PHOTO CREDITS: The East African

By

Anthony Kitimo

Africa has been selected to pilot a United Nations-funded project to reduce illicit financial flows. The pilot by the United Nation Conference on Trade and Development (UNCTAD) and the United Nations Office on Drugs and Crime (UNODC) support the project, which is aimed at helping the region achieve the Sustainable Development Goals (SDGs) in the next decade.

UNCTAD and UNODC said the framework, adopted this week, was arrived at through collaborations with international organisations and national tax, Customs and statistics experts.

The framework identifies four main types of activities that can generate IFFs — illicit tax and commercial activities, illegal markets, corruption and financing of crime and terrorism.

The measures will also be extended to Asia and the Pacific from next year, as part of a global war against IFFs to promote peace, justice and strong institutions, as reflected in target 16.4 of the SDGs. According to UNCTAD’s Economic Development in Africa Report 2020, stopping illicit capital flight would cut in half the annual financing gap of $200 billion with an estimated $88.6 billion reported to leave the continent illegally.

PHOTO CREDITS: Nairobi Law Monthly

By

Everlyn Muendo and Leonard Wanyama

The recent nullification of Double Taxation Agreements (DTAs) by several African governments has been a ground-breaking moment in tax justice advocacy, revenue debates and pursuits of economic justice in general.

DTAs are pacts which divide taxing rights between two or more states on cross border income and are sometimes interchangeably referred to as Double Taxation Treaties (DTTs).

Kenya, Senegal and Zambia each cancelled their respective DTAs with Mauritius. This was based on the realization that in one way or another their state interests were infringed upon by how their respective agreements took away their taxing rights.

By

Gerald Byarugaba

What is Oxfam and what does it do in the Horn and East African region? Why is it important to highlight the impact of the organisation’s focus on the extractive industry.

Oxfam is a global movement of people, working together to end the injustice of poverty. Through our work and with our
partners, we aim to find practical, innovative ways which would help end poverty in the communities we work in.

Our over 50 years’ experience working in the Horn, East, and Central Africa (HECA) region has enabled us build strong partnerships and relationships with local and national organisations and earn the trust of governments and the people we work with. We currently work in Burundi, DR Congo, Ethiopia, Kenya, Rwanda, South Sudan, Somalia, Sudan, Tanzania, and Uganda.

In the extractives industry, we work to promote Natural Resource Justice, by ensuring that citizens and governments in countries rich in oil, gas and minerals get a fair share of revenues from their resources and invest in areas that have greater capacity to reduce poverty and inequality such as health and education. That includes promoting meaningful participation of citizens in decision making and ensuring the respect for rights of communities affected by extractive projects and protection of the environment.

The State of Tax Justice 2020, a first-of-its-kind annual report by the Tax Justice Network, reveals for how much tax each country in the world loses to international corporate tax abuse and private tax evasion. While there have been estimates in the past about the tax lost globally to tax abuse, it has been difficult to determine how much each country loses individually – until now.

After nearly two decades of campaigning by the Tax Justice Network, the OECD (an intergovernmental body of rich countries and a leading rules-setter on international tax) finally released game-changing transparency data in July 2020 on multinational corporations’ financial affairs, making it possible to estimate each country’s tax losses with unprecedented accuracy by analysing the new data.

The State of Tax Justice 2020 also provides an annual snapshot of countries’ rankings on the Tax Justice Network’s Corporate Tax Haven Index and Financial Secrecy Index and their vulnerability to illicit financial flows as tracked by the Tax Justice Network’s vulnerability tracker.

PHOTO CREDITS: Reuters

By

Tom Bergin and Ron Bousso

(Reuters) – Bermuda and the Bahamas aren’t exactly big players in the oil-and-gas world. They don’t produce any of the fuels at all. Yet the islands are deep wells of profit for European oil giant Royal Dutch Shell Plc.

