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International Taxation from Global South Perspectives

Badr Mandri from the Policy Center for the New South and Sebastien Babou Diasso and Aaditri Solankii from the South Centre

South Centre (SC) in collaboration with the Policy Center for the New South (PCNS) organized on October 13, 2021, a webinar on the issue of International Taxation from the Global South perspectives. Tax revenue mobilization plays a key role in financing the economic and social development of countries. When well designed and implemented, tax policy can help developing countries raise revenue and increase their spending, especially in the social sector. Indeed, tax revenue as a share of GDP represent only 15% to 20% in low and middle-income countries, because of obstacles such as the imbalanced and complex international standards designed for developed countries, and the difficulties in collecting taxes in developing countries. This webinar addