Transnational expertise and the expansion of the international tax regime

Hearson, M, 2018. Transnational expertise and the expansion of the international tax regime: imposing ‘acceptable’ standards. Review of International Political Economy 25(5):647-671.

We are living through a period of instability and change in the international tax regime, perhaps unprecedented in its depth and duration. It’s driven by economic and political changes, such as austerity politics, the digitisation of the economy, and the rise of China and other emerging powers. To understand the impact of these pressures on the institutions of tax cooperation, we need to know how the politics at international level works, and we have two complementary lenses to do so. One focuses on conflicts and alliances between states with different preferences: developed versus developing, offshore versus onshore, US versus Europe, and so on. The other takes a sociological approach, studying the transnational policy community that makes international tax rules and its interactions with other actors such as politicians and campaigners. To explain why the OECD, G20, EU or UN have reached a particular conclusion, we probably need to use both of these lenses.

But how do states arrive at their national positions? Those positions set the parameters for subsequent transnational discussions, but they also determine if and how states will implement international agreements. For example, with whom will they negotiate bilateral tax treaties, and on what terms? The same sociological lens is important here, because national tax policy is made by a community of people, many of whom are also involved in tax standard-setting at the OECD and elsewhere. At both national and international levels, international tax has historically been an obscure topic, the preserve of this small community of experts. Every so often – as in recent years – the community faces a conflict with others who aren’t steeped in the principles underlying the tax system, nor its technical details. Such conflicts can play out at the national level, as well as in the transnational sphere.

In an article published over the Christmas break, I explore this using archival documents that show how the UK formed its policy towards bilateral tax treaty negotiations with developing countries. I reach two important conclusions:

  1. Often it was the UK, rather than its developing country negotiating partner, that initiated and drove forward negotiations. The UK’s aim was to reduce the tax paid by British businesses abroad, making them more competitive in comparison to firms from other countries. So we can’t explain the expansion of the international tax regime into developing countries solely through a focus on developing countries’ actions.
  2. Tax experts, from the Inland Revenue and the business community, dominated policy formulation. They saw tax treaties as a means to lock developing countries into ‘acceptable’ OECD tax standards, a long game designed to protect British businesses from anything unconventional. Meanwhile, their non-expert counterparts in other government departments and businesses had different priorities derived from a focus on short-term tax gains. They were mostly unable to influence policy, however, indicating that business power over tax policy depends a lot on expertise.

I’ve uploaded all my photographs from the archive files that I cited into a zip file (warning: it’s very large: 660 pages and 273MB). Below is a selection to illustrate the argument.

First, Alan Lord, Deputy Chairman of the Board of Inland Revenue, sets out the tax expert view in 1976:

Here is an extract from the minutes of a typical meeting between the Inland Revenue and tax professionals from British businesses. As can be seen, businesses are being consulted not just about which countries to negotiate with, but also about the sticking points in individual negotiations – in this case Malaysia.

Below is one of my favourite exchanges, from a few months later. In contrast to the open attitude to the CBI tax committee, the same Inland Revenue civil servant (Ann McNicol, now Ann Smallwood) refuses to share even a list of current negotiations with other departments.

Extract from a letter from Smallwood, Inland Revenue, to Harris, Foreign and Commonwealth Office, 1973. Click to see the whole document.

Smallwood’s letter provokes a round of very angry memos within those departments, of which this is a good example.

Extract from a memo by Kerr, Foreign and Commonwealth Office, 1973. Click to see the whole document.

A particular bone of contention between the two groups (Inland Revenue and the CBI tax committee on the one hand, Foreign Office, Departments of Trade and Industry, and their business interlocutors on the other) was the stalemate in negotiations with Brazil. In the paper I show how the tax experts in business and the Inland Revenue did not want to set what they saw as a bad precedent by caving in to Brazilian demands to sign a treaty that contravened OECD standards. They came under strong pressure to sign a treaty “at any price” from business lobbyists who thought UK firms were losing out to German and Japanese competitors that did benefit from treaties with Brazil. The consequence, as Smallwood put it in 1975, was that business “spoke with two voices”.