In 2018 and 2019, Shell earned more than $2.7 billion – about 7% of its total income in those years – tax-free by reporting profits in companies located in Bermuda and the Bahamas that employed just 39 people and generated the bulk of their revenue from other Shell entities, company filings show.

If the oil-and-gas major had booked the profits through its headquarters in the Netherlands, it could have faced a tax bill of about $700 million based on the Dutch corporate tax rate of 25%. The bill would have been much steeper if the income were reported in oil-producing countries – some of which levy rates exceeding 80%.ADVERTISEMENT

Shell and other oil majors are avoiding hundreds of millions of dollars in taxes in countries where they drill by shifting profits to thinly staffed insurance and finance affiliates based in tax havens, according to a Reuters review of corporate filings and rating agency reports. Shell, BP Plc, Chevron and Total use subsidiaries in the Bahamas, Switzerland, Bermuda, the UK Channel Islands and Ireland to provide their global operations with banking, insurance and oil-trading services, the documents show. These subsidiaries, in turn, book profits that go lightly taxed or entirely tax-free.

Such arrangements are not illegal. But they highlight the ability of international oil corporations to game global tax systems and avoid handing over revenue to nations where they conduct their core business, according to academics who study corporate taxation.

The profits generated by those offshore units are enormous, despite their tiny operations. BP’s so-called captive insurer – meaning it serves only other BP entities – had $6.5 billion in cash on hand at the end of 2018 after years of robust annual profits, according to insurance rating agency AM Best Co. The insurer, Jupiter Insurance Ltd, has accounted for as much as 14% of BP’s global annual profits in recent years, according to AM Best figures and BP’s financial statements. Jupiter has six directors but no employees; BP outsources insurance administration to a brokerage located in Guernsey, a tax haven in the UK Channel Islands.

Located about 75 miles south of the British coastline, Guernsey is not part of the UK but is a British crown dependency and sets its own tax rates. It charges no tax on corporate profits derived from revenues generated outside the island.

PHOTO CREDITS: Courtesy Daily Nation

By

Edwin Okoth

Kenya is losing up to Sh62 billion every year in taxes as companies and individuals use tax loopholes to avoid paying their pound of flesh.

International corporate tax abuse and private tax evasion is bleeding the country close to half its health budget an amount it can use to pay more than 250,000 nurses for a whole year according to the Tax Justice Network.

The November report says the country ranks poorly in managing financial secrecy, affording evaders an opportunity to get away with money that can be put into better use.

The country was ranked seven in Africa for providing conducive ground for tax evasion with its laws and financial systems being programmed to abet global corporate tax abuse and financial secrecy.

The loophole seems to be working against the East African economic giant that now loses more than what Uganda, Tanzania, Rwanda and Ghana bleed combined.

TJN chief executive Alex Cobman said such systems that allow for massive tax losses are not broken by mistake but programmed to work in the same manner.

“Under pressure from corporate giants and tax haven powers like the Netherlands and the UK’s network, our governments have programmed the global tax system to prioritise the desires of the wealthiest corporations and individuals over the needs of everybody else,” Mr Cobman said.

Why is there a lack of parliamentary participation in African double taxation agreements?

By

Everlyn Muendo and Leonard Wanyama

The recent nullification of Double Taxation Agreements (DTAs) by several African governments has been a ground-breaking moment in tax justice advocacy, revenue debates and pursuits of economic justice in general.

DTAs are pacts which divide taxing rights between two or more states on cross border income and are sometimes interchangeably referred to as Double Taxation Treaties (DTTs).

Kenya, Senegal and Zambia each cancelled their respective DTAs with Mauritius. This was based on the realisation that in one way or another their state interests were infringed upon by how their respective agreements took away their taxing rights.

This undermined public finance management (PFM) principles, affected domestic resource mobilisation (DRM) capabilities and enabled the facilitation of increased illicit financial flows (IFFs).

