Tax and Development: The Link between International Taxation, the Base Erosion Profit Shifting Project, and the 2030 Sustainable Development Agenda

By Irma Mosquera Valderrama 

In the GLOBTAXGOV project, we are investigating international tax law making including the implementation of the BEPS Minimum Standards in 12 countries. One of the questions which is related to the GLOBTAXGOV is whether the BEPS will help developing countries to achieve the 2030 Sustainable Development Agenda? In order to provide an interdisciplinary view to this question, experts in international relations and international political economy (Dries Lesage and Wouter Lips) and taxation (Irma Mosquera) have recently published a working paper at the website of the United Nations University Institute on Comparative Regional Integration Studies (UNU-CRIS).

The working paper  titled “Tax and Development: The  Link between International  Taxation, The Base Erosion Profit Shifting Project and The 2030 Sustainable Development Agenda” will be discussed in a workshop to take place in 2019. For this workshop we are aiming at inviting experts in tax, development, governance and international political economy. In addition, representatives of the European Commission (TAXUD and DEVCO including representatives of Policy Coherence for Development and Domestic Resource Mobilization), the OECD, the UN and any other international organizations (IMF and World Bank) and regional organizations (e.g. ATAF and CIAT) will be invited.

For the authors, the BEPS Project is the largest reform of the international tax architecture in decades. The BEPS project aims to ensure that multinationals pay their taxes in the jurisdictions where they create value and where their economic activity takes place. When it is fully implemented, it will substantially alter the global governance architecture for taxation. This is a commendable goal, yet the BEPS project can be criticized for not sufficiently tailoring to the specific needs of developing countries. While it has made a laudable attempt to be more attentive towards developing countries with the creation of the BEPS inclusive framework, this concerns the implementation phase of BEPS. The agenda-setting and decision-making process only included the G20 and OECD countries. Against this background, it is unclear how and if the BEPS project considered the specific needs of developing countries, especially in light of the Sustainable Development Goals (SDGs). This paper will examine this issue by addressing the following questions: (i) Were the Sustainable Development Goals (SDGs) and the interests of developing countries to attract investment considered throughout the BEPS Process? (ii) What issues of international taxation, beyond BEPS, should be addressed to fulfill developing countries’ domestic resource mobilization needs to achieve the 2030 Agenda for Sustainable Development. We conclude with a set of recommendations to the international global tax governance architecture to be more inclusive and responsive to development countries’ needs.