Extract from a memo by Smallwood, Inland Revenue, 1975. Click to see the whole document.

Ultimately, as the absence of a UK-Brazil treaty today underlines, it was the tax experts who won the day. This illustrates that, while businesses have certainly helped shape the design of the international tax regime, the corporate lobby is far from monolithic in its preferences and its ability to influence. A lobbying position stands more chance of success if it is coherent with the underlying design principles of the international tax regime, and articulated by members of the community of tax professionals at its heart. Whether this conclusion still holds in an era of politicisation and rapid change perhaps merits some further investigation…

The European Union’s tax treaties with developing countries: leading by example?

Yesterday a report I wrote for the European United Left/Nordic Green Left (GUE/NGL) group in the European Parliament was published. It was used as input for a hearing of the Parliament’s TAX3 committee, at which Hannah Tranberg from ActionAid, Eric Mensah from the Ghana Revenue Authority and UN Tax Committee, and Sandra Gallina of DG Trade spoke. (This link is to a video of the hearing, which begins with Margaret Hodge and Tove Ryding discussing Brexit, then moves on to the tax treaties discussion at around 16:30).

When the GUE/NGL approached me about working with them on this report, I jumped at the chance. It uses the Tax Treaties Dataset, a project funded by ActionAid and launched in 2016. Earlier this year I had used much of the same analysis in a European Commission workshop for treaty negotiators, and the comparative element certainly caught some of their attention. Just last week I used the dataset at a workshop of African treaty negotiators organised by the Organisation Internationale de la Francophonie, at which it helped them to begin the process of analysing their treaty networks and developing renegotiation strategies.

But the EU is partiuclarly important. Most of the world’s tax treaties – and 40% of those with developing countries – have an EU member as signatory. Combined with its commitment to policy coherence for development, this makes the EU uniquely placed to ‘lead by example’. Indeed, the European Parliament has already called for “Member States to properly ensure the fair treatment of developing countries when negotiating tax treaties, taking into account their particular situation and ensuring a fair distribution of taxation rights between source and residence.”

 

The report has two main messages, from my perspective. The first is that, while the recent attention paid to treaty shopping is most welcome, the basic balance between ‘source’ taxing rights – which allow countries to tax inward investment from the treaty partner – and ‘residence’ taxation in tax treaties with developing countries is also a problem.

The dataset, which includes over 500 tax treaties signed by developing countries, includes a measure how much of a developing country’s source taxing rights each treaty leaves intact. It turns out that EU treaties remove more source taxing rights than average, even when compared with other OECD members.

eu4

 

What’s more, the difference is growing.

eu6

Source/residence has been the elephant in the room in the debate over international tax rules in recent years, as we saw when it was dropped from the BEPS process at an early stage, only to re-emerge in the context of digital taxation. Countries conducting ‘spillover analysis’ or otherwise analysing their treaty networks need to take this into account.

The second message is that there’s a great deal of variety within and between countries’ treaty networks. There’s loads of variation within each EU Member’s treaties, and between the average values for EU members. The same is true when drilling down to individual provisions. So there is plenty of potential to ‘level up’ based on precedent

eu5

The report echoes the European Parliament in arguing that, if the EU wants to be a leader on policy coherence for development, Member States need to level up the source taxing rights across the different provisions of their treaties with developing countries. Simply saying that on balance their treaties are no worse than anyone else’s – a point the report questions when looking at the EU as a whole – is not enough. The four summary recommendations are for Member States to:

  1. Conduct spillover analyses incorporating reviews of their double taxation treaties, based on the principle of policy coherence for development and taking into account guidance from the European Commission and other bodies.
  2. Undertake a rolling plan of renegotiations with a focus on progressively increasing the source taxation rights permitted by EU members’ treaties.
  3. Reconsider their opposition to a stronger UN tax committee, as the Parliament has previously requested.
  4. Formulate and publish an EU Model Tax Convention for Development Policy Coherence, setting out source-based provisions that EU member states are willing to offer to developing countries as a starting point for negotiations, not in return for sacrifices on their part.