For instance, in Senegal the government lost up to USD 8.8 billion due to tax avoidance by major mining companies such as Grande Corte Operations and SNC Lavalin. This was possible thanks to the two entities setting up shell companies in Mauritius in order to take advantage of loopholes in the Senegal-Mauritius DTA.

Such progressive steps by governments have been lauded as a step in the right direction. However, even while these actions are celebrated, the lack of legislative involvement in the policy process of formulating DTAs in the respective countries and beyond is noted as a worrying trend.

This is deeply concerning because parliament is the representation arm of government comprising directly elected officials, primarily vested with the power of the people in protecting public interests.

It is therefore wrong to not include them in such important procedures of formulating DTAs. Why then are parliaments marginalized from these processes and how is this exclusion from treaty making taking place?

A game of synonyms -The Danger of DTAs not being qualified as ‘Treaties’

In order to understand what is limiting parliamentary participation in treaty making, it is important to know how DTAs are defined. According to the Vienna Convention on the Law of Treaties (VCLT), a treaty is an:

 ‘’international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.’’

This definition is considered as the standard governing best practices in relation to binding international treaties. Obviously, DTAs are treaties if one simply bears in mind that they are agreements between two or more states, are in written form, and are governed by international law.

This understanding has been adopted verbatim in the laws of Kenya and Zambia, specifically those guiding processes of treaty formulation. However, both countries have added a qualifier to this definition as to why bilateral agreements should not be considered treaties. This creates a game of synonyms that makes an unclear discrepancy in the law.

For instance, in the Kenyan case, bilateral agreements do not qualify as treaties because they are pacts between two states that are mainly concerned with administrative matters. This is as opposed to treaties which are pacts on issues of higher significance such as sovereignty or human rights.

This distinction is mischievous because it goes against international best practice. Logically, any international commitment requires accompanying technical directions that help in achieving its consequential aims.

Separating the meaning of agreements from treaties is an attempt to frustrate dispute resolution processes in which the VCLT definition is always used with regards to the interpretation of rules regarding the implementation of international treaties. 

Essentially, the rule of thumb as per VCLT, requires reference to the context (legal or otherwise) of the treaty in question to gain the true (negative or positive) impact of a DTA. This is in order to determine the managerial instructions of implementation based on provisions within it.

In further examining the interpretation of DTAs this means authorities need to refer to available models and their respective commentaries. This will often be done through utilising either the Organisation for Economic Co-operation and Development (OECD) model, the United Nations (UN) model or the African Tax Administration Forum (ATAF) model.

Besides general concerns in relation to double taxation, the UN model is designed to include broader considerations from developing nations. Meanwhile the ATAF model is more specific in taking up the concerns of African countries in order to offer more favourable interpretations for their use.

This is supposed to ease the process of interpreting technical issues by domestic authorities. In the Kenya- Mauritius DTA case, this would have been a useful approach in determining the petition that challenged the constitutionality of the treaty, and, in addressing substantive issues raised.

Further, this would have made it easier for the court to understand or examine technical issues of the DTA in view of the allegations that the treaty was likely to result in significant revenue leakages for Kenya. Ultimately, in making this distinction between treaties and agreements, this game of synonyms is dangerous because it limits the interpretation or technical understanding of content within DTAs.

It is also detrimental because it could result in future court or tribunal decisions that may effectively reduce the taxation rights of the government, thereby resulting in lost revenues and the institutionalisation of tax injustice or inequality.

Lastly, by failing to consider DTAs as treaties and thereby acknowledging whether they are full legal instruments or subsidiary legislation, such interpretations weaken parliamentary participation or procedures in DTA treaty making.

Legal Practice that Weakens Parliamentary Participation

Surprisingly, parliaments pass the very laws that weaken their participation in DTA policy formulation processes. This is especially the case in relation to treaty making laws.

In the East African Community (EAC), these include Kenya’s Treaty Making and Ratification Act of 2012 as well as Uganda’s Ratification of Treaties Act of 1998. Meanwhile Zambia’s Ratification of International Agreements Act of 2016 can be cited as another problematic law.

