THE PLATFORM FOR COLLABORATION ON TAX PCT PROGRESS REPORT 2021 THE PLATFORM FOR COLLABORATION ON TAX PCT PROGRESS REPORT 2021 This report has been prepared in the framework of the Platform for Collaboration on Tax (PCT) under the responsibility of the PCT Secretariat and staff of the four organizations. This report reflects a broad consensus among these staff, but it should not be necessarily regarded as the officially endorsed views of those organizations, their member countries, or the donors of the PCT Secretariat. PARTNER ORGANIZATIONS DEVELOPMENT PARTNERS The work of the PCT Secretariat is generously supported by the governments of: France Japan The Netherlands Norway Switzerland The United Kingdom TABLE OF CONTENTS ACRONYMS 2 I. INTRODUCTION 4 II. WORKSTREAMS 9 A. Workstream 1 - Medium-Term Revenue Strategies (MTRS): 10 B. Workstream 2 - COVID-19: 14 C. Workstream 3 - Tax and SDGs: 14 D. Workstream 4 - International Taxation: 17 E. Workstream 5 - Coordination: 21 III. STRENGTHENED BUDGETARY SUPPORT AND THE SECRETARIAT STAFFING 25 IV. NEXT STEPS AND FUTURE STRATEGIES 27 APPENDIX 29 APPENDIX 1: Status of Action Items under the PCT Workplan of 2018 30 APPENDIX 2: Updates on Countries’ Medium-Term Revenue Strategies 32 APPENDIX 3: PCT Partner Coordination on the Ground: Country Case-Studies 37 ACRONYMS AAAA: Addis Ababa Action Agenda ADB: Asian Development Bank ATAF: African Tax Administration Forum ATI: Addis Tax Initiative BEPS: Base Erosion and Profit Shifting CD: Capacity Development CIT: Corporate Income Tax DAC: Development Assistance Committee DRM: Domestic Resource Mobilization DRMS: Domestic Resource Mobilization Strategy DPs: Development Partners ECOWAS: Economic Community of West African States EMDEs: Emerging Markets and Developing Economies FAD: Fiscal Affairs Department FBR: Federal Board of Revenue FfD: Financing for Development FIRS: Federal Inland Revenue Service FTA: Forum on Tax Administration GDP: Gross Domestic Product GLoBE: Global anti-Base Erosion GTP: Global Tax Program IF: Inclusive Framework INFF: Integrated National Financing Framework IMF: International Monetary Fund KSP-TA: Knowledge Sharing Platform for Tax Administrators MTRS: Medium-Term Revenue Strategy OECD: Organisation for Economic Co-operation and Development ODA: Official Development Assistance OIP: Online Integrated Platform PCT: Platform for Collaboration on Tax PIT: Personal Income Tax RMTF: Revenue Mobilization Thematic Fund SDGs: Sustainable Development Goals TA: Technical Assistance TIWB: Tax Inspectors Without Borders TSR: Tax System Reform UN: United Nations UNDP: United Nations Development Program VAT: Value-Added Tax WAEMU: West Africa Economic and Monetary Union WB: World Bank WBG: World Bank Group 4 I. INTRODUCTION PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 5 The world is in the throes of an exceptionally challenging period political level among 136 members of the OECD/G20 Inclusive caused by a global health pandemic and the ensuing economic Framework on BEPS (IF) to reform international tax rules downturn. As of September 12, 2021, more than 225 million with a view to addressing the tax challenges posed by the people were infected and over 4.6 million people lost their digitalization and globalization of the economy. The two- lives to the disease1. The global health emergency continues pillar solution4 is expected to be a major area of focus for as the infection rate is yet to be contained although nearly 30 the international tax landscape in the coming months as the percent of the global population has been fully vaccinated as work on drafting and implementing related agreements such of September 12, 2021. Developing countries continue to have as a multilateral convention for Amount A under Pillar 1 and limited access to vaccines and lag behind advanced countries model rules for Global anti-Base Erosion (GLoBE) rules under in vaccinating their populations. The crisis is far from over Pillar 2 continues. Those countries that join the subsequent with some regions experiencing second and subsequent legal agreements may need to adopt concomitant, legal and waves of infections, which require more lockdowns and lead administrative changes as part of the process. As noted in the to a looming uncertainty over the recovery. The IMF World Detailed Implementation Plan5 accompanying the Statement, Economic Outlook Update of July 20212 projects a world gross technical assistance will need to be made available to domestic product (GDP) growth rate of 6% with emerging developing countries joining up to support all aspects of and developing economies (EMDEs) growing at 6.3% on implementation. average (driven by higher expected growth in emerging and developing Asia) in 2021. This projected growth is subject to During this period, The Platform for Collaboration on Tax the risks of how the pandemic evolves in the coming months Partners - the International Monetary Fund (IMF), the and of access to vaccinations, particularly, for developing Organization for Economic Cooperation and Development economies. The World Bank forecasts that per capita income (OECD), the United Nations (UN) and the World Bank Group losses in two-thirds of EMDEs in 2020 would not be made (WBG) - continued their support to countries through the up for until 20223. The pandemic has dealt a harder blow to release of joint knowledge products, technical assistance the underprivileged and poorer sections of the population. concerning tax-related responses to the crisis, and workshops Governments and policy makers continue to struggle with the on critical issues. increased spending needs to boost economic revival on the The Platform for Collaboration on Tax (PCT) reviewed one hand, and lower revenues caused by containment and and revamped its work program during a two-day work mitigation measures on the other. programming retreat held on October 28-29, 2020 following In a fiscally constrained environment, more than ever before, seven pre-retreat core group meetings. The updated work governments and policy makers need well-designed fiscal program resulting from this exercise was approved by the policies and strategies on both tax and expenditure fronts to PCT Principals and endorsed by the Partnership Council6 in respond to the crisis, boost economic revival and meet the November and December 2020 respectively. SDGs and other developmental goals. This period is also marked by an historic agreement at the 4 Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy can be accessed at https://www.oecd.org/tax/beps/ statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the- 1 Source: WHO COVID-19 dashboard, https://covid19.who.int/ digitalisation-of-the-economy-october-2021.pdf 2 IMF. World Economic Outlook. Retrieved from https://www.imf.org/en/Publications/WEO 5 See Annex to the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising 3 World Bank. 2021. Global Economic Prospects, June 2021. Retrieved from https://www. from the Digitalisation of the Economy. worldbank.org/en/publication/global-economic-prospects 6 The Partnership Council consists of the representatives of PCT Partners and Donors. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 6 The revised work program retains key activities from the • The PCT also conducted three regional workshops previous action plan and introduces new priorities identified in partnership with the African Tax Administration by the PCT Partners. It also reflects the increased resources Forum (ATAF) (one workshop for Africa) and the of the Secretariat and is more aligned and responsive to Asian Development Bank (ADB) (two workshops: one the current context and the challenges of the pandemic. each for small and large states in Asia) to facilitate The refocused, output-oriented work program is organized better exchange of information on the MTRS and how under five workstreams (see Section II for details) and will it can benefit countries’ tax system reform priorities, be delivered over an 18-month period since its approval in particularly, in the light of the COVID-19 pandemic. December 2020. The five workstreams are: Overall, nearly 550 participants including ministers a) Medium-Term Revenue Strategies (MTRS) of finance and/or senior government officials from 53 b) COVID-19 countries, staff from PCT Partners, regional partners (ATAF and ADB) and development partners attended the c) Tax and Sustainable Development Goals (SDGs) workshops. d) International Taxation • The COVID-19 response tab on the PCT website was e) Coordination continually updated with Partners’ resources, blogs, policy papers on COVID-19, and tax policy and tax The theme of each of the workstreams was identified after administration responses to assist countries, particularly detailed deliberations to focus on the rapid changes in the developing countries, in dealing with the crisis. global tax landscape, the challenges posed by the pandemic, the need for a coordinated global response to it, and the central • Shining the light on how COVID-19 has affected women role that taxation is expected to play in an equitable and resilient and how tax systems can impact gender equality, the recovery. The key outputs that have been delivered since the PCT Principals released a joint blog on the subject. finalization of the revised work program are as follows: Gender equality issues in tax system reform were also • The PCT continued to deliver toolkits on key areas of discussed with stakeholders during the Tax and Gender significance for developing countries. Two new toolkits Equality Workshop on June 15, 2021. on Transfer Pricing Documentation and Tax Treaty The following sections of this Progress Report provide an Negotiations were released, taking the total number of update of the work of the PCT since the last Progress Report toolkits published to five so far. For wider outreach, the was released in July 2020. This Progress Report is part of PCT carried out virtual consultation workshops for the PCT’s commitment to operating transparently and making draft Toolkit on Tax Treaty Negotiations as well as virtual its workplan and outputs publicly available to governments, dissemination workshops for the finalized toolkits. providers of capacity development (CD) and their donors, Since July 2020, six workshops were organized with civil society organizations, and the general public through its more than 1,300 participants from governments, civil publicly accessible website. society organizations, business representatives, tax practitioners, media and academia from across the globe. Table 1 below lists the action-oriented deliverables under each of the five workstreams and the progress made in their respect. The status of the activities and achievements under PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 7 the 14 action items of the original workplan of 2018 are listed steps for each of the five workstreams. Section III reports in Appendix 1. Ongoing activities from the workplan of 2018 on the strengthened budgetary support. The next steps for have been included in the revised workplan. Section II of this further collaboration between the Partners are included in report details the objectives, activities, outcomes and next Section IV of this Progress Report. TABLE 1: Deliverables for the PCT’s work plan from December 2020 to June 2022 and their status MTRS COVID-19 TAX AND SDGS INTERNATIONAL TAX COORDINATION Hold Workshops on MTRS, Start sharing data on Produce two Principal Finalize pending toolkits Include a dedicated page on the starting with workshops monitoring the impact blogs—one on gender and the review of PCT website on the Partners’ focused on Sub-Saharan of COVID-19 on revenues equality and tax, one on toolkit topics. [public tax tools, frameworks and Africa and the East Asia between the Partners environment and tax— in documents] assessments, which would and Pacific region [public 2021 [public document] include links to the Partners’ (ongoing) workshop] websites and contain up-to- (Principals’ blog on tax and (two more toolkits date information on country (three workshops held) gender equality published, released, taking the total assessments [public] second blog to be released to five) in Q4 2021) (ongoing) Produce a policy note on the Hold an internal Partners’ Develop terms of reference Produce a Principals’ Update the Online Integrated role of MTRS in the time of roundtable to share COVID-19 for technical outputs on blog on the benefits of a Platform (OIP) data twice a year COVID-19[public document] updates and experiences gender, equity, health multilateral approach to [public]. and environment, and finding solutions to the (ongoing) (preparations underway) (one update carried out, second commission external international tax debate in update underway) consultants. 