The TA will strengthen the capacity of tax authorities in target countries to collect tax by (i) broadening and protecting domestic tax base by implementing the BEPS report recommendations, (ii) improving domestic tax compliance through efficient and transparent tax administration, enhanced exchange of information, and improved risk management practices; and (iii) improving tools and procedures to stem both cross-border and domestic tax evasion and avoidance.
|Project Name||Strengthening Tax Policy and Administration Capacity to Mobilize Domestic Resources|
|Project Type / Modality of Assistance||Technical Assistance
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Governance and capacity development
|Sector / Subsector||
Public sector management / Public administration
|Gender Equity and Mainstreaming||No gender elements|
|Description||The TA will strengthen the capacity of tax authorities in target countries to collect tax by (i) broadening and protecting domestic tax base by implementing the BEPS report recommendations, (ii) improving domestic tax compliance through efficient and transparent tax administration, enhanced exchange of information, and improved risk management practices; and (iii) improving tools and procedures to stem both cross-border and domestic tax evasion and avoidance.|
|Project Rationale and Linkage to Country/Regional Strategy||
Strengthening the domestic revenue structure is indispensable for developing countries to achieve the post-2015 Sustainable Development Goals (SDGs) as it drives development financing. Strengthening domestic resource mobilization, including international support to developing countries in order to improve domestic capacity for tax and other revenue collection, is one target under SDG 17. The Addis Tax Initiative (ATI) stresses the importance of tackling both cross-border and domestic tax evasion and avoidance. The Asian Development Bank (ADB) has engaged with tax authorities in ADB developing member countries (DMCs), through regional conferences, tax policy and administration research and training seminars on tax issues, to identify challenges these authorities face and to enhance the capacity and regional cooperation of tax authorities. This technical assistance (TA) will conduct tax policy and administration research and training courses, designed on the basis of the research and a capacity development needs assessment to enhance the capacity and regional cooperation of tax authorities.
Many developing countries seek technical assistance to help boost their tax collection by broadening and protecting domestic tax base, and improving domestic tax compliance, as well as tools and procedures to stem both cross-border and domestic tax evasion and tax avoidance. Strengthening domestic revenue systems is not just a question of raising revenue. It is also about designing a tax system that promotes inclusiveness, encourages good governance, promotes investments and job creation, matches society's views on reducing inequality, and promotes social justice. This is particularly relevant in developing Asia, where a large number of economies have a low tax collection rate, usually below 20% of GDP.
Raising tax revenue poses many challenges for developing countries. Specific challenges that loom especially large in developing countries include weak tax administrations, low taxpayer morale and compliance, corruption, small tax base, and missing reciprocal link between tax and public and social expenditures.
The rapid globalization of financial services, investment, and trade poses new challenges and opportunities in international taxation, and has imposed a significant impact on developing countries' revenue base. The G20 has identified base erosion and profit shifting (BEPS) as a serious risk to tax revenues, sovereignty, and fair tax system worldwide. The Organization for Economic Cooperation and Development (OECD) reported to the G20 Finance Ministers at their meeting on 8 October 2015 in Lima, Peru that there are opportunities in developing countries to raise additional revenues from addressing BEPS issues, and to create a more certain and stable investment climate for business.
For some of the poorest countries, which rely very heavily on tax revenue from Multi-National Enterprises, BEPS has a particularly significant effect on vital tax revenues. The impact of BEPS on developing countries, however, extends beyond revenue. BEPS undermines the credibility of the tax system in the eyes of all taxpayers. If the largest and most high-profile taxpayers are seen to be avoiding their tax liabilities, confidence and effectiveness of the tax system is undermined.
International organizations and national governments worldwide have joined in an unprecedented effort to reduce cross-border tax avoidance and increase transparency. The Global Forum provides tools to enhance international tax cooperation and transparency. As more countries become active in the BEPS programme, and use the standard format for automatic exchange of information, opportunities to protect each country's domestic revenue base and provide finance for development are growing.
|Impact||Sustainable tax revenue for financing of development in support of Addis Tax Initiative increased.|
|Description of Outcome||Capacity of national tax administrations to increase resource mobilization in target DMCs enhanced|
|Progress Toward Outcome||Knowledge and capacity of national tax administrations to increase resource mobilization in target DMCs are being improved through series of technical consultations and regional knowledge sharing workshops.|
|Description of Project Outputs||
Knowledge sharing workshop on developments and country experiences in improving domestic resource mobilization delivered.