These laws establish the process of how governments enter into any agreements with other states and they also play an important role of indicating the means of domesticating these international treaties through the process of ratification.

Ratification enables international agreements to have the force of law within a country because it shows the willingness of a government to be bound by a treaty. Such official endorsement is normally achieved through the approval of either the cabinet, parliament and or a combination of these two state organs.

In Kenya and Zambia, the law requires that the Cabinet approves a treaty after which it is passed on to the parliament for consideration then ratification.

After attaining this legislative consent, an instrument of ratification is made and deposited with a relevant international authority or state. A copy of this is then sent to the Registrar of Treaties and included in the list of official agreements the country subscribes to.

This required procedure shows a clear process for parliamentary participation in treaty making. It is necessary so that legislators can effectively protect public interest and, as in the Kenyan context, specifically ensure that these treaties do not conflict with the Constitution. Yet in many African countries, DTAs are not being subjected to this standard of legislative scrutiny.

This is because the additional clarification in treaty making laws, distinguishing DTAs as bilateral agreements, legally lowers their hierarchical significance thereby reducing their parliamentary relevance.

Basically, the game of synonyms weakens the legislative role at a crucial stage of oversighting the domestication of international obligations because ratification of DTAs is not viewed as a significant issue in the massive schedule of parliamentary business. 

While the Executive, through the agency of Cabinet, can enter into bilateral agreements on behalf of the people of Kenya, parliament remains supreme in determining affairs in relation to PFM especially because matters of taxation and other resources are a question of national sovereignty.

Executive Overreach through Statutory Instruments

Unfortunately, in both the Kenyan and Zambian context the executive can enter DTAs through extensive powers given to it by income tax legislation. This widespread influence amounts to overreach since the agreements are then not subjected to effective public scrutiny from parliament as all treaties should.  

Moreover, practice shows that when the executive arm enters DTAs they are subsequently relegated to subsidiary legislation, that is, laws made by a body other than the parliament. This happens because parliament uses statutory instruments to delegate such authority to institutions of government like ministries, departments or agencies and their respective high ranking decision making officers.

According to the Parliament of Kenya, The National Assembly Fact Sheet No.21 on Statutory Instruments this form of delegated authority can be described as:

Any rule, order, regulation, direction, form, tariff of costs or fees, letters patent, commission, warrant, proclamation, by-law, resolution, guideline or other statutory instrument issued, made or established in execution of a power conferred by or under an Act of Parliament under which, that statutory instrument or subsidiary legislation is expressly authorized to be issued.

Generally, it is therefore expected that once these powers are granted and implemented within stipulations of the law then there would be no need for extensive parliamentary input. Therefore, DTAs get less scrutiny as subsidiary legislation through their description of being ‘simple’ agreements.

Regrettably, the reality of subsidiary legislation is that government bodies or officers who are delegated authority through statutory instruments tend to overreach and claim powers they do not possess or outrightly abuse them.

This then results in processes that harm the level of public participation and scrutiny required by limiting conformity to the constitution plus subsequent legislation such as the Interpretation and General Provisions Act, the parent law from which delegated authority is drawn, all the way to the Statutory Instrument Act itself.

With exact regard to the Statutory Instrument Act, this procedural sidestep undermines its standards of delegated authority that require consultation with stakeholders, preparation of regulatory impact statements and explanatory memorandum, plus tabling of issues in parliament; especially on issues that have revenue implications.

This means that by failing to consider DTAs as treaties, they are -by technical means- driven to a lower legislative hierarchy, where due to poor practise tax issues are subjected to subordinate examination by parliament thereby dangerously limiting the rights of government to collect the required resources that help in the provision of public goods and services.