2021 - without preempting ongoing international (ongoing) deliberations on the issue [public document] (to be dropped in view of the progress made under the IF framework) Provide more information Organize Tax and SDGs Scope a possible review Compile a calendar on main on MTRS on the PCT website webinars starting with a paper of the PCT’s deliverables for FY21/22 (e.g. through an MTRS tab) gender webinar [public role in supporting the (completed) [public] webinar] development of more effective tax systems (completed) (gender webinar held in (in a similar vein to June 2021, more events to the paper published in be scheduled in the coming 2011: Supporting the months) Development of More Effective Tax Systems) (to be taken up) Improve the coordination Curate resources on tax and Review, after Q3 2021, and information exchange SDGs on the PCT website on possible work on further on MTRS through a designated webpage guidance for low-income/ semi-annual updates low-capacity countries (preparation underway) and quarterly meetings with regards to the BEPS [internal document/ process, concerns and meeting for Partners] priorities (to be taken up) (to be taken up in Q4 2021) PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 8 MTRS COVID-19 TAX AND SDGS INTERNATIONAL TAX COORDINATION Support country-level Develop e-learning Partner collaboration by versions of the PCT setting up deep dives that toolkits that build on and will take place every other are complementary to month on specific countries existing ones. with the participation of (ongoing) relevant country officials [internal] (to be taken up) Further assess the overlaps Information exchange on between INFFs and MTRS Partners’ BEPS impact and, where possible, assessments collaborate. (to be shelved to focus on (discussed during the MTRS forward-looking work) workshops) Develop two-three country case studies on taxation of government-to- government aid (ongoing) PL ATFORM FOR COLL ABORATION ON TAX 9 II. WORKSTREAMS PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 10 The details of the objectives, activities, outcomes and next 1.2 Activities: steps of each of the workstreams are discussed below: 1.2.1 Country engagement: Some 25 countries are currently A. WORKSTREAM 1 - involved in discussing, formulating, and implementing MEDIUM-TERM REVENUE MTRSs. These countries receive extensive support for their STRATEGIES (MTRS): MTRSs from the PCT Partners, in particular, the IMF and World Bank, who provide hands-on support through their respective country teams. Many countries are already fully 1.1 Objectives: An MTRS is a comprehensive tax system engaged in tax administration, law and/or policy reforms reform strategy for the medium-term through a country- domestically that provide a sound basis for adopting a holistic led and whole-of-government approach. The MTRS approach approach – particularly one integrated with and based upon relies on four interdependent components for sustained tax an analysis of development spending needs. In some cases, reforms in a country. The first component places the tax these ongoing reforms are supported through intensive system reform in the context of a government’s assessment engagements financed, for example, under the IMF’s Revenue of the overall medium-term expenditure needs for financing Mobilization Thematic Fund (RMTF) or the World Bank’s its development goals. The second component relates to the Global Tax Program (GTP). In other cases, for instance, the process of tax system reform itself. Ideally targeting a period UN supports MTRSs through its linkages with the Integrated of about 4 to 6 years, this aims at designing a comprehensive National Financial Frameworks (INFFs) while OECD provides program including tax policy and tax administration reforms support to some countries by training on international tax, and development of the necessary legal framework. The third exchange of information and the Tax Inspectors Without component calls for a sustained and whole-of-government Borders (TIWB) program. A list of the countries at various commitment to reform involving not only the ministry of stages of engagement on their MTRSs is below. Since finance, and tax administrations but also other line ministries, the last PCT Progress Report, Cameroon, Kenya and Togo which are stakeholders in sector-specific tax reforms. It also have commenced dialogue on MTRSs; Bangladesh and calls for commitment at the highest political level to ensure Vietnam have advanced from dialogue to the stage of MTRS the sustained pursuit of reform. The fourth component of formulation; and Egypt, Liberia and Senegal have progressed the MTRS approach is a coordinated and well-sequenced to the implementation stage. More details about the progress engagement of the external development partners (providing made on country MTRSs can be found in Appendix 2: technical assistance and/or financial support) with the government in the lead in designing and implementing a tax • Implementation support: Egypt, Liberia, Papua New reform strategy. Guinea (PNG), Uganda. The COVID-19 pandemic has underscored the need for more • Early implementation: Senegal. efficient and equitable tax systems that are aligned with • Formulation support: Albania, Bangladesh, Benin, countries’ development goals, making MTRSs more salient in Ethiopia, Indonesia, Lao PDR, Pakistan, Rwanda, Thailand the recovery phase under this workstream. The PCT aims to and Vietnam. facilitate a better exchange of information on the MTRS and how it can be useful for countries’ tax system reform priorities • Dialogue pre-formulation: Cameroon, Georgia, Honduras, including through workshops, country deep dives and updates Jordan, Kenya, Malaysia, Mongolia, Morocco, Togo and on country engagement. Uzbekistan. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 11 1.2.2 MTRS workshops: In May and August 2021, the PCT views and experiences. Senior representatives of the PCT conducted three regional and virtual MTRS workshops for Partners (IMF, OECD, UN and World Bank), ATAF and ADB leaders, ministers and senior government officials. These workshops development partners and other stakeholders presented the titled “Medium-Term Revenue Strategies (MTRSs) to Support MTRSs, its features, and how it compares with other forms of Recovery and Development” were designed to increase tax system reform. Interlinkages between the MTRS and the countries’ understanding of the role that MTRSs can play in Integrated National Financial Frameworks (INFFs) were also reforming their tax systems to meet revenue and other policy discussed. More information on the workshops’ resources, goals, enhance the exchange of information and experience program, recordings and presentations can be accessed here. between countries in the regions on adopting, formulating and implementing the MTRS and how it compares with other 1.2.3 MTRS resource tab: To enhance transparency and approaches to tax reform, and foster an understanding facilitate a better exchange of information on the MTRS, a between capacity development partners (bilateral donors, dedicated MTRS resource page has been added to the PCT regional tax organizations and PCT Partners) on their role and website. The webpage collates information about the MTRS how to coordinate their activities in MTRS countries. The first approach and its four interdependent components, including workshop was held on May 18-19, 2021 for countries in Africa a video featuring its keys aspects. The MTRS webpage also in partnership with ATAF. Two more workshops were held in includes information on the status of country engagement, partnership with ADB for countries in Asia on May 26-27, 2021 publicly available MTRS country documents and resources (for large states) and on August 25-26, 2021 (for small states). on each of the MTRS workshops. A report on the lessons from In all, nearly 550 participants from 53 countries including the regional MTRS workshops held so far can be accessed ministers, high-level officials of ministries of finance, tax and here. Since its launch in June 2021, the webpage has been customs administrations (commissioners general/deputy accessed 1908 times as of September 26, 2021. Figure 1 commissioners general), and other senior officials attended below shows details of country-based break-up of the visits the workshops as panelists and attendees and shared their to this webpage. FIGURE 1: MTRS Resource Page Country Outreach by Region and Income Level MTRS Resource Page Outreach by Region MTRS Resource Page Outreach by Income Level Sub - Saharan Africa Upper Middle South Asia Income North America Lower Middle Income Middle East & North Africa Latin America & the Caribbean Low Income Europe & Central Asia High Income Total East Asia & Paci c 0 5 10 15 20 25 0 5 10 15 20 25 Number of countries Number of countries PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 12 1.3 Outcomes: The efforts made, particularly through the workshops have also prompted several countries to express MTRS workshops and the MTRS resource tab, have facilitated an interest in designing and adopting an MTRS. An analysis greater appreciation of the MTRS as an approach to tax system of the participant profiles and summary of the feedback reform and how it can support countries in strengthening their received from those participants who responded to a survey tax systems to achieve their developmental goals, not least after the three MTRS workshops can be found in Figures 2-5 in the light of challenges posed by the COVID-19 crisis. The below. FIGURE 2: Average Participation* by Country Delegations in the Africa Workshop Average Participation by Country Delegations in the Africa Workshop (May 18 -19, 2021) 16 Number of participants 12 8 4 0 Togo Angola Nigeria Eswatini Zimbabwe Cameroon Botswana Mali Mauritius Mozambique Tanzania Benin Seychelles Madagascar Niger Sierra Leone Central African Republic Chad Equatorial Guinea Guinea - Bissau Kenya South Africa Senegal *The average number of observers, who participated in the Africa workshop, is 35. Observers include participants from development partners, international organizations and regional partners. FIGURE 3: Average Participation* by Country Delegations in the Asia Workshop Average Participation by Country Delegations in the Asia Workshop (May 26 - 27, 2021) 32 28 Number of participants 24 20 16 12 8 4 0 Cambodia Indonesia Thailand Viet Nam Lao People's Democratic Republic Papua New Guinea Malaysia Philippines India Nepal Pakistan Bangladesh Mongolia * The average number of observers, who participated in the Asia workshop, is 101. Observers include participants from development partners, international organizations and regional partners. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 13 FIGURE 4: Average Participation* by Country Delegations in the Small States Workshop Average Participation by Country Delegations in the Small States Workshop (August 25 - 26, 2021) 12 10 Number of participants 8 6 4 2 0 Fiji Vanuatu Cook Islands Bhutan Timor-Leste Islands The Maldives (Federated States of) Niue Samoa Islands Nauru Palau Tuvalu Solomon Micronesia The Marshall * The average number of observers, who participated in the Small States workshop, is 86. Observers include participants from development partners, international organizations and regional partners. FIGURE 5: MTRS Workshop Participant Survey Results Participant Evaluation Survey Results 100% 80% 60% 40% 20% 0% Africa Asia Small States Africa Asia Small States Africa Asia Small States Africa Asia Small States Africa Asia Small States Africa Asia* Small States* Topic Relevance Gained Knowledge Workshop Pacing Valuable Exchanges Logistics Interpretation and Translation Very Dissatis ed Somewhat Dissatis ed Neither Somewhat Satis ed Very Satis ed *No interpretation or translation was provided during Asia and Small States MTRS Workshops. Note: n=35 for Asia, n=42 for Africa, n= 27 for small states PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 14 1.4 Next Steps: In the coming six months, and subject to technical issues such as COVID-19 implications for tax treaties country authorities’ interest and availability (especially given and transfer pricing, and others cover issues such as greening the pandemic-related demands on senior officials), the PCT the economy, gender and broader macro-fiscal development Partners are considering organizing MTRS country deep dives as well as social and economic consequences of the crisis. to share experiences on the progress made with the country MTRSs. The discussions will inform the development of future 2.3 Outcomes: The COVID-19 resource tab serves as a one- MTRSs. stop-shop for the Partners’ COVID-19 resources. The resource tab was accessed 4790 times with 3585 unique page views Efforts will also be made to hold other regional MTRS from its inception through September 26, 2021. Since the last workshops, especially for Latin America and the Caribbean Progress Report, the number of countries viewing the tab has (LAC) to engage with countries in other regions and promote been increased overall and the outreach of the tab has been their understanding of how MTRSs can support their efforts in expanded globally as shown in the Figure 6. The resources tax system reform to satisfy their development goals. collated on this tab have provided timely and topical information and guidance to governments and policymakers The status of progress made by countries in engaging on MTRS in tackling the particular challenges posed by the pandemic. dialogue, formulation and implementation will be updated annually on the website. 