This video introduces the concept of base erosion and profit shifting and showcases how ADB's Office of Anticorruption and Integrity promotes international tax transparency and domestic resource mobilization. Increased international tax cooperation within Asia and the Pacific is critical to fight tax evasion and promote coordinated and effective responses to international tax challenges, including the taxation of the digitalized economy, while preventing unilateral measures that can create obstacles for foreign investments and trade. Through a regional technical assistance program on enhancing tax transparency, ADB supports the efforts of its developing member countries in implementing and effectively benefiting from the international tax integrity principles. To learn more about this initiative, visit https://www.adb.org/projects/51320-001/main.

Transcript

Imagine a world

with enough food for every man, woman, and child.

Where hospitals serve all who are sick.

And schools are open to all who want to learn.

That world is possible.

To meet Sustainable Development Goals,

developing countries must raise their tax revenue

with 15% of gross domestic product

widely regarded as the minimum.

Getting there requires a fair and efficient tax system

that reduces inequality,

removes loopholes and non-compliance opportunities,

and is implemented by a strong tax administration.

International tax cooperation helps countries raise tax revenue,

fight tax evasion, and curb tax avoidance.

Since 1980, over 16 trillion U.S. dollars have been lost

in developing countries due to tax leakages

and billions more are lost each year.

That’s almost a hundred times the amount needed

to end extreme poverty. 

When covert and complex arrangements divert taxable income

from the country of origin,

when tax cheats use opaque offshore structures

to keep their investments concealed,

when individuals use bank secrecy to avoid or evade tax,

it is the poorer nations who bear the brunt.

Aggressive international tax planning is also referred to as

Base Erosion and Profit Shifting (BEPS).

Until a few years ago, many countries allowed

secret bank accounts and shell entities,

refusing to share information with other governments.

But the tide is turning.

World leaders have been working to put tax transparency

and fairness at the center of their tax reforms.

The G20 and Organization for Economic Cooperation

and Development BEPS Initiative,

aim to help address gaps in the international tax system

while maintaining tax sovereignty of implementing countries.

Under the Global Forum on Transparency

and Exchange of Information for Tax Purposes,

most countries have agreed to

Lift bank secrecy for tax purposes,

Share tax information with other governments,

And make financial transactions transparent.

The Asian Development Bank supports its

developing member countries

in strengthening their tax administration capacities and systems. 

ADB provides technical assistance

based on countries’ needs and demands,

and assists them in creating policy reforms

to improve tax fairness and transparency. 

ADB promotes international tax cooperation.

It encourages its developing member countries

to participate in OECD and G20 initiatives

such as the Global Forum and the BEPS Inclusive Framework

to equip countries with tools against legal

but aggressive tax planning

and to develop tax policies that support regional,

sustainable, and inclusive growth.

These efforts make it difficult for tax evaders 

to set up offshore tax companies and trusts.

With better systems and international tax cooperation,

hiding assets and ownership from tax authorities

is harder to do and easier to detect. 

These significant changes take effort to pull off,

but the returns are many and long term.

Improving transparency and fairness in the tax system

helps restore trust in government. 

Recovering billions of tax dollars increases domestic resources

for infrastructure and social services.   

Strengthening domestic resource mobilization is key

to achieving Sustainable Development Goals.

With better tax transparency and international tax cooperation,

Asia and the Pacific will be prosperous,

inclusive, resilient, and sustainable.

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