Finland supports developing countries in curbing tax evasion
Finland is committed to supporting developing countries' tax capacity. Finland will, for example, help them benefit from the new Agreement on Automatic Exchange of Financial Account Information. The specific objectives are expressed in Finland's Tax and Development Programme for 2016–2019, which was published recently.
"A growing emphasis in our development policy is on efforts to get the economic development on track, but at the same time we must support tax administrations to succeed in their work. At present, low tax revenues hamper efforts to build fairer societies," says Minister for Foreign Trade and Development Kai Mykkänen.
The poorest developing countries collect under 50% of the OECD average as taxes in relation to their gross domestic product (GDP). The Government Action Programme to Combat International Tax Avoidance addresses this problem in three ways.
"Firstly, it is important to strengthen the legitimacy of taxation among people and companies in developing countries. A functioning system is based on high tax morale. At the same time we continue to play an active role in efforts to establish international tax rules and implement them. As a more immediate measure, we strengthen developing countries' taxation capacity by making Finnish tax experts available to provide knowledge and skills for local tax inspectors," says Mykkänen.
Finland is committed to doubling its support, by 2020, for strengthening of developing countries' taxation capacity. The Action Programme puts together the objectives that Finland promotes.
"Fostering democracy and anti-corruption work are essential in improving taxation in developing countries. A good example of important work is awareness-raising among citizens, parliamentarians and journalists to help them understand taxation issues," Kai Mykkänen says.
The reform of international tax rules was further accelerated by the release of the Panama Papers last spring. Reforming global tax rules is significant for developing countries, because tax evasion and avoidance prevent them from strengthening their tax bases and developing their public services.
"If developing countries collected one per cent more taxes in relation to the GDP, the revenue would equal the entire volume of international development assistance," Mykkänen notes.