2.4 Next Steps: As more data and analysis about the impact of COVID-19 and the responses to its challenges becomes B. WORKSTREAM 2 available, the PCT Partners will hold an internal Roundtable - COVID-19: to exchange views on how the crisis is affecting revenues, and their experience in technical assistance and lessons learnt through engagement with countries on their response 2.1 Objectives: COVID-19 and its aftermath have had to the crisis. The resource tab will be also tailored to different repercussions on the PCT’s workplan by informing each of its country groups with relevant content to further expand its workstreams. Under this workstream dedicated to COVID-19, outreach. the PCT aims to assist countries, particularly developing countries, in dealing with the crisis by sharing the Partners’ cutting-edge knowledge resources, blogs and policy papers on C. WORKSTREAM 3 - tax policy and tax administration responses to COVID-19. The TAX AND SDGS: Partners also aim at exchanging information internally through discussions on their experiences and lessons learned on 3.1 Objectives: Taxation has a significant role to play in countries’ tax-related responses to dealing with the COVID-19 meeting the SDGs. While tax systems can generate revenues crisis. Additionally, they strive to regularly share updates on to fulfill the spending needs of governments to meet SDGs, tax the impact of the COVID-19 crisis on revenue collections. policy interventions can promote equity, poverty alleviation, gender equality, health, sustainable environment and other 2.2 Activities: The dedicated COVID-19 resource tab is SDGs. Under this workstream, the PCT focuses on raising frequently updated to include the Partners’ resources on awareness on the interlinkages between taxation and the COVID-19 including topical blogs, knowledge resources and SDGs, scoping possible joint work by the PCT Partners, compilations of fiscal policy, tax policy and tax administration identifying areas where additional research is desirable and responses by countries. Some of the resources discuss niche producing joint papers/pilot studies on key topics. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 15 FIGURE 6: COVID-19 Resource Tab Outreach by Country Groups* Per Progress Report Periods COVID -19 Resource Tab Outreach By Regions COVID -19 Resource Tab Outreach By Income Level North America Low Income South Asia Middle East & North Africa Lower Middle Income Latin America & the Caribbean East Asia & Paci c Upper Middle Income Sub- Saharan Africa High Income Europe & Central Asia 0 5 10 15 20 25 30 35 40 45 50 0 5 10 15 20 25 30 35 40 45 50 55 Number of countries viewing the page Number of countries viewing the page 2020 Progress Report 2021 Progress Report 2020 Progress Report 2021 Progress Report (Mar 30, 2020- Jun 30, 2020) (Jul 1, 2020- Sep 22, 2021) (Mar 30, 2020- Jun 30, 2020) (Jul 1, 2020- Sep 22, 2021) *Country groups are based on World Bank’s current country and lending classifications at https://datahelpdesk.worldbank.org/ knowledgebase/articles/906519-world-bank-country-and-lending-groups Given the PCT Partners’ organizational priorities and the through stakeholder consultations. Noting that women have close interlinkages between tax-related interventions shared a disproportionate burden of the pandemic, the blog and achievement of some of the SDG targets, and based highlights the importance of progressivity in personal income on deliberations during the PCT Retreat, gender equality, taxes (PITs) and assessing the incidence of VAT systems environment, equity and health will be prioritized in the PCT under the gender lens. Authors recommend the removal of workplan. unnecessary incentives under corporate income taxes (CITs). They also emphasize the necessity to make tax and customs 3.2 Activities: administrations more supportive to women. In the blog, PCT Partners underline their commitment to engage with each 3.2.1 Tax and Gender: To identify the possible joint work, the other, governments and civil society and help governments PCT Secretariat conducted a review of the existing resources formulate policies and procedures to promote gender equality. and ongoing work of the PCT Partners on how various taxes impact gender equality. On May 20, 2021, a core team of experts from PCT Partners participated in an Internal Roundtable on Taxation and On June 3, 2021, the PCT Principals released a joint blog, Gender Equality to share their ongoing and planned work ‘How Tax reforms can promote growth and gender equality on understanding how taxes impact gender equality. During in the post COVID era’ shining the light on the need to this virtual roundtable, Partners presented on their existing remove explicit and implicit biases in the tax systems research on the impact of various taxes on gender equality, that disadvantage women, engage with women to make discussed their ongoing or planned technical assistance the administration of taxes responsive to women’s needs and engagement with countries, learned about each other’s and highlight gender equality issues in tax system reform PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 16 approaches and priorities, and explored possibilities of • to produce a scoping note for possible joint work collaboration in collecting gender disaggregated and related on benchmarking environmental taxes vis-a-vis data on the impact of various taxes. conventional taxes in respect of fiscal and social objectives (e.g., robustness against informality, evasion, On June 15, 2021 the PCT organized a three-hour public fiscal multiplier effects, equity). Workshop on the Role of Taxation in Achieving Gender Equality. The workshop featured a keynote address by H.E. These outputs are planned to be delivered over a period of Srimulyani Indrawati, Minister of Finance, Indonesia. Experts twelve months with the support of an expert consultant. from the PCT Partners, governments, think tanks, academia, and civil society discussed how tax policy and tax and 3.3 Outcomes: The collective efforts by the PCT Partners customs administrations affect gender equality, especially in through a joint blog, virtual events and agreed outputs have the context of the COVID-19 pandemic. Experts also discussed raised awareness about the role of taxation can in supporting the need for advances in data collection and methodology and countries’ progress towards the SDGs. Enhanced discussions the importance of incorporating gender equality initiatives among the Partners have facilitated internal exchange of in tax reforms. The workshop was attended by nearly 305 information on each other’s priorities and work as well as on participants from governments, civil society organizations, exploring opportunities for joint work. Speaking in one voice on academia, PCT and development partners. Recordings, critical issues has facilitated better outreach of the Partners’ presentations and program overview of the workshop can be thinking and their guidance and resources to the relevant accessed here. stakeholders, particularly, governments from developing countries. The joint Principals’ blog on tax and gender equality 3.2.2 Tax and Environment: Following a series of discussions has been accessed 1801 times with 1610 unique pageviews between the experts of the PCT Partners, among other things, since its release in June 2021. The public webinar on tax and it has been agreed: gender received positive feedback and interesting exchange • to analyze the existing carbon pricing tools and of views among participants, 45 percent of which were from databases of the Partners, and produce a short paper governments. comparing the approaches, and suggest possible ways 3.4 Next steps: In the coming months, the PCT plans to of increased collaboration, conduct an Internal Roundtable on Tax and Environment and • to produce a short paper explaining the interlinkages to hold a public webinar on the subject for wider stakeholder between taxation and environment, trends in global engagement, in addition to the expected outputs listed in practices and the urgency of adopting green fiscal 3.2.2 above. policies, Similar exercises for other SDGs such as equity and health, • to conduct a pilot study on tax expenditures under PIT, which have been identified as priority areas for the PCT, will be CIT, VAT systems that undermine carbon taxes (e.g., VAT also undertaken. Efforts will be made to explore the feasibility exemptions on kerosene, deductions on fuel or transport of joint analytical work in critical areas to understand the allowance paid to employees) in order to raise awareness impact of tax policies and practices on specific developmental about the counteractive effects of such expenditures on goals by leveraging respective Partner strengths. mitigation efforts, and PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 17 In addition, a dedicated tax and SDGs resource page collating 4.2 Activities: PCT and PCT Partners’ resources on this workstream will be hosted on the PCT website. 4.2.1 PCT Toolkits: The toolkits are a valuable resource that provides a single point of reference for countries, particularly D. WORKSTREAM countries with lower capacity, on complex international 4 - INTERNATIONAL tax issues. The toolkits also serve as a resource for the PCT TAXATION: Partners (either individually or collectively) to use in their capacity-building efforts and training. The development process of each toolkit includes public consultation on 4.1 Objectives: Under this workstream, the PCT aims to discussion drafts with stakeholders and direct dialogue with provide guidance, particularly, to developing countries on interested stakeholders, all of which are facilitated by the PCT the key areas of taxation through jointly developed technical Secretariat. Since the last Progress Report, two more toolkits toolkits. The workstream also intends to facilitate informed on Transfer Pricing Documentation and Tax Treaty Negotiations participation of developing countries in the international tax were finalized and released, bringing the total number of PCT debates as well as provide support in the implementation of toolkits published so far to five. Table 2 below lists the finalized agreed outcomes. toolkits released as of September 27, 2021. TABLE 2: PCT Toolkits on BEPS and Related Tax Matters TOOLKIT TIMELINE Options for Low-Income Countries’ Effective and Efficient Use of Tax Completed in October 2015 Incentives for Investment Addressing Difficulties in Accessing Comparables Data for Transfer Completed in June 2017 Pricing Analyses Taxation of Offshore Indirect Transfers Completed in June 2020 Practical Toolkit to Support the Successful Implementation by Developing Countries of Effective Transfer Pricing Documentation Completed in January 2021 Requirements Tax Treaty Negotiations Completed in March 2021/Updated in May 2021 4.2.1.1 Transfer Pricing Documentation: The toolkit on in implementing efficient and effective transfer pricing Transfer Pricing Documentation, which was released for public documentation regimes, and additional approaches to comments in September 2019, was finalized on January 19, documentation, including information required in or to be 2021. The finalized version was released in English. French, filed along with the tax return (such as transfer pricing return Russian and Spanish translations are also available for schedules) as well as other measures such as questionnaires wider dissemination amongst country officials. This toolkit and draft sample penalty provisions in case taxpayers fail to discusses the documentation recommended under the properly maintain the required documentation. BEPS Action Item 13 Report and additional measures that tax administrations use to require taxpayers to document 4.2.1.2 Tax Treaty Negotiations: The draft toolkit on Tax Treaty all stages of their transfer pricing analysis. Serving as a Negotiations was released for public consultation through the “sourcebook” of guidance, the toolkit provides an analysis of PCT website and the dedicated PCT hub on the Knowledge policy options and examples to assist developing countries Sharing Platform for Tax Administrators (KSP-TA) on June 29, PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 18 2020, and public comments were accepted until September In addition, a user-friendly, online version of the toolkit, which 24, 2020. 