countries’ tax systems

19 Feb 19

The UK government is to give a £47m package of support to developing countries to boost their tax systems.

It is expected increased revenues in the developing countries will mean greater spending on essential services, such as health, education and infrastructure.

The money is also intended to ensure the governments in those developing countries become more transparent and accountable, the UK Department for International Development said in a statement today.

Penny Mordaunt, international development secretary, said: “This new UK support will help countries collect more taxes and leave them less reliant on aid. It will turbo charge their development.

“Governments in the developing world want to move beyond aid and we want to help them get there faster.”

She added that a fairer, more transparent tax system is “vital in helping our aid money go further”.

Stronger tax systems would also contribute to economic growth by tackling tax avoidance and evasion and be more ‘investment friendly’, Mordaunt said. 

The package includes £10.3m to the OECD to assist developing countries implement international tax standards to tackle tax evasion and avoidance, including support to Tax Inspectors Without Borders – an initiative by the OECD and UN that helps developing countries by sending experts overseas.

An additional £7.4m will go to the World Bank’s Global Tax Programme to work with countries to build effective systems.

Money will also go to the IMF to support African countries and an intergovernmental forum for mining, minerals and sustainable development to tackle tax avoidance within the mining sector.

The average developing country generates tax revenues of around 14% of GDP, according to the OECD. This is way below the 35% average for developed countries, which means less funding for public services.

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