The UN Publishes New Handbook on Developing Countries’ Tax Base

UN has published a new Handbook on several selected issues to assist developing countries to guard their tax base and strengthen their capacity to gather domestic revenue. The Handbook is the fruit of a project undertaken by the Financing for Development Office on the basis of draft papers discussed at a workshop in June 2014 in New York and in September 2014 in Paris.

Complement to OECD BEPS Project

The Handbook focuses on OECD BEPS issues of primary interest to developing countries. It keeps an eye particularly on base erosion issues caused by lack of coherence in international tax rules, or disconnect between economic activities and taxing rights. It also includes other issues that are not part of the BEPS project but important for developing countries, however transfer pricing aspects are not covered.

Issues Covered by the Handbook

The Handbook was firstly published in July 2015, and the 2017 version adds two new chapters. It focuses on domestic law generally and on the UN Model, not on the situation of particular countries. Main issues covered include:

  • Income from Services
  • Capital Gains;
  • Interest Payments;
  • Neutralizing the Effect of Hybrids;
  • General Anti-Abuse rules on Tax Treaty;
  • Permanent Establishment Issues;
  • Taxation on Digital Economy;
  • Tax Incentives; and
  • Transparency and Disclosure.

The Handbook appeals collaboration among developing countries on improving transparency, disclosure and information sharing. In particular, the Handbook barely identified existing and potential risks and possible responses, but did not give any recommendation as BEPS Action Reports of the OECD.

Sources: UN, Handbook

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