26 sets of comments were received from tax facilitates easy navigation to specific sections of interest administrations, regional tax organizations, tax practitioners, for the reader and links to additional resources, is available. business representatives, civil society organizations (CSOs) French and Spanish translations of the toolkit, as well as their and individual treaty experts. The toolkit was revised in light online versions, can be also found on the PCT website. of the comments received and released on March 10, 2021. This toolkit provides capacity-building support on tax treaty 4.2.2 PCT Toolkit Workshops: In line with its commitment to negotiations, building on existing guidance, particularly from maximize outreach efforts for its toolkits, since July 2020, the the UN Manual for the Negotiation of Bilateral Tax Treaties PCT has conducted six virtual workshops to collect feedback between Developed and Developing Countries. The toolkit on, disseminate and discuss the guidance provided in its describes the steps involved in tax treaty negotiations, toolkits. In all, over 1,300 participants from across the globe including considerations to whether a comprehensive including government officials from ministries of finance and tax treaty is necessary, how to prepare for and conduct tax administrations, business representatives, tax practitioners, negotiations, and the follow-up measures to take after CSOs media and academia attended the workshops and negotiations. Treaty negotiating teams, especially those new participated in the discussions. Table 3 below lists the workshops to the process, can also find practical tips on the conduct of held since July 2020. The links provided in Table 3 lead to event negotiations and negotiation styles. Additionally, the toolkit summaries, recordings, presentations and resources of the collates links to publicly available resources that treaty toolkit events. Furthermore, Figures 7-8 summarize the results negotiators will find useful, making them easily accessible. on participant profiles and their event feedback. The virtual format of delivery enabled participation from all regions of the A unique feature of this toolkit is that it is designed as a ‘living world in these workshops. The workshop for the launch of the document,’ allowing for regular updates and improvements Transfer Pricing Toolkit held on February 17, 2021 attracted based on new developments and feedback from users and many tax practitioners and business representatives from experienced negotiators. Since its release in March 2021, the higher-income countries, accounting to 44% of participants. toolkit has already been updated in May 2021 with 11 additional 56% of all participants, however, were from low-income, lower- resources including templates, examples and links that treaty middle-income and upper-middle-income countries, who were negotiators and those interested in the subject may find useful. the primary target audience for these workshops. TABLE 3: PCT Toolkits launch and public consultation events EVENT DATE NUMBER OF PARTICIPANTS Launch Webinar for the Toolkit on Offshore Indirect Transfer of 212 July 23, 2020 Assets Public Consultation Workshop on Draft Toolkit for Tax Treaty 478 November 4, 2020 Negotiations Public Consultation Workshop on Draft Toolkit on Tax Treaty 26 December 1, 2020 Negotiations (French) Public Consultation Workshop on Draft Toolkit on Tax Treaty 31 December 1, 2020 Negotiations (Spanish) Launch webinar for the Toolkit on Transfer Pricing Documentation February 17, 2021 437 Launch Workshop for the Toolkit on Tax Treaty Negotiations March 11, 12 & 15, 2021 303 (unique participants over three days) PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 19 FIGURE 7: PCT Toolkit Events Participant Profiles Attendance by Region Attendance by Income level Sub- Saharan East Asia Low Africa and Paci c income 15% 10% 3% Lower South Asia middle 6% income 22% High Europe and income North America Central Asia 44% 13% 30% Middle East and North Upper Africa middle 3% Latin income America and 31% Caribbean 23% FIGURE 8: PCT Toolkit Events Participant Feedback Participants Feedback by PCT Toolkit Event 100% Percentage of responses 80% 60% 40% 20% 0% Launch of the Tax Treaty TTNT TTNT Transfer Pricing TTNT Launch Toolkit on Taxation Negotiations Toolkit Consultation Consultation Documentation Workshop of O shore Indirect (TTNT) Consultation (French) (Spanish) Requirements Transfers (English) Toolkit Launch PCT Toolkit Events Very dissati ed Dissatis ed Neither satis ed nor dissatis ed Somewhat Satis ed Very Satis ed 4.2.3 PCT collaboration on taxation of projects funded by as government-to-government aid, beginning with renouncing government-to-government aid: repayments of value-added taxes and import levies.’7 Since the last PCT Progress Report, these activities have included The PCT Partners have continued to collaborate across their the finalization of guidelines by the United Nations (UN) activities to support the implementation of the commitment in Committee of Experts on International Cooperation in Tax the Addis Ababa Action Agenda (AAAA) for countries to ‘consider not requesting tax exemptions on goods and services deliveries 7 Para 58 Addis Ababa Action Agenda on Financing for Development - https://sustain- abledevelopment.un.org/content/documents/2051AAAA_Outcome.pdf PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 20 Matters, an agreement by the OECD Development Assistance • donor and recipient countries and international Committee to establish an Official Development Assistance organizations develop, review periodically and make (ODA) taxation transparency hub, and a decision by the PCT to public their policies on taxation of government-to- commission further research in this area. government aid and, subject to confidentiality clauses, provisions granting specific tax exemptions for 4.2.3.1 UN Guidelines. The United Nations (UN) Committee development assistance in aid agreements; and, of Experts on International Cooperation in Tax Matters and its multi-stakeholder Sub-Committee on Tax Treatment of ODA • recipient countries analyze the costs and benefits of projects, in which all PCT Partners are engaged, approved extending such exemptions, make revenue forecasts, the Revised Guidelines on the Tax Treatment of Government- publicly release tax expenditure statements and ensure to-Government Aid Projects at its 21st meeting in October that all requirements to make the agreements legally 2020. The Revised Guidelines were released during the 22nd enforceable are met. meeting of the UN Committee on April 28, 2021.8 The objective of the thirteen non-binding guidelines is to assist donor 4.2.3.2 OECD ODA Taxation Transparency Hub. The OECD and recipient countries and international organizations Development Assistance Committee (DAC) has commenced through whom aid is provided in determining whether or work on transparency related to country policies and not tax exemptions should be requested with respect to the practices on taxation of Official Development Assistance execution of government-to-government aid projects, and - if (ODA). A transparency hub is being established, to provide tax exemptions are requested - how they should be negotiated information on DAC members’ policies and practices on ODA and, where granted, implemented. The Revised Guidelines, taxation. Following a workshop to inform the requirements inter alia, recommend that: for the hub, a survey was completed by DAC members, on a voluntary basis to provide data for the hub, which is currently • donor countries, their aid agencies and international being designed and tested. organizations (through whom government to government aid is provided) refrain from requesting 4.2.3.3 PCT research on taxation of government-to- specific tax exemptions for their aid projects, except government aid. To better understand the impact of tax in circumstances where the tax rules in the recipient exemptions on aid-funded projects, the PCT is undertaking country are not consistent with internationally agreed empirical research to carry out case studies in at least principles or where there are serious concerns about the three developing countries on the challenges and impacts governance structure, tax system or tax administration of ODA taxation. It is expected that this research will provide of the recipient country; new evidence and analysis on a range of issues including the spillover costs resulting from economic distortions, • tax authorities of the recipient countries should be administrative difficulties and compliance burdens, and risks involved in any negotiation or drafting of the provisions of tax avoidance and abuse. of tax exemptions in aid agreements, should there be an agreement to grant such exemptions; 4.3 Outcomes: The PCT’s toolkits are the most visited resource on the PCT website (11,189 page views as of September 8 The Committee also adopted a Recommendation on the Public Disclosure of Provisions 26, 2021). They intend to inform the formulation of country Concerning the Tax Treatment of Government-to-Government Aid Projects to support the policies and practices in critical areas of taxation. The public Guidelines by emphasizing the importance of transparency with respect to tax provi- sions related to government-to-government aid projects. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 21 consultation process of the PCT toolkits helps inform the In addition, further efforts will be made to increase the discussion for countries’ policy and legislation on key issues accessibility and utility of the existing toolkits. User-friendly, of concern. The endorsement of the guidance in the toolkits e-learning modules of the existing toolkits will be developed by the four PCT Partners provides wider acceptance among to facilitate self-paced learning by stakeholders, in particular stakeholders and facilitates adoption by countries. For those from low-income or low-capacity countries, on key example, the toolkit on Offshore Indirect Transfer of Assets aspects of the guidance in the toolkits. provides sample domestic legislation for two approaches to tax offshore indirect transfers of assets and provides the basis E. WORKSTREAM 5 (with some modifications) for some of the recent legislation - COORDINATION: by developing countries to tax such transfers. Both the OECD Model and the UN Model Tax Conventions have incorporated 5.1 Objectives: This workstream aims to further strengthen Article 13(4) providing taxation rights to source countries in the coordination among the PCT Partners and focuses on cases of offshore indirect transfers of assets. Inclusion of the coordinating the workplan management. While the technical new standards in Article 9 of the BEPS Multilateral Instrument assistance and other capacity development activities are will facilitate early incorporation or strengthening, as the delivered by the PCT Partners themselves, the PCT Secretariat case may be, of these provisions in tax treaties where treaty has a primary role in coordinating the public availability and parties agree to do so. sharing of information on activities of the Partners. This is crucial to realizing synergies as well as preventing duplication The PCT’s efforts towards wider dissemination of its toolkits and redundancies. through translations, media and social media channels, and virtual launch events have enabled access to the guidance by 5.2 Activities: The PCT Partners met regularly allowing for a wide audience, including government officials who would exchange both at the technical working level and at the have been constrained to attend face-to-face events. senior management level (Principals). The Technical Working Group (TWG), comprised of senior technical experts from 4.4 Next steps: each of the Partners, aims to meet twice a month. Since July 2020, the TWG met 22 times to prepare for and execute the The international tax landscape has developed significantly PCT’s workplan and exchanged information and views on in the last year and will continue to do so in the coming collaborative activities of the Partners. Moreover, experts from months. As a result, the activities in this workstream will be PCT Partners met on five occasions as members of technical reviewed to align them with emerging priorities following the core groups for each of the workstreams to discuss and global economic shock posed by COVID-19 and the outcome suggest activities and deliverables for the revised workplan. of the Inclusive Framework (IF) negotiations to address the The TWG met for a two-day retreat on October 28-29, 2020 to tax challenges posed by the digitalization of the economy, as deliberate on the suggestions by the core groups and finalize well as other relevant developments. The review process will the workplan. involve internal and external consultations and will identify additional areas where PCT actions can add value, for example, The PCT Principals, senior staff of the PCT Partners at the identifying areas where the changing international tax director level, who provide strategic vision and guidance to landscape has created new priorities for developing countries the PCT work program, met on November 25, 2020 to discuss where PCT toolkits/technical guidance would be desirable. and approve the workplan. They met again on September 9, PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 22 2021 to hold strategic discussions on the PCT and its role in Medium-Term Revenue Strategy (MTRS), are highlighted in in tax system support given the recent challenges and yellow. The OIP also provides insights into current and future developments. They also briefed each other on their respective opportunities for global collaboration. Since its launch in organizations’ priorities. March 2020, the OIP has been extensively used by the experts of the four PCT organizations and beyond. Nearly 4916 visitors The Partnership Council is comprised of the