In-country consultation delivered and country capacity development needs assessment and recommendation report prepared.
Capacity building activities for tax policy and administration officials, including knowledge sharing jointly delivered with partner organizations, conducted.
|Status of Implementation Progress (Outputs, Activities, and Issues)||
Output 1: The knowledge-sharing workshop on developments and country experiences in improving domestic resource mobilization titled _Strategic Workshop on Strengthening Tax Policy and Administration Capacity to Mobilize Domestic Resources_ was held in collaboration with the Organisation for Economic Co-operation and Development (OECD) at the Asian Development Bank Institute (ADBI) in April 2017. The workshop was very successful and demonstrated the ability of the eight target countries of the RETA to collaborate and shape the program of work for the TA project.
Output 2: The first stage of in-country consultations were held in Cambodia, Thailand, Viet Nam, Philippines and Mongolia in 2017, and hearing from Papua New Guinea, Indonesia and Malaysia were conducted at the workshop. Countries identified a wide range of areas where support was required and prioritized support on taxation of the digital economy and support on exchange of information and Base Erosion and Profit Shifting (BEPS). Other areas include tax policy skills and reform of property taxation (where there is scope for important extra revenues over time); improving skills and strategies in tax audit and investigation (including on VAT) and sharing knowledge on tools and techniques for improving taxpayer services and tax compliance.
Output 3: The training course of "Workshop on the Taxation of the Digital Economy_ was held in collaboration with the OECD at the ADBI in August 2017, and ITC/ATI Tax and Development Conference was held in collaboration with the Addis Tax Initiatives (ATI) secretariat in June 2017. The workshops, conference and consultations were successful in gathering information about the current status of the target countries' tax authorities, understanding the contexts in each country, identifying key issues, building on important contacts with the key personnel and identifying areas where support would be valued as well as providing substantial training on these issues. All countries were keen to benefit from the project and all had prepared well for the meetings with presentations on their current and proposed work programs and targeted requests for assistance.
In October 2018, the TA has been extended until 31 October 2019 and a change in implementation arrangement was done to conduct a range of different training interventions to cover the different functional and process stages in improving tax policy and administration capacity to mobilize domestic revenue resource. The extension of completion date will allow for further mentoring and training work and for the production of a report with specific recommendations on tax policy of domestic resource mobilization. Several countries are keen to develop their tax policies and administrations on property tax. A benchmark study on property taxes covering selected countries in Southeast Asia is on-going jointly with the Domestic Resource Mobilization Trust Fund. This study aims to enhance revenue performance of recurrent property taxes and create a platform for dialogue and knowledge sharing on property tax reform. The final report and workshop will be delivered in Q3 2019.
The extension will also allow a wider range of issues identified to be addressed more fully. The focus on taxation of the digital economy has resulted in the work on tax audit and investigation being deferred and the work on tax policy would also benefit from the proposed extension. The training activities and recommendation report, which were originally scheduled Q3 2018, are rescheduled Q3 2019 to share the outcomes of in-country consultations and operation support during the extension period.
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation|
|Responsible ADB Officer||Suzuki, Yasushi|
|Responsible ADB Department||Sustainable Development and Climate Change Department|
|Responsible ADB Division||SDTC-GOV|
|Concept Clearance||04 Aug 2016|
|Fact Finding||15 Apr 2016 to 31 Aug 2016|
|Approval||16 Nov 2016|
|Last Review Mission||-|
|Last PDS Update||27 Mar 2019|
|Approval||Signing Date||Effectivity Date||Closing|
|16 Nov 2016||-||16 Nov 2016||31 Oct 2018||31 Oct 2019||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|0.00||1,000,000.00||0.00||0.00||0.00||0.00||1,000,000.00||16 Nov 2016||942,584.17|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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|Title||Document Type||Document Date|
|Strengthening Tax Policy and Administration Capacity to Mobilize Domestic Resources: Technical Assistance Completion Report||TA Completion Reports||Mar 2020|
|Strengthening Tax Policy and Administration Capacity to Mobilize Domestic Resources: Technical Assistance Report||Technical Assistance Reports||Nov 2016|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
|Title||Document Type||Document Date|
|A Comparative Analysis of Tax Administration in Asia and the Pacific: 2018 Edition||Reports||Jul 2018|
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