The use of tax treaties by developing countries is controversial, to say the least. Best case scenario? Tax treaties help to attract foreign direct investment by reducing the risk of double taxation. Evidence for this is weak. Worst case scenario? They become a vehicle for multinational tax avoidance leading to huge revenue losses for developing countries.
Despite the uncertain benefits and widely recognised risks, developing countries continue to sign tax treaties. In such cases, an understanding of good treaty practice – how countries in a similar position have negotiated, reviewed, or modified their treaties to better protect their tax base – can help lay the foundations for fairer and more sustainable tax treaties.
The new Tax Treaties Explorer website (www.treaties.tax) provides a means to compare and contrast tax treaties in ways that complement analysis of the legal wording. It is based on a new dataset of almost every treaty signed by developing economies. For non-specialist policymakers and others with a stake in tax policy, this is an accessible entry point to understand treaties in comparative context.
This event, jointly hosted by the ICTD and the Global Tax Program of the World Bank, will introduce the Tax Treaties Explorer and demonstrate how it can be used by practitioners and researchers. It will feature a brief presentation of the Toolkit on Tax Treaty Negotiations from the Platform for Collaboration on Tax, as well as presentations of three research projects that use the Explorer data:
Tax Treaties and Foreign Direct Investment Flows: A Replication Study by Martin Hearson, Marco Carreras, and Anna Custers
Tax Treaty Aggressiveness: Who is Undermining Taxing Rights in Africa? by Markus Meinzer, Maimouna Diakité, Lucas Millán Narotzky, and Mirsolav Palansky
Taxing Profits from International Transport in Africa: Past, Present and Future of Article 8 (Alternative B) of the UN Model by Tatiana Falcão and Bob Michel