“A gathering of international chatterers for the purpose of chattering.” The birth of the OECD’s Committee on Fiscal Affairs.

In my previous post I explored the United Nations’ brief post-war flirtation with a Fiscal Commission, which came stuttering to a halt in 1951 due, it seemed, to the lack of a compelling purpose that might have motivated states to fight to retain it. The United Kingdom had supported a Russian proposal to wind up the UN’s tax work, a position that seems consistent with its subsequent opposition to the creation of what is now the UN Committee of Experts on International Cooperation in Tax Matters two decades later. It’s perhaps more surprising that, as we will see, the British were initially opposed to the creation of a Fiscal Committee at the Organisation for European Economic Cooperation (OEEC), the predecessor of the OECD, as well. Today the UK is a strong supporter of the OECD’s position as the dominant site of international tax cooperation, but it did not start out that way.

We begin, as the League of Nations’ tax work did, with a resolution of the Executive Committee of the International Chambers of Commerce resolution, in 1954. The resolution identified double taxation as a “serious obstacle” to trade and investment in Europe, and for OEEC members to take steps to relieve it. It asked for unilateral measures, bilateral treaties and, ideally, a multilateral convention. The OEEC’s secretary general was sceptical that the organisation could add any value here, especially given that the UN had not at this point formally dissolved its Fiscal Commission.

He also set out another surprising objection to the ICC’s proposal. It is often asserted that the OEEC picked up the League of Nations’ London draft model bilateral tax treaty, which favoured the interests of capital exporters, rather than the capital importer-favouring Mexico draft. While it is probably true that the eventual OECD model is closer to the London than the Mexico draft, the ICC’s proposal that the OEEC use the London draft was actually a problem for the OEEC, because not all of its member and associate countries had endorsed it. “If an approach of this kind were to be adopted by the OEEC, therefore,” concluded the Secretary General, “it would be necessary for the Organisation to set up an expert body charged with the duty of attempting to produce a more acceptable draft.”

Extract from OEEC Secretary General's memo, 12 November 1954

Soon after this, Switzerland and the Netherlands began to circulate proposals for a fiscal commission. In a curious echo of the current debate around digital taxation, these proposals all expressly mentioned turnover taxes, increasingly imposed by states on the rendering of services, as the main new problem motivating their concerns.

The Dutch note circulated in 1955 noted that “the number and extent of problems relating to taxation has been steadily increasing, not only in the national field but also and especially, in connection with the gradual intensification of international economic relations, in the international sphere.” It advocated work under the umbrella of the OEEC because it was consistent with the organisation’s mandate, and because of the need to discuss in “a smaller circle than the United Nations.” In December 1955 the Netherlands and Switzerland were joined by Germany, publishing a joint memorandum proposing the creation of a expert committee of “specially qualified high-ranking Government representatives,” and in January 1956 an ad hoc committee was created to conduct a study into the matter. The ad hoc committee immediately recommended the creation of a full committee, citing “ample evidence that there are cases of double taxation which constitute obstacles to international trade and investment, and that action to remove these obstacles should be possible within a group of like-minded nations such as the members and associated countries of the OEEC.”

Extract from Dutch memo to the OEEC, 11 July 1955

In March 1956, the Fiscal Committee was created, against the judgement of the British and Scandinavians. Britain’s attitude throughout had been sceptical, but acquiescent. The British representative, Sir Hugh Ellis-Rees, “criticised the memorandum for being vague and for not revealing what the usefulness of the study would be, nor what were its precise objectives.” On the other hand, he told the Inland Revenue, “I think that in our position in the organisation it would be tactically unwise to try to suppress at this stage a movement which has some support however ill-founded it may turn out to be.” Two handwritten notes in the Inland Revenue files are worth quoting at length here. One is from Alan Lord, who eventually sat on the Committee for the UK.