Need for Parliamentary Action in the Fight for Tax Justice

Such failures essentially derail the fiscal sovereignty of states by not properly exercising taxing rights. DRM efforts are then undermined resulting in wider development ramifications on the socio-economic needs of citizens due to lowered taxation that affects revenue allocation and expenditure capacity.

African parliaments need to take up a stronger role as far as DTA matters are concerned. This can be done in two ways. First, is by utilising their powers as captured in ratification laws to change treaty formulation processes.  

Treaty making laws need to reflect that DTAs are a serious issue of fiscal sovereignty for the state because they are fundamentally obligatory treaties like any other and are therefore not a lower form of legal designation.

Secondly, African parliaments need to increase their oversight on the affairs of Cabinet and any other body involved in the formulation of DTAs. For instance, this could be through insisting on public availability of revenue data used for executive decision making in entering DTAs. Such an examination can become a means of further scrutinizing various legislations that suspend any aspect of income tax law. The authors of this article work for EATGN. Contact Email: info@eataxgovernance.net

(PHOTO CREDITS: Courtesy TJAU)

In the July-September 2020 edition, we bring you some of the key milestones that have been made by the Local Government Finance Commission (LGFC) in local revenue mobilization. Among other objectives, the LGFC was created to advise the president on all matters concerning the distribution of revenue between the Government and local Governments and the allocation to each local Government of money out of the consolidated fund.

The issue also presents some of the TJAU partners at the sub-national level from Teso, Central and West Nile regions sharing their experiences. These partners have been able to contribute greatly to advocacy work within their respective communities.

Below are some of the key stories presented in this newsletter;
• A Local Government Finance Commission (LGFC) Perspective on Local Revenue Mobilization in Uganda
• Residents of Asuret Sub-County actively monitor delivery of public services in their Community
• Asuret Sub County realizes lower revenues in the wake of COVID-19.
• Koboko community residents devise measures to improve local revenue
mobilisation in the district
• Weaker service delivery in Kyere Sub County owing to creation of new
administrative units
• Kalamba Community Development Organization engages Local Government officials from Mpigi – Butambala District on Local Revenue Mobilization.

(PHOTO CREDITS: Courtesy Citizen Tv)

By

Tom Odhiambo

There is no doubt that the global economy is in recession. In many parts of the world businesses have ground to a halt. The production of goods has slowed down. The services sector is probably worse off than the manufacturing sector. Goods and services often go together.

Bread, milk and tea in a hotel means that a cook, a waiter, a cashier, a cleaner and the supply chain to bring the three commodities to the hotel as well as the transport sector to ferry the workers are financially oiled.

In the short run, millions of workers have lost jobs and livelihoods. In Kenya, the latest government figures only go back to June when it was reported that about 1.7 million Kenyans had lost their jobs from March to mid the year. What will happen in the long run as the recession cuts across the economy is anyone’s guess.

This is why news that the government plans to introduce a 1% tax burden on employed Kenyans is not good news. The proposed taxation is aimed at creating an unemployment insurance fund (UIF), which would be used to offer short term relief to individuals who lose their jobs in times such as these.

The government proposes that the workers will be deducted 1% of their income, with the employer marching it with another 1%.

In the end the employee will pay 2% of her income, considering that most employers will simply pass on the 1% tax onto the employee through a range of mechanisms – lower salary, less benefits, layoffs etc.

Although the idea is sensible, the timing is plain wrong. These are times when business have shut down, or are working at half their capacity, or have laid off staff, or have halved their staff pay, among other measures.

Businesses are strained because they aren’t making money and will naturally struggle to pay taxes. The tax burden for most businesses and individuals has risen significantly.

Working Kenyans generally support a whole set of dependants. There are immediate relatives, then distant kin, friends, colleagues, among others. This is one of those ‘hidden’ expenses that make the life of an ordinary working Kenyan economically nightmarish.

Considering that there is always little chance of one having more than one job – despite the popular claims of a ‘side hustle’ – many Kenyans relying on wages tend to live hand-to-mouth. It is a daily struggle to make ends meet.