PCT Partners, accessed the OIP map or its data as of September 26, 2021. The development partners to the PCT (France, Japan, Norway, latest OIP update took place in February 2021 and featured data Switzerland, the Netherlands and the United Kingdom), collected in October 2020. The PCT Secretariat is continuously and representatives of other countries and regional tax working on further harmonizing the data and providing more organizations as observers. The Partnership Council granular information. Under the PCT’s commitment in the meeting took place on December 17, 2020 and included the 2020 Progress Report10, the PCT Secretariat holds an internal participation of senior ministers/government officials from database of country/project contacts. Stakeholders can email Egypt, Georgia, Jamaica, Nigeria, Peru, Uzbekistan and Zambia the PCT Secretariat using the link https://www.tax-platform. as well as representatives from ATAF. org/contact with the subject “Country Contact Information – [Country Name]” to request access to relevant country In addition to the meetings arranged as per the PCT workplan, contacts. For further information on the field coordination PCT Partners also arrange ad-hoc meetings to confer on among PCT Partners, Appendix 3 provides specific examples possible collaboration and exchange of views on their from Nigeria and Pakistan. significant activities. In the last year, this has included an exchange of information on each other’s ongoing activities and As part of the coordination efforts, the PCT website serves country projects in the taxation of extractive industries (June as the primary vehicle for transparency and dissemination 23, 2020), a briefing on the developments under the work of of information on the PCT and its Partners’ activities. The the UN Tax Committee such as the taxation of G2G Aid work website resources are updated with new resources regularly. (November 18, 2020), and progress made under the Inclusive Where useful, new tabs are also added to improve navigation. Framework on BEPS project to address tax challenges posed In the last year, the MTRS resource page (see also section by the digitalization of the economy (May 20, 2021). 1.2) and a training calendar of PCT and Partners’ tax-related training courses were added to the website. Information about The Online Integrated Platform9 (OIP) is a publicly accessible forthcoming PCT events and post-event resources, recordings database on domestic resource mobilization (DRM) activities and event summaries are made available through the news and projects executed by the PCT Partners. The OIP lists and and events page. describes the projects and activities of each of the Partners and enables searches both for the country- and regional- Furthering its outreach activities, the PCT Partners and the level data. The interactive map in the OIP is a user-friendly Secretariat also engaged with various fora to share updates tool that provides an overview of the country projects and and highlights on the PCT and its workplan: technical assistance activities of the Partners with a click on i) On July 2, 2020, the TWG representatives from each of the country on the map. It also affords an organization-based view of activities supporting DRM efforts. On the interactive the PCT Partners presented the key PCT achievements map, countries, where the PCT Partners have an engagement 9 An updated collation of PCT Partners’ activities and projects will be available in November 10 https://www.tax-platform.org/sites/pct/files/publications/Platform-for-Collaboration- 2021 on-Tax-PCT-Progress-Report-2020.pdf. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 23 in the previous year to the members of the Inclusive experts from the PCT Partners engaged with the audience Framework at its bi-annual meeting. through a Q&A session at the OECD Tax and Development Day, which was a public event open to all interested ii) On September 17, 2020, the PCT Secretariat presented stakeholders. its toolkit on Tax Incentives for developing countries at a webinar organized by the Addis Tax Initiative (ATI) for ix) On July 22, 2021, the IMF and the PCT Secretariat its members. presented how the MTRS strategy can support countries in their tax system reforms at the Asia-Pacific Economic iii) On September 22, 2020, the TWG representatives Conference (APEC) seminar on “Tax Policy Responses to collectively presented highlights of their workplan at the the COVID-19 Pandemic”. G20-IFA meeting. iv) On October 01, 2020, the PCT Secretariat presented 5.3 Outcomes: The PCT as a platform has proved to be an highlights from its tax tools and frameworks workplan effective vehicle to exchange views and information on at the Virtual Roundtable on Tax Tools and Frameworks the Partners’ responses to the crisis with each other and conducted by the Center for Global Development. between the Partners and various stakeholders. Partners also intensified the exchange of information and other forms of v) During the twenty first session of the Committee of coordination on their engagement in the provision of capacity Experts on International Cooperation in Tax Matters held development support. In particular, regular exchanges among from October 20 to 29, 2020 as well as its twenty-second the Partners have forged effective relationships, facilitated session held from April 19-28, 2021, the UN Secretariat quick exchanges of views and information, and served as a briefed Committee members on the work program of the forum for conferring with each other on tax-related activities. PCT, Transparency on Partners’ country projects and activities vi) On December 10, 2020, PCT Partners from the UN and through the OIP also affords a picture of the trends in the OECD presented the progress made by the UN Sub- Partners’ activities at the country level. The country examples Committee on finalizing the guidelines on the taxation in Appendix 3 demonstrate results from the project leads’ of projects funded by government-to-government aid responses to a survey carried out by the Secretariat and and the work on promoting transparency of country offer a glimpse of country-level collaboration and potential for practices by the OECD DAC, respectively, at a virtual increasing it. seminar organized by the French think tank, Foundation for Studies and Research on International Development Enhanced outreach—covering both inputs into and the dissemination of the work of the PCT—is vital to ensuring both (FERDI). the quality and impact of the PCT’s work, enabling countries vii) On Jan 26, 2021, the PCT Secretariat presented the to access and use the guidance developed by the PCT that literature review of the PCT Partners’ work on taxation is sensitive to their needs and circumstances. Outreach and gender equality at the World Bank Gender Learning activities allow the PCT to share with a wider audience the Week. lessons learned from country experiences on the MTRS formulation and implementation, toolkits, SDG workshops, viii) On Jan 30, 2021, the PCT Secretariat presented on the and other capacity development activities. PCT, its governance structure and key achievements, and PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 24 5.4 Next Steps: The PCT will continue to update its website In addition, Partners will continue to build on the experiences resources regularly. An additional resource page for collating and lessons from the coordination and analyses of each publicly available resources on the tools and frameworks used other’s activities to further strengthen collaboration, leverage by the PCT Partners for tax-related diagnostic and information synergies and avoid duplication and redundancies. collection will be added to the website. PL ATFORM FOR COLL ABORATION ON TAX 25 III. STRENGTHENED BUDGETARY SUPPORT AND THE SECRETARIAT STAFFING PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 26 The PCT Multi-Donor Trust Fund (MDTF) dedicated to support the The increased budgetary commitments and, consequently, PCT Secretariat and work program is funded by contributions strengthened Secretariat staffing will further support the from Japan, Norway, Switzerland, The Netherlands, and the Partner coordination and secure the delivery of the PCT United Kingdom. France joined the PCT Council in April 2021 workplan. The majority of the technical activities, and with a commitment of USD 300,000. analysis, however, continue to be undertaken by the four PCT Partners, funded through their funding arrangements. PL ATFORM FOR COLL ABORATION ON TAX 27 IV. NEXT STEPS AND FUTURE STRATEGIES PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 28 Review of the Work Program. The PCT will carry out a mid-term support pandemic recovery. This review will ensure that the review exercise of the progress made on its workplan agreed PCT focuses on the areas where collaboration between the to in November 2020. In particular, the completed tasks and partners provides the maximum value. outputs, ongoing activities and pending tasks will be reviewed and prioritized. The revised work program will take into account The PCT will collect systematic feedback through surveys on recent developments in taxation, particularly international tax the PCT outputs, such as toolkits, from its target audience on issues which may require broader changes in the workplan, their utility, accessibility and the need for additional guidance including introducing new priorities and activities, which may and will follow up with the attendees of MTRS workshops, who necessitate dropping some activities. The review will also take gave their consent to be contacted to explore engagement on into account the need to further strengthen tax systems to the MTRS. PL ATFORM FOR COLL ABORATION ON TAX 29 APPENDIX PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 30 APPENDIX 1: Status of Action Items under the PCT Workplan of 2018 ACTION ITEM STATUS NOTES 1. On a regular basis, working with others including the Achieved Standalone PCT website developed. Addis Tax Initiative, we will help to give a comprehensive Updated DRM project list of four partners available through the picture of the total effort of international, regional and publicly accessible data repository on the PCT website. bilateral partners in supporting developing countries on tax matters. 2. We will integrate and aim for the highest possible Achieved Standalone PCT website developed. standards of transparency in the provision of information Updated DRM project list accessible through a data repository; about our capacity development activities in developing sustained through regular and frequent updates to the Website/OIP. countries through the PCT website. 3. On international tax, we will scale up our joint work to Ongoing The provision of international tax policy advice is implemented support developing countries to address tax transparency through toolkits and toolkit workshops. and base erosion and profit shifting, including on treaties. Several PCT events on toolkits conducted as of September 2021: 9 Toolkits translated into French, Russian and Spanish: 117 4. Working together with other stakeholders, we will seek to Ongoing PCT is actively in exchange and coordination with other stakeholders provide coherent and consistent international tax policy (e.g., ATI, ADB, ATAF, FTA, APEC, PITAA). advice. 5. We will complete the PCT Toolkits to help countries Completion PCT Toolkits – Progress: address challenges in international taxation and launch an expected by 2021 • Tax Incentives for Investment Toolkit: Published in October expanded outreach program to support the development 2015. and use of the Toolkits. We will respond to additional concerns raised by countries with analytical work, • Transfer Pricing and Comparables Data Toolkit: Published in recommendations and guidance. June 2017. • OIT Toolkit: Published on 4 June 2020. • TP Documentation Toolkit (Discussion Draft): Published on Jan 14, 2021. • Tax Treaty Negotiation Toolkit: Published on March 10, 2021. • BEPS Risk Assessment Toolkit: In early stages of discussion; to be reviewed in Q4 2021. 6. We will provide, in mid-2018, an update to the G20 on tax Achieved The report is available at https://www.tax-platform.org/sites/pct/ certainty and developing countries files/publications/119100-WP-PUBLIC-World-Bank-Document.pdf 7. We will analyze and report on the spillovers and Ongoing Related outputs are available in the revised workplan. opportunities from changes in the international tax environment on and for developing countries. 8. We will work together to support the development of Ongoing Related outputs (MTRS-related information sharing; country deep country-led MTRSs, including through the involvement dives, workshops) are available in the revised workplan. of bilateral partners, and report on outcomes. We will Three MTRS workshops for Africa (in partnership with ATAF), Asia align our support according to the plans set out by and small states in Asia and Pacific (in partnership with ADB) were governments. held in May and August 2021. 9. We will help developing countries access the knowledge, Ongoing Standalone PCT website developed. Updated DRM project list experience and good practices in tax administration, accessible through a data repository. starting with the use of technology, working with the PCT KSP-TA Hub launched. Forum on Tax Administration, regional tax organizations and other partners. Three MTRS workshops for Africa (in partnership with ATAF), Asia and small states in Asia and Pacific (in partnership with ADB) were held in May and August 2021. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 31 ACTION ITEM STATUS NOTES 10. We will support the participation of developing countries in Ongoing PCT will convene in October 2021 to review the toolkit basket on tax policy discussions at international fora. international tax and other relevant issues 11. We will launch a multi-year Tax and SDGs Program, that will Ongoing Revised workplan includes workstream on tax and SDGs. include components on taxation and health, education, gender, inequality, environment, and infrastructure. 12. We will establish a regular dialogue between the PCT and Ongoing In the 2019 PCT Partnership Council Meeting, Egypt participated as stakeholders—most importantly developing country an observer. governments. In the July 2020 PCT Partnership Council Meeting, Egypt, Uzbekistan, and the representatives from UN Tax Committee (Argentina, Jamaica, Japan) participated as observers to participate in the dialogue. In the December 2020 PCT Partnership Council Meeting, Egypt, Georgia, Jamaica, Nigeria, Peru, Uzbekistan and Zambia participated as observers. 13. We will review current practice, and provide guidance and Ongoing The updated PCT workplan includes case studies on government-to- recommendations, on the tax treatment of ODA-funded government aid to be completed in 2021. goods and services. UN guidance is completed. 14. To help deliver this agenda we will seek to secure donor Achieved funding for the expanded work program, supported by a strengthened PCT Secretariat. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 32 APPENDIX 2: its commitment to the MTRS while updating some key milestones. Going forward, the Revenue Administration will Updates on Countries’ Medium-Term Revenue focus on the implementation of the new Tax Administration Strategies Act, organizational redesign, taxpayer service strategy development and implementation, short-term revenue The progress made on countries’ MTRSs is detailed below: recovery, and IT modernization. Tax policy and legal divisions Implementation Support will focus on modernization and simplification of Income Tax Act, capacity building in Tax Policy Division, and mining and Egypt — The MTRS was approved by the Egyptian Council of petroleum fiscal analysis and modeling. The MTRS covers Ministers on December 31, 2020. The MTRS document includes the period between 2018 and 2022. The Tax Administration chapters on expenditure needs, revenue and other goals Act implementation has commenced in July 2020 and been setting, tax policy and revenue administration reform options completed by January 2021. and legislative measures. The authorities requested IMF support with the implementation of the MTRS. Consequently, Uganda — Uganda’s MTRS, which is called the Domestic the IMF is setting up a long-term support program to assist Revenue Mobilization Strategy (DRMS), was concluded in the authorities to implement their MTRS. The support program the FY19/20 and adopted by the Ministry of Finance and the will include a peripatetic long-term advisor. An important part Commissioner of the Uganda Revenue Administration after will be the coordination with development partners so that all the approval of a costing implementation plan in June 2021. international organizations present in Egypt will assist with The plan covers the period from 2019-2020 to 2023-2024 the implementation avoiding overlaps or gaps in CD. As the and targets an increase in revenue of at least 2.5 percent next steps, the IMF will set up the long-term support program of GDP over five years. It envisages both tax policy and tax and develop consultation with the authorities and an action administration measures. On tax policy, it envisions revising plan for the implementation of the MTRS. excise duties, depreciation rates and some export levies. On tax administration, the DRMS intends to improve arrears Liberia — Liberia Revenue Authority and Ministry of Finance management and tax audits as well as data and information and Development Planning have already started working on sharing. Over the medium-term, the DRMS contemplates the implementation of the DRM Strategy and fleshing it out with revising exemptions, including adopting a new tax expenditure concrete tax proposals. The modernization of excise taxes—a framework, and other tax administration measures to improve switch from ad valorem to specific tax rates and the use of taxpayer registration, risk modeling, better enforcement and excise duty stamps—has been already implemented. Several debt collection, and dispute resolution. further measures have been considered for implementation, Early Implementation Support e.g., streamlining various tax concessions, improvements to property taxation (property valuation), higher taxation of Senegal — The authorities finalized the draft MTRS document telecommunication services, and a suite of measures geared end of May 2020, making it the first country in Francophone towards the improvement of tax enforcement (an update from Africa to prepare one. The main focus of the MTRS is to, in tax UN is awaited). policy, expand the tax base by reducing tax expenditures and formalization of the economy, and in revenue administration, Papua New Guinea (PNG) — PNG’s MTRS was formally increasing the number of taxpayers, tackling fraud, and launched in November 2017, covering a period from 2018 digitalization. The IMF’s FAD is providing CD support in a to 2022. In May 2020, the PNG government reconfirmed PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 33 managerial and operational capacity, revenue administration (b) the technical analyses that are progressing, and (c) the core business functions and procedures, support functions key stakeholder consultations, which have been constrained and improving the business environment. The World Bank is by COVID-19. The National Board of Revenue (NBR) plans to providing CD support in targeted tax policy and administration update the MTRS document following the consultations, as areas, including international taxation (transfer pricing, anti- the COVID-19 situation permits. Responding to the prolonged abuse and treaty policy), risk-based audit selection, MSME COVID-19 constraints, the NBR has revised the MTRS Delivery taxation and excise taxation (tobacco). The MTRS covers the Plan. This plan adopts an agile approach for the draft MTRS period of 2020-2023 and detailed implementation plans for preparation, including extensive review and engagement of both the tax policy and revenue administration are under the NBR officials at all levels, which will substantively complete preparation. In January 2021, IMF assisted in reviewing the MTRS preparation activity and provide comprehensive Senegal’s Medium-term Revenue Strategy (MTRS) to factor actionable reform agenda, across the VAT, income tax, and in the negative impact of COVID-19 and update the matrix of customs, led by NBR. The MTRS will be a living document and priority reforms, including a timetable and the potential yield will be updated to take account of emerging reform needs and of key measures in revenue administration. Tax policy plans priorities, including from the analyses and consultations. are being reviewed, as authorities would like to alter the focus of the efforts. Benin — The authorities showed interested in the MTRS approach, given the revenue needs and their interest to Formulation Support increase the tax-to-GDP ratio to the West Africa Economic and Monetary Union (WAEMU) level (20 percent of GDP). A Albania — In November 2019, an IMF tax policy and workshop to explain the MTRS framework to the officials from administration mission advised on the MTRS formulation, the Ministry of Finance was organized in November 2019, and including tax policy and administration options to reform the an MTRS road map was prepared. The MTRS formulation work tax system and increase the tax-to-GDP level, to be considered supported by IMF’s FAD includes: (1) a Tax Administration in Albania’s MTRS. Unfortunately, the country was affected Diagnostic Assessment Tool (TADAT) assessment (completed by an earthquake in late 2019 and the COVID-19 pandemic in in November 2019), (2) a value-added tax (VAT) gap analysis 2020, temporarily stalling the progress. Recently, the MTRS (ongoing), and an evaluation of income tax incentives formulation process has been reinvigorated. Based on the IMF (completed). Discussions for the formulation of an MTRS recommendations, the Ministry of Finance and Economy drafted document are still taking place but the progress has been the strategy and, in June 2021, requested the IMF support in slow since the pandemic outbreaks. reviewing and revising the draft strategy to reflect the post- pandemic realities on the ground. An engagement is planned in Ethiopia —The IMF has provided comprehensive advice in September-October 2021 to review and revise the MTRS. tax policy and administration, including estimations of the revenue potential of the various measures. The medium-term Bangladesh — The Bangladesh Medium-Term Revenue measures for both tax policy and revenue administration are Strategy (MTRS) process continues to make progress, in currently under consideration and final development by the both preparation, and readiness for implementation, amidst authorities with the assistance of IMF. The government has challenging COVID-19 constraints. More specifically, the published their “Ten Years Development Plan: A pathway to MTRS preparation manifests variable progress, across the Prosperity” for 2021-2030. The revenue mobilization goals three MTRS Pillars. These include: (a) the Bangladesh DRM are to increase the tax-to-GDP ratio from 9.2% to 18.2% Reforms Mapping (2010-2020) report, which is completed, PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 34 over 10 years through reform of tax policy and regulations, specifically related to domestic revenue mobilization. IMF’s modernizing the tax system and administration, reforming FAD has provided CD on domestic revenue mobilization that the tax structure and fighting illegal trade activities. The can serve as a stepping stone to a potential future MTRS. mid-point or medium-term plans are under development for the first five years and considers the IMF’s comprehensive Pakistan — The government continued developing an MTRS advice that included a blueprint of reforms in tax policy with close support from the WB and other development and administration to achieve the goals. The medium-term partners working in the Domestic Revenue Mobilization measures for both tax policy and revenue administration (DRM) improvement. Recently, the MTRS has benefited from are currently under consideration and final development by a multi-donor engagement to carry out the Tax Administration the authorities. Once the government decides on measures Diagnostic Toolkit (TADAT) to assess the tax administration that will be included in the medium-term plan and in line performance and practices. TADAT will provide an evidence- with the IMF supported ECF/EFF program, the next steps are based assessment about the main gaps against good anticipated to include: (i) assisting the drafting of granular practices and set out a baseline for further reforms. Based on compliance improvement plans, (ii) redrafting VAT legislation, the latter, development partners will define the framework for and (iii) assisting the implementation plan as needed. further assistance with the leadership at the Federal Board of Revenue (FBR). This will allow better coordination and Indonesia and Thailand — Both countries received the IMF’s focus on key areas where the development partners working advice for drafting their MTRSs. In both cases, the MTRS drafts in this space have a relative comparative advantage. In this have not been formally adopted; instead, in both countries, context, the WB will continue to assist the FBR to consolidate they took a selective approach and considered some of the the MTRS providing technical advice in the tax policy and tax reform options provided for the draft MTRSs. Thus, neither of administration, including customs fields. these countries are presently pursuing the implementation of an MTRS to tax system reform with a comprehensive Rwanda — An MTRS workshop led by the IMF’s FAD and approach. However, Thailand informed that at the end of 2019, Rwanda’s Ministry of Finance in September 2019 helped the Ministry of Finance created a team to analyze the tax establish governance arrangements for an MTRS and also system reform options recommended in the MTRS draft. define an MTRS roadmap and action plans. The subsequent formulation work supported by IMF’s FAD includes a TADAT Lao PDR — In May 2018, the Ministry of Finance requested assessment (completed), capacity building in policy analysis IMF assistance in