We regard the whole idea as, if I may borrow the FO [Foreign Office] words, “futile and unrewarding” or, in cruder terms, as a gathering of international chatterers for the purpose of chattering.

We must, in the interests of international unity, agree to attend a meeting, which is [illegible] but if anything on this should turn up with Mr Daymond and [illegible] you will no doubt determine your answer by reference to our Policy of being Against It.

The author of the second note is unidentified, but it shows how the UK viewed the Swiss and Dutch proposals, as well as – in the third paragraph – a pessimism that seems rather anachronistic when compared to the kind of work conducted by the OECD today.

1. Insofar as I can discover from this rather Crazy Going file, the pace is being made by: (i) the Dutch, who seem to be resentful about the liquidation of the Fiscal Commission of UN (which we ourselves regard as a Good Thing) and so want to set up a new Committee or Commission to discuss, inter alia, fields, spheres and bases, & (ii) the Swiss, who seem to be engaged in a private brawl with the French.[…]

2. If this be so, the answer to (i) is that we regard this exercise, to use the FO phrase, as “futile and unrewarding” and (ii) that this is a private fight in which we do not wish to join.

3. There seems to have been later on a ganging up of Germans, Swiss and Dutch to give a regrettable academic flavour to the whole thing and to discuss domicile, “classification of income” and “localisation of income”, whatever these terms may mean. Presumably some attempt to reach, for example, agreement on whether interest should be charged by reference to origin or residence, an exercise which long experience has shown to be pointless.

The British concerns were, I think, unfounded, as the new committee raced through a list of five thorny areas within a year, finding consensus on topics such as permanent establishment and the taxation of shipping and airlines, which are recognisable today as core components of the OECD model convention.

The most recent document in this particular file is an interim report from the Fiscal Committee in 1957. It shows how within 18 months the committee was already consolidating its ways of working (Working Parties on each specific issue, just as the OECD has today) and forming a clear raison d’être. In the excerpts below, I’ve picked out three things that struck me from the committee’s interim report. First, how forcefully it began to make the case for tax cooperation, as European economies became more integrated. Second, the recognition that other countries might be incentivised to follow Europe’s lead, because of its “placement in the world economy.” It is interesting to reflect on how much this echoes the EU’s tax cooperation efforts today, perhaps more so than the OECD, for which the economic power of its members complicates its authority.

Extract from interim report of the OEEC Fiscal Committee, 3 July 1957

Finally, the committee members had already begun to “harmonise their views”, perhaps the first conscious expression of what would become a powerful driver of successful tax cooperation: the formation of a consensus about how to do tax among an international community of practitioners.

chattering4

The Colombia UK tax treaty: 80 years in the making

Hearson, M, 2017. The UK-Colombia Tax Treaty: 80 Years in the Making. British Tax Review (4):375-384.

Today at 2.30pm, the UK parliament’s Third Delegated Legislation Committee will debate tax treaties with Lesotho and Colombia. It will be interesting to see how much debate really takes place, a matter on which I’ve commented before once or twice.

The hearing gives me a chance to plug my article in the British Tax Review last year [pdf], which traced the UK’s attempts to obtain a tax treaty with Colombia over 80 years. Its overtures were frequently rejected, at first because Colombia was not interested in tax treaties, then because it was bound by the terms of the Andean pact, and finally because it could not agree on terms with the UK, especially over technical service fees, an area where the UK position has changed. Since the article was published I had the chance to speak with a Colombian tax official, who told me that Colombia’s change of heart on technical service fees is a change of view about tax policy, rather than a concession forced by OECD membership, as I speculated in the article. Of course, the two developments might not be totally independent.