In many cases the pay doesn’t meet the basic needs of many a family. Can such individuals afford another tax when they are already overburdened by taxes, formal and informal?

Would employers willingly pay such tax and not retrench more workers? Where did the government get such an idea at such a time? And why are Kenyans not so concerned about the proposal?

It is important to question the value of this suggested tax because the conditions under which it is likely to be introduced aren’t just right. There is need to debate the proposal because no one today knows for sure for how long COVID-19 is going to be around and to continue affecting businesses.

Is this suggestion for the long run or is this some short term measure that will be ended as soon as it is clear that we can operate ‘normally’?

How do the working Kenyans who will contribute to the fund ensure that this is not another milk cow for the politically connected or a source of income for supporters of particular government functionaries? In what specific ways will a retired contributor benefit?

Not many would oppose a fund that cushions those who lose their jobs in moments such as these. For technological and business changes these days no longer guarantee employees the old from cradle to grave.

Very few jobs offer the opportunity to work for one’s entire productive years. And even where one can work till retirement, there is always the worry about retirement.

In fact, too many governments are struggling with their pensions – there aren’t just enough people working to support retirees, or, pension funds can’t find productive and secure investment opportunities.

This means that workers are increasingly being expected to save for their time away from the workplace.

In such circumstance every shilling counts. Every little saving by a Kenyan worker will surely cover them for a rainy day. In this country, where retired Kenyans always have to fight to receive their pension, any money that they can save whilst working – and possibly invest – is worth keeping.

Apart from saving whatever little money they earn or have; many Kenyans don’t live far from pecuniary embarrassment. For some of them, the end of the month – when they receive their pay – can be a difficult period as creditors come calling yet they cannot pay off all their debts.

How do you convince such an economically struggling person to pay more taxes?

The writer teaches at the University of Nairobi. He can be contacted at: odhiambotom@gmail.com or +254720009155

By

Tom Odhiambo

Title: Tax and Development – A Comparative Study; Editor: Karen B. Brown; Publisher: Springer International Publishing; Date: 2017; Pages: 377

In general discussion taxation is only related to development directly.

Common discourse tends to project the impact of taxation and taxes on development as the resultant financial investment, in goods and services, that impact the quality of human life.

In other words, money collected should be seen and felt to have been invested in public goods that people benefit from directly.

Except for the experts. who know the various ways in which taxation directly and indirectly impact development, ordinary citizens would be lost if asked to explain the different ways in which tax policies or practices determine local development.

Yet, taxation regimes have both a direct and an indirect influence on the development of society(ies). Double taxation denies the taxpayer extra money which could easily have been invested in some business.

Tax holidays for investors (local or foreign) could enable a business save money and reinvest in machinery or business plants. Specific tax exemptions may allow individuals or businesses to save and use the money to expand the business or improve the existing one.

Indeed, tax policies within a country, tax agreement between nations, and taxation practices across a region or the world have direct and indirect effect on development, especially in African nations, which are industrializing.

African countries, many with weak economies and even weaker tax regimes, are likely to find themselves disadvantaged in relation to the developed nations.

The developing nations, for instance, enter into trade agreements that compel them to buy goods from the developed countries, which goods are often subsidized, and which consequently disadvantage local manufacturers.

Undoubtedly this is an unfair economic practice. But what would a weaker African partner do when a stronger, industrialized partner dumps goods into their market, which cannot be taxed at the same rate as local goods?

In many instances nothing really. This is why tax justice advocates, non-governmental organizations opposed to harmful tax practices, and organizations such as the United Nations have always sought to debate, encourage and institutionalize fair tax practices internationally.

This is not an easy task, as many of the essays in the book, Taxation and Development: A Comparative Study (2017) show.

In Taxation and Development various authors, drawn from different countries across the world such as Australia, Belgium, Croatia, Israel, South Africa, Uganda, USA and Venezuela, discuss their countries’ experiences and how policies have impacted their development.