developing an MTRS, covering the period and tax expenditure assessment (ongoing), and VAT gap of 2021-2025 to support their 9th National Socio-Economic analysis (ongoing). The MTRS covers FY2023-24 through Development Plan (NSEDP). IMF missions (financed by the FY2025-26. The authorities have completed consultation with government of Japan) in tax policy, revenue administration stakeholders on the MTRS -1 (May -July 2021), and will now and customs administration were undertaken, with the process to finalization for approval. MTRS-1 covers FY2021- results expected to be combined in a draft MTRS. Both the tax 22 through FY2023-24. The next steps include: (i) taking and customs agencies have strategic plans for the period of into consideration task holder input, (ii) submitting MTRS 2018-2020, which were intended to build the foundation for for approval (including the Cabinet), (iii) publishing the final stronger results through the MTRS. In December 2019, the MTRS, and (iv) initiating the implementation plan. A follow-up Ministry of Finance officials indicated that the focus would MTRS (MTRS-2) is planned to commence in FY2024-25. be on strengthening the tax and customs administrations, Vietnam — The Ministry of Finance is preparing its PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 35 comprehensive tax reform strategy for 2021-2030 and tax tax system reform into an MTRS, though there have been reform plan for 2021-2025 with assistance from the IMF and no developments over the last 12 months. The authorities the World Bank. Specifically, the IMF and the World Bank are emphasized their preference to reform the tax system jointly supporting the General Department of Taxation (GDT) gradually through accelerated modernization of the Revenue to formulate the tax administration reform strategy and plan, Administration. while the Tax Policy Department (TPD) is preparing the tax policy reform strategy with support from the World Bank. The Honduras — During the 2019 Spring Meetings, the authorities IMF and the World Bank conducted joint missions to support asked for technical assistance on developing a fiscal pact the GDT. This includes a tax administration assessment using (Pacto Fiscal) and an MTRS. However, during the 2021 Spring the DIAMOND tool led by the World Bank to identify strengths, Meetings, the authorities did not ratify the request on the weaknesses, and performance gaps of the GDT to inform the fiscal pact and MTRS, requesting CD in other areas. formulation of the Vietnam tax administration reform strategy Jordan — In April 2019, the Minister of Finance expressed for 2021-2030 and reform plan for 2021-2025, and a series interest in exploring the formulation of an MTRS. The minister of virtual technical assistance led by the IMF to help the GDT requested the IMF mission to provide more background to identify external challenges to the upcoming strategy information and share experiences from other countries. and plan. On the policy side, the World Bank is supporting While there was a change of government in late 2019, MTRS the TPD to conduct a comprehensive review of the tax policy is still seen as a valuable tool going forward, but more in the framework and provide options for reforms. With inputs from medium-term timeline. the WB and IMF team, the draft Vietnam Tax System Reform Strategy 2021-2030 was completed and circulated by the Kenya—Engagement with Kenya on the MTRS has Ministry of Finance for public consultation in early July 2021. commenced in FY2020-21. Following the interest expressed On July 8, 2021, the WB Country Director sent the World Bank’s by the authorities in formulating an MTRS, IMF’s FAD has held comprehensive recommendations for the draft strategy to two rounds of technical discussions with the authorities, the Minister of Finance. The government plans to have the providing an overview of the MTRS framework and the various strategy to be adopted by the end of December 2021 steps in the process of its formulation. Engagement on Dialogue pre-formulation formulation is expected to commence before the end of the calendar year of 2021. Cameroon — MTRS consultations with Cameroon were initiated. However, in March 2021, the Revenue Administration Malaysia — In January 2020, the IMF conducted an MTRS officials indicated that the focus would be on fostering the workshop and discussed steps for the MTRS formulation digitalization process to improve domestic revenue collection. and an action plan to take the MTRS formulation forward. The Ministry of Finance established an MTRS Steering Committee, Georgia — Georgia is receiving intensive CD support in the but plans were put on hold due to the COVID-19 pandemic. taxation area from the IMF, under its RMTF. The focus of the IMF is seeking re-engagement on the government’s interest CD program has been mostly on tax administration with in pursuing the MTRS approach once the immediate COVID-19 targeted policy advice to address some issues, and there has crisis abates. been some progress. The World Bank is providing targeted support on tax compliance in the area of VAT. Discussions Mongolia — Mongolia receives intensive CD support in tax with the authorities have been held to transition the ongoing system reform areas from the IMF under its RMTF and the PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 36 Government of Japan through customs reforms, though, and it was agreed that IMF would take the lead. The Minister of mostly in tax administration. In addition, the World Bank has Finance has to confirm this interest. provided CD support on tax expenditures and is preparing a policy that includes support for the implementation of Togo — The dialogue for the MTRS engagement was international tax standards. The MTRS approach was discussed commenced, but it is presently on hold. In May 2021, the with officials as a means to finance government spending Ministry of Finance officials indicated that the focus would and offset the high volatility in the mining sector. OECD, in be on tax policy reforms to improve domestic revenue partnership with the IGF, is providing intensive assistance on mobilization. taxing the mining sector, complemented by a joint OECD-UNDP Uzbekistan — Since 2018 the government is pursuing Tax Inspectors Without Borders (TIWB) program. Authorities significant reforms of its tax system - a whole revamping of the continue to focus on achieving sustainable increases in policy setting, administration, and legal framework. Already revenue through improvements in tax administration. A new significant changes have taken place in tax policy, and there RMTF funded project (2020-22) has been agreed to focus on is also a comprehensive tax administration reform strategy. tax administration. The authorities are not considering further The IMF is providing an intensive CD program under its RMTF, work to progress the MTRS. The MTRS approach may be raised working in collaboration with the World Bank and other with authorities again at a future time within the context of DPs. During the 2020 IMF Spring Meetings, the authorities ongoing economic dialogue. reiterated their interest in transitioning the current tax system Morocco — During the 2019 IMF missions on revenue reform program into an MTRS. In April and June 2021, the IMF administration, the Secretary-General of the Ministry of supported the initial work to develop the MTRS action plan. The Finance and the Director-General of the Tax Administration preliminary agreement was reached on a broad timeline: (1) showed keen interest in proceeding with an MTRS approach, MTRS formulation is expected for end-2021, and (2) MTRS is to cover 2022 - 2026. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 37 APPENDIX 3: both for the authorities and the IMF and WB technical teams. Key aspects of the framework include: PCT Partner Coordination on the Ground: Country Case-Studies i) Sharing and discussing action plans and agreeing on convenient work modalities: The IMF-FAD and WB To understand the dynamics of PCT Partners’ activities at experts and teams organize ‘kick-off’ meetings to agree the country level and coordination among them, the PCT on work focus modalities and discuss their respective Secretariat carried a survey of Partners’ activities in two action plans and decide on a practical work modality on countries: Nigeria and Pakistan on a sample basis. Both each topic. countries were chosen because as per the last update on ii) Aligning meeting schedules. The IMF-FAD and WB staff the Online Integrated Platform, all four PCT Partners have a substantial presence in these countries in strengthening their and experts working on similar topics participate in DRM efforts and because of their geographical diversity. The meetings together (individual schedules permitting), survey respondents were project leads and representatives and where possible assign responsibility for delivery of a of the Partners in the TWG and the description below explains task to support implementation. the scope of Partners’ activities, their attempts at leveraging iii) Sharing meeting schedules for non-shared capacity complementarities and synergies among each other and with development (CD) activities. The IMF and WB staff keep other development partners as well areas where coordination each other informed of the timing of CD meetings for non- could be strengthened. shared activities to minimize CD activity meetings for the A. Nigeria Country Case Study authorities. Coordination in Capacity Development Activities iv) Reviewing recommendations. The IMF-FAD and WB teams share all mission reports and review and discuss Both the IMF and WBG are active in the space of tax and key recommendations to ensure they are consistent. customs administrations’ capacity building, extractive v) Sharing outputs for all deliverables. Materials that industries and tax policy reform advice. are prepared during or for a mission including detailed In the space of revenue administration reforms, teams from implementation plans, PowerPoint presentations or both organizations have developed a collaboration framework ‘how-to’ notes to guide the authorities in implementing for project design and capacity-building delivery to support proposed measures are shared between the teams. the implementation of specific reforms. The framework aims to vi) A joint reform implementation monitoring committee. improve the capacity-building coordination and effectiveness The committee comprising staff from the Federal Inland which have resulted in improved breadth and depth of coverage of the authorities’ capacity development needs. Revenue Service (FIRS) of Nigeria, IMF FAD and WB, and The Partners consolidate meetings to reduce the demand on chaired by the FIRS, meets periodically to assess reform the Nigerian authorities’ time. It has also helped ensure that progress and discuss and resolve emerging issues. the capacity development provided by both organizations Using the process developed under the framework, the is complementary and has aimed to consolidate technical IMF-FAD and WB developed plans that are complementary meetings as much as possible to achieve time efficiencies, PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 38 and cover the key issues necessary to strengthen the VAT data directly from ministries of finance, revenue and national administration in Nigeria. To close the identified gaps, the IMF statistical offices in many developing countries, in partnership FAD has developed work plans to assist the FIRS to establish with regional organizations11 for its publications on revenue a VAT register and build a methodology for developing a basic statistics, including Revenue Statistics in Africa. The OECD VAT compliance improvement plan. The WB workplans focus team collects the data directly from Nigeria in conjunction on building effective enforcement and compliance functions, with the OECD’s regional partners. Separately, the teams at including establishing an audit function through training the IMF and the OECD are in regular contact with each other on to build technical skills and introducing tested approaches an ad hoc basis to ensure that the datasets are as aligned as to improve the accuracy of reporting, starting with the key possible and that both teams are clear on the links between economic sectors. the OECD classification (the Interpretative Guide), the IMF classification (GFSM 2014) and the national accounting OECD projects provided technical assistance to Nigeria’s standards. Consultation mechanisms include the informal Federal Inland Revenue Service (FIRS) in the areas of IMF-OECD Working Group on Government Revenue Data, which international tax, BEPS, transfer pricing, transparency and brings together senior and technical officials from the OECD the exchange of information. These projects contributed to and the IMF, to explore areas of mutual interest. changes in regulations and documentations. In addition, TIWB supports tax audits in response to base erosion and profit Project leaders also reported how project design was shifting risks and is a joint initiative of the OECD and UNDP, indirectly informed by the PCT Partner publications and third- which