Here is how the article concludes:

The demands of OECD membership, combined with the unusually liberal use of MFN clauses during an era of less-than-strategic negotiation, seem to have backed a country once insistent on a “red line” over technical service fees, and before that sceptical of accepting the limitations on its taxing rights that come with a tax treaty, into a corner. Having been constrained in its negotiating position by the pro-source taxation stance of the Andean community, Colombia now finds itself pulled in the other direction by the OECD. Is this further proof that the world is moving inexorably towards an OECD-type tax system? The gradual but steady expansion of the OECD, given a fillip most recently by the announcement that Brazil would begin accession talks, might lead us to such a conclusion. In contrast, however, the continued expansion in the use of the technical service fees Article by developing countries, together with its imminent introduction into the UN Model Treaty, point towards a growing divide between states on this topic.

The long history of negotiations between the UK and Colombia perhaps demonstrates more than anything the extent to which the tax treatment of international transactions today is a product of historically specific events. Each side’s positions changed radically over time, from a refusal to accept each other’s terms to a willingness to concede them outright. The UK’s constant enthusiasm for a treaty with Colombia stands in contrast with the latter’s oscillation between hot and cold. If Colombia turns cold again, however, it will be left with a fossilised relic of its negotiating position in 2016. Given the rarity with which tax treaties are terminated or their terms substantially renegotiated, treaty networks are collections of these fossils. Hence Colombia is stuck with its MFN [most favoured nation] clauses, regrettable outcomes of its negotiating spree in the 2000s. The biggest irony, however, is reserved for the UK. Despite its apparent willingness in the 2000s to forgo a treaty with Colombia over withholding taxes on technical service fees, Britain retains, as a legacy of its negotiations from 1973 until the turn of the century, the largest number of treaties of any OECD Member containing just such a clause

Certainty in the tax treaty regime

Here’s the text and slides of a talk I gave yesterday at an event called Harnessing the Commonwealth Advantage in International Trade.

I want to talk today about issues related to tax treaties in developing countries, and their impact on tax certainty for multinational investors. To do this I think we have to consider two aspects of the tax treaty regime: the multilateral norm-setting processes at the OECD and United Nations, and the individual bilateral treaties negotiated by pairs of countries. The key point I want to make is that, at both these levels, the elaboration of a regime that constrains developing countries’ source taxation rights in ways that risk being seen as excessive is not sustainable in the long term.

Consider first the multilateral level. Last week I was reading a PWC document, ‘Navigating the Maze: Impact of BEPS and Other International Tax Risks on the Jersey Funds Industry [pdf].’ It notes that:

Countries are already diverging from suggested guidance from the OECD, which was meant to bring coherence and consistency.

This does not only apply to developing countries, but there is plenty of evidence to suggest that in emerging markets there is a growing dissatisfaction with the OECD approach, as illustrated by the ongoing row over the status of the UN tax committee, and India’s recent financial contribution to its trust fund, which until then had been empty for over a decade.

Here are two quotes that illustrate this sentiment further:

“For developing countries the balance between source and residence taxation [is] very crucial. International tax rules with its preferences for residence based taxation [are] not in interest of developing countries.”

Eric Mensah, Ghana Revenue Authority, 2017 [pdf]

“The global tax system is stacked in favour of paying taxes in the headquarters countries of transnational companies, rather than in the countries where raw materials are produced.”

Francophone LIC Finance Ministers Network, 2014 [pdf]

It seems that, to maintain the integrity of the international tax system as emerging market voices become stronger, countries that favour residence-based taxation will need to accept greater flexibility within the instruments agreed at multilateral level.

Turning to the bilateral treaties that developing countries have negotiated, here I want to introduce you to some research I conducted at the LSE, funded by an NGO called ActionAid. ActionAid used it to inform a campaign that has targeted individual governments and treaties, calling for renegotiations.