The conversations revolve around various internal tax practices such as incentives for taxpayers in a direct tax system; and international tax agreements to reduce the burden of tax for direct foreign investors.

Further issues include local and international laws that can protect those investing abroad against unfair tax practices; taxation policies that would encourage locals to compete with foreign investors; and taxation on cross-border incomes.

Lastly, the book also looks at how to tax investments in tax havens by locals among other topics.

The essays in this book deal with the specificities of each country but within the broader global context since it is no longer tenable to think and act about tax and taxation simply within one’s borders.

What happens across country boarders have a substantial impact, especially because of cross-border movements persons, services, goods, or transfer of funds.

Therefore, a book like Taxation and Development is significant for African countries because they are more disadvantaged than their counterparts in the global north and Asia, yet international trade today puts them in the same basket.

What policies should African countries institute and implement in fostering development within individual nations, regionally and continentally?

Can African countries ever truly benefit from international tax regimes, which are generally largely designed to address the needs of the more developed nations? In other words, can there be fairer tax regimes and practices that can help African countries develop?

The essays in Taxation and Development seem to suggest that there is a way in which each country in the world could benefit from collectively designed taxation policies and practices.

This is the ideal situation. In this case, for example, Kenya can indeed trade fairly with the UK, its major European trade partner, without fear that Kenya’s goods are overtaxed in the UK and that the UK is probably subsidizing its manufacturers who sell in Kenya.

Indeed, the UK could even suggest that in order to reduce the cost of production and transportation, it will invest in a factory in Kenya.

Kenyans will be sold the idea that the factory means transfer of technology, knowledge and skills, and that the locals will buy what is made in Kenya. But would such an idyllic situation happen?

Evidence shows that in situations such as the one described above, there is actually little, if any, transfer of technology and skills.

The industry in question could easily (and often do) underdeclare its profits hence paying less tax, thereby transferring (taxable) income out of the country in the form of payment for services or benefits for its employees and so on.

If Kenya were to get into a dispute with the UK, it would be a net loser as the factory could close, the staff would leave, and the country could be declared hostile or unfair to foreign investors.

This is the paradox of multinationals – very few multinationals would willingly pay the correct taxes in the countries where they are located.

Thus, although the wish to have a fairer international tax system is fine, it is nearly impossible to convince countries to wholly sign up to treaties that would force them to implement tax regimes that they may find, from time to time, constraining.

Each country tries as much as it can to raise taxes to pay for its needs.

Therefore, even though a country may share information on taxation; provide tax incentives for foreign and local investors; sign up to bilateral and multilateral investment agreements; institute anti-tax haven provisions, among other measures, each country’s needs will always determine how willing and often it will subscribe to such international policies or practices.

In other words, realism trumps idealism where taxes and taxation are concerned.

Every country in the world wishes for a better life for its citizens. This may be expressed in its policies on development. But progress always has a cost, which can never be paid for by foreign investment or foreign aid or benign foreign tax policies.

Taxation and Development shows that indeed there are taxation policies and practices that can enable progress and enable people to live a decent life across the world. Many countries have developed by establishing such practices.

But the realities of globalization and financialization of economies mean that many countries will always be struggling to keep up with innovations in doing business, which means that taxation increasingly becomes complicated.

Also, for selfish reasons, just like businesses undercut each other, countries will always strive to make themselves attractive to investors and businesses by offering tax incentives that would undoubtedly undermine international agreements.

It is often very difficult to challenge such actions, for the politicians and bureaucrats in charge will counter-argue that they are doing what best serves the interests of their citizens.

In the end, therefore, what Taxation and Development seeks to provoke is a continuing debate on how to create conditions that would enable fair global taxation regimes and practices that may help each country to develop according to its ability and offer humanity decent life.

Tom Odhiambo teaches at the University of Nairobi. He can be reached at: tom.odhiambo@uonbi.ac.ke or +254720009155