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· Explains how patterns of investment are often influenced by tax, with about 30% of global investment routed through offshore investment hubs before reaching its destination as productive assets.
· Shows how an additional 10% of investment routed through offshore hubs is associated with a 1 percentage point lower reported (taxable) rate of return on investment.
· Calculates tax revenue losses for developing countries associated with offshore investment links at about $100 billion.
The chapter stresses the joint policy
imperative to take action against tax avoidance to support domestic resource
mobilization and to continue to facilitate productive investment for sustainable
development. It provides an investment perspective on international tax
avoidance, leading to new insights on the links between investment and
tax policies and resulting in a set of guiding principles for Coherent
International Tax and Investment Policies.
Synergistic international tax and investment policymaking should aim to:
· Remove aggressive tax planning opportunities
as investment promotion levers.
· Consider the potential impact on investment of anti-avoidance measures.
· Take a partnership approach to tackling tax avoidance in recognition of shared responsibilities between host, home and conduit countries.
· Manage the interaction between international investment and tax agreements.
· Strengthen the role of both investment and fiscal revenues in sustainable development.
A further key recommendation of the Report is to enhance capacities in developing countries for the promotion and facilitation of investment and for addressing international tax avoidance issues. As such it connects directly with the work of the G20 Development Working Group on Domestic Resource Mobilization and its Call to Action for Strengthening Tax Capacity in Developing Countries. In its future deliberations the DWG may wish to consider the close links between international tax and investment policymaking.
With kind regards,
James Zhan
Director, Investment and Enterprise
Team leader, World Investment Report
UNCTAD
Palais des Nations, Geneva
Tel: +41
22 917 5797
www.unctad.org/diae
www.unctad.org/wir
(World Investment Reports)
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