Slide2

I took 500 tax treaties concluded by developing countries and had a group of LLM students code them for the main clauses that could vary on a source-residence axis, using an International Bureau of Fiscal Documentation analysis. We can use that data to plot each treaty along a simple axis from 0 to 1, where 0 means an overwhelmingly residence-based treaty, and 1 a more source-based treaty. Remember that 1 here represents the presence of the most source-based clauses within existing treaties, and doesn’t take into account the concerns about inherent bias in the parameters for those treaties set by the OECD and UN models. In this first slide you can see that treaties among developing countries, in light blue, are becoming marginally more source-based over time, while treaties between developing countries and OECD members are becoming more residence-based.

Slide3

The next chart shows some of the underlying drivers of those trends. You can see that permanent establishment definitions are becoming more expansive, perhaps reflecting changes to the model treaties, while withholding tax rates are trending downwards. There are diverse trends in different clauses within areas such as capital gains tax and taxation of services.

I want to talk to you about a few examples.

Slide4

Here we see Vietnam’s treaties taken from the same dataset. Vietnam has actually expressed a comprehensive set of observations on the OECD model convention, broadly following the UN model. So here a zero on the vertical axis means the treaty contains none of those positions and instead follows the OECD model, while 1 means it includes all of Vietnam’s observations. You can see that in the 1990s Vietnam signed a number of more residence-based treaties that are completely the opposite of its stated negotiating position. And of course, these are with many of its biggest sources of investment.

More recently, Vietnam has come to regret those earlier treaties, and has chosen to interpret certain provisions on PE and technical services in the way it wished it had signed them, rather than the way it did. Businesses are very unhappy, and in the words of the Vietnam Business Forum, it has:

made the application of DTA[s] of foreign enterprises impossible, effectively it obliterate[s] the legitimate benefit of enterprises.

The residence-based treaties that Vietnam signed when it was inexperienced and urgently in need of investment are creating uncertainty, rather than the stability that investors are looking for.

Slide5

You might be aware that a few years ago Mongolia tried to renegotiate a few of its treaties, and when it was unsuccessful it terminated them. They’re the treaties with the Netherlands, Luxembourg, Kuwait and the UEA, marked in black on here. But if you look on the bottom left, you see a number of treaties with OECD countries, including the UK and Germany, that have even more limited source taxing rights. Indeed, according to an IMF technical assistance report from 2012 [pdf]:

The Mongolian authorities are currently considering cancelling all DTAs and start building up a new DTA network with countries based on trade volumes and reciprocity in economic relations.

I’m told the IMF talked them out of this, but it is worth knowing that they considered it.

Slide6

Here is Zambia, a Commonwealth example. You can see the same pattern. Its earlier treaties were very residence-based. I did some archival and interview work on those early treaties, and you can see that when they were first signed, Zambia had a hugely under-resourced civil service, with no experience of negotiation, and other countries took advantage of this. The most egregious example is its treaty with Ireland, which had zero withholding tax rates on all types of payment. That’s in contrast to the East African community countries, which had very strong negotiating red lines, and as a result either walked away, or obtained more source-based treaties that today appear quite generous, but have stood the test of time.

Slide7

This chart shows a few renegotiations that have taken place in response to government and civil society concerns. You can see that Zambia’s renegotiations have focused more on updating treaties and closing loopholes, not dramatically shifting the balance of taxing rights. In contrast, Pakistan and Rwanda have both negotiated big overhauls.

So in conclusion, as the politicisation of the international tax regime continues, especially in developing countries, I think we’re likely to see growing demands for a rebalancing between source and residence not just in the multilateral setting, but also in individual treaties. My advice to OECD governments, and businesses who engage with them, is that tax certainty in the future depends on an enlightened approach to the tax treaty regime that leaves more developing country taxing rights intact.

European Economic and Social Council hearing on tax treaties and development

I’ve posted below the slides I just used for a presentation here at the European Economic and Social Council. The EESC has formed a study group to consider the question of “EU development partnerships and the challenge posed by international tax agreements.”

Interesting discussions included the evidence base for the effect of tax treaties on investment into developing countries. Here I think the key question is what provisions of tax treaties are relevant to investment flows, and in what circumstances, rather than simply whether tax treaties per se attract investment.