respectively bring tax expertise and strong relationships party support. The IMF cites Nigeria’s 2018 TADAT assessment with tax administrations. TIWB experts from the OECD and ATAF as the basis for its tax administration reform program, which have completed two programs providing tax audit support involved the support of multiple donors and development on real cases of transfer pricing audit in the oil and gas partners12. More than one PCT Partner commented on the sector. Currently, TIWB is providing support to FIRS under a role of ATAF and its assistance in leveraging funding and subsequent program focused on tax audits in the oil and gas facilitating access to expertise. sector, supported by a UNDP Roster expert, and under a tax audit program reviewing mutual agreement procedures in A matrix of the PCT Partners’ tax-related activities in Nigeria is collaboration with ATAF. The TIWB programs in Nigeria, in addition in Table 4 below. to the OECD’s BEPS and transfer pricing projects, was informed Leveraging Complementarities by close collaboration with the WBG Economic Community of West African States (ECOWAS) program. The shared diagnosis Significant high-level coordination takes place among the led to agreed courses of action and focus areas. Benefitting Partner representatives at the PCT’s Technical Working Groups, from the OECD and UNDP partnership, all TIWB programs reflect which meet twice a month to review topics with implications a strong collaboration, which, among other things, facilitates for all Partners’ work, agree on best practices, leverage the recruitment of experts, as well as strong relationships with tax administrations and in-depth knowledge of country 11 The African Tax Administration Forum (ATAF), African Union Commission (AUC), CREDAF, context thanks to the UNDP country offices. TIWB also benefits African Development Bank, European Union, UN Commission for Latin America and the Caribbean (ECLAC), CIAT, Inter-American Development Bank, Asian Development Bank, from the support of the UNDP Country Office in Nigeria to Pacific Island Tax Administrators Association and the Pacific Community. coordinate assistance with other development partners and 12 The African Tax Administration Forum (ATAF), the International Monetary Fund (IMF), Fiscal Affairs Departments (IMF-FAD) Foreign, Commonwealth and Development Office align with the domestic SDG Agenda. The OECD also collects (FCDO, formerly DfID), and the United States Agency for International Development (USAID). PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 39 resources and expertise, create guidance and toolkits to or the IMF and the WBG on tax administrations, project team inform country-level work and keep apprised of each other’s leads have spoken highly of the coordination arrangements, activities to inform each organization’s value-add. highlighting clear benefits for efficiency and quality delivery. At the country level, project teams from different organizations While there has been very good progress between PCT keep communication open to align activities. Teams meet Partners in the area of tax administration, there is more work to ensure interventions are mutually complementary, often to do to ensure the same degree of information-sharing and consolidating funding and expertise into one program, collaboration regarding tax policy. rather than funding parallel programs. For example, the OECD collaborated closely with the WBG to avoid duplication in the Some Partners have expressed the view that the greater area of transfer pricing. As part of their regular meetings, information sharing among the PCT Partners on program the IMF and WBG tax administration reform teams reassign delivery and project focal points could lead to benefits for all responsibility for the delivery of a task to maximize benefits parties. Another Partner team supported the idea of broader from the available resources. As described above, the OECD coordination frameworks based on existing ones that work and IMF work together to ensure mutual understanding well to involve more development partners. A team from a and consistent classification of their respective datasets of third Partner stated that the coordination must be based on government revenues. This also serves as a channel through its inherent value-add, and no outside incentives should be which the two organizations promote mutual involvement in required. regional workshops. Multiple teams suggested that country authorities are Steps to Improve Future Collaboration best placed to incentivize collaboration, suggesting that the support for this initiative could dovetail well with the All PCT Partner project leads voiced their support for further government’s stated interest in establishing a DRM Working coordination in the future. In areas where coordination has Group, and could fit under other efforts to support capacity been the highest, such as between the OECD and the UNDP, building in the tax policy division. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 40 TABLE 4: Matrix of Tax Activities in Nigeria by the PCT Partners THEME IMF OECD / UN WBG • Strengthening institutional arrangements • Working with the ATAF and UNDP roster • Capacity building for non-oil revenue and taxpayer segmentation. expert to provide tax audit support modeling. • Improving core processes and ICT in the oil and gas sector under TIWB • Developing tax gap analysis capacity. capabilities. program. (OECD/UN) • Developing tax expenditure analysis • Data analytics to improve VAT compliance. • Working with the ATAF, TIWB’s tax capacity. audit program focused on a mutual • Developing skills to improve compliance in • Developing tax incidence analysis agreement procedure (MAP) case. specialized sectors. capacity. (OECD/UN) Tax Administration • Build revenue administration capacity • Business processes review. through the Managing Natural Resource • Evaluation and improvement of current IT Wealth – Thematic Fund (MNRW-TF). system. • Compliance risks in the oil and gas sector. • Support the setting up of a Compliance Risk Management Unit in FIRS. • Improve SOE accountability for remittances of their operating surplus. • Improved cash management and reduced revenue leakages through the implementation of the State Treasury Single Account (TSA). • Reforms to broaden the tax base for • Revenue Statistics in Africa: collecting • VAT transition strategy developed. corporate income tax, VAT, and excises. comparable revenue statistics. (OECD) • Rationalize tax incentives. • Capacity development on the petroleum • Technical assistance (TA) on • Streamline the VAT regime. fiscal regime policy (royalty, petroleum international tax leading to changes • Policy notes: inputs for Finance Bill 2020 profits tax, production sharing and state in regulations and documentation. and 2021. participation). (OECD) Tax Policy • State-level benchmarking of property tax • Assessment of policy and legislative regimes. reform proposals for the Petroleum Fiscal Bill. • Incentivize state-level internally generated revenue: support the approval and • Training on petrol fiscal analysis and publication of a consolidated state revenue modeling. code. • Ad hoc support provided in response to specific policy questions between mission visits. • Countering base erosion and profit • TA for transfer pricing, BEPS. (OECD) • Guidelines on introducing thin International Tax shifting. • TA for transparency and exchange of capitalization rules. information. (OECD) • Capacity development for tax cooperation • Working with ATAF to provide transfer on transfer pricing. pricing audit support. (OECD/UN) • Strategic planning, project management • Report on improved control methods Customs Administration and key performance indicators. and risk-based management model for • Core processes to streamline and secure customs administration. import and transit operations. • Review of customs tariffs from the • Post-clearance audit. perspective of regional trade integration. • Risk management and control of international trade. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 41 B. Pakistan Country Case Study A matrix of the PCT Partners’ tax-related activities in Pakistan is in Table 5 below. Coordination in Capacity Development Activities Leveraging Complementarities The PCT Partners coordinate with each other and with other development partners during the design phase of projects. Where efforts bear some thematic similarity, teams learn The Partners seek each other’s input on interventions to what other institutions are doing to keep a clear division of benefit from the expertise and reinforce synergies by keeping labor. In the area of tax administration, the IMF team focuses each other apprised of upcoming activities. Through frequent on compliance risk management while the WBG team focuses check-ins, the Partners ensure a clear division of labor and on improving the outcomes from tax audits. The WBG sought conduct their work without close coordination on day-to-day the support of the ADB on defining the scope of the Automated activities. Entry-Exit System (AEES) activities because of the notable modernization interventions that the ADB was already The IMF and WBG have high levels of information exchange undertaking at land-border posts. In the tax policy area, with each other in Pakistan, led by country teams, and providers of capacity development support have worked in supported by Pakistan’s Tax Administration. The WBG sought related but different areas. On some emerging issues, such as the IMF’s input on the technical design and structure of their the establishment of a tax policy unit, further coordination is major reform program. The IMF has regular email exchanges needed to ensure the Partners’ advice is aligned. and meetings with the WBG to discuss aspects of both teams’ reform agendas. Steps to Improve Future Collaboration The OECD has held meetings with the WBG team, both in Pakistan The PCT Partners’ teams in Pakistan all expressed their and at headquarters, to understand each organization’s support for further collaboration in the future. The OECD value-add, as well as to inform sequencing of activities. The supports the coordination with other organizations in OECD specializes in international tax. Its activities include an sequencing reforms to maximize effectiveness but also induction program that provided Pakistan with guidance to suggests simplifying administrative procedures to facilitate implement the minimum standards and set up the normative the co-funding of activities. The IMF appreciated the synergies and institutions to fight against BEPS, a capacity-building that can be achieved by working together and suggested program of the Global Forum on Transparency and Exchange that coordination is already ideal and cooperation could be of Information for Tax Purposes, which was designed in close improved. The WBG supported the value of good coordination collaboration with the United Kingdom (UK), to support and has held the first of regular meetings for effective Pakistan on transparency and exchange of information, and coordination and information exchange. In attendance were a tax audit and tax crimes investigation support program with the IMF, OECD, and WBG, as well as the Asian Development the UNDP on its TWIB program. Bank, Tax Inspectors Without Borders (OECD and UNDP), UK (FCDO and Her Majesty’s Revenue and Customs), and World The Asian Development Bank (ADB) is leading a Tax Health Organization. Administration Diagnostic Assessment (TADAT), with the participation of the IMF, the WBG, and the Foreign and Commonwealth & Development Office (FCDO), UK. PL ATFORM FOR COLL ABORATION ON TAX T H E P L AT FO R M FO R C O L L ABO R AT I O N O N TAX P C T P RO GR ES S R E P O RT 2 0 2 1 42 TABLE 5: Matrix of Tax Activities in Pakistan by the PCT Partners THEME IMF OECD / UN WBG • Assisting the FBR in implementing • Broadening the tax base and facilitating aspects of its tax administration compliance. reform program. • Strategic planning. • Helping to implement a compliance • Risk-based audit. risk management framework. • Business processes reengineering Tax Administration • Providing advice and assistance on [subnational]. key domestic revenue mobilization • Assisting the Sindh Revenue Board focus areas. (SRB) in implementing its Tax Revenue • Provide advice on international best Mobilization Plan. practices to address issues that will • Improving automation. be raised in the TADAT assessment. • Implementing a new data center. • Increase the tax base. • Publication of quarterly reports. • Improving human resources. • Reducing and improving sales tax, PIT and CIT incentives. Tax Policy • Restructure PIT for better efficiency, equity and revenue collection. • Capacity development to inform the tax policy reform package. • Support Pakistan on transparency and exchange of information, in particular on automatic exchange. (OECD) International Tax • Guidance on minimum standards to fight against BEPS. (OECD) • TIWB program for improving tax audit capacity. (OECD/UN) • TIWB program on criminal investigation. (OECD/UN) • Post-clearance audit. Customs Admin PL ATFORM FOR COLL ABORATION ON TAX