Tax certainty is the new buzzword, and it was interesting to think about how it applies here. On one hand, a treaty provides greater certainty because it commits its signatories to tax investors in a certain way as long as the treaty is in force. But that certainty relies on ongoing support for tax treaty norms. Developing countries feel unhappy with the content of the international tax norms on which bilateral treaties are based, as well as the institutions that develop those norms. (Here, for example, is a recent presentation by Eric Mensah from the Ghana Revenue Authority that makes these points). Countries such as Mongolia, Vietnam and Uganda are beginning to question the constraints imposed on their tax policy by treaties signed in the past. There is perhaps a trade-off between developed countries’ desire to defend the content of existing norms and the role of the OECD, and developing countries’ willingness to abide by those standards in the long term.

Link to presentation on Slideshare

Visualising Uganda’s (and others’) tax treaties

Interesting news from Uganda, where the government announced in its latest budget that it has finished formulating its new tax treaty policy, and will be renegotiating treaties that don’t comply. Seatini and ActionAid Uganda will no doubt chalk this up as a success! The news report linked to above also states that the the government plans to amend the awkwardly-worded anti-treaty-shopping clause in its Income Tax Act, although there are clearly still doubts about its application. According to a report in Tax Notes International, there’s an ongoing mutual agreement procedure between the Netherlands and Uganda to try to settle the ongoing Zain capital gains case, which turns on the applicability of that clause. 105_screen_shot_2016_04_29_at_6_11_10_am

So this is good timing for my working paper with Jalia Kangave, based on a submission we made to the Ugandan government’s review, to have been published by the International Centre for Tax and Development.

Here’s a link to that paper on Researchgate

When writing that paper, I thought that Uganda had a pretty good record of tax treaty negotiations, but some new visualisations of the ActionAid Tax Treaties Dataset suggest otherwise. For these I am indebted to Zack Korman, and to tax twitter for introducing me to him. Below are some maps Zach has made using the ‘source index’ I developed for the dataset (read more about that here). Red means a residence-based treaty that gives fewer taxing rights to the developing country, while green means a source-based treaty that gives it more taxing rights.

This slideshow requires JavaScript.

Links to high-res versions of individual images: Uganda map, Uganda bar chart, Vietnam, Mauritius, UK, Nordics

Uganda’s treaties are pretty red, meaning that most of its treaties restrict its taxing rights much more than average. Looking at the breakdown of the index shows that Uganda has some above-average withholding tax provisions, but its treaties are quite a lot worse than average in other areas. The slide show also gives some other countries for comparison. Vietnam’s treaties are mostly green, while Asian countries have got better deals from Mauritius (an offshore financial centre, not a developing country, in this context) than African ones. The UK’s treaties are pretty red, while the Nordics are very interesting: diverse in content, but consistent among themselves, giving good deals to Kenya and Sri Lanka, and worse ones to Tanzania and Bangladesh. This suggests that more source-based treaties with Nordic countries have been up for grabs for tough-negotiating developing countries.

Below I’ve posted some of Zach’s animated maps, on which it’s easier (and interesting) to follow the developments at earlier stages. There’s lots to comment on, but mostly I just keep watching them. The technical service fees map, at the bottom, is especially interesting, as it shows how countries have changed attitudes over time: watch how Pakistan suddenly changes position in the mid 1980s, for example.

World2

Above: All treaties in the dataset (red=residence-based, green=source-based)


Asia

Above: Asia (red=residence-based, green=source-based)


Africa2

Above: Africa (red=residence-based, green=source-based)


Vietnam2

Above: Vietnam (red=residence-based, green=source-based)


UK2

Above: UK (red=residence-based, green=source-based)


Nordic2

Above: Nordic countries (red=residence-based, green=source-based)


Netherlands2

Above: Netherlands (red=residence-based, green=source-based)


Slow WHT

Above: Management, technical service and consultancy fees WHT (green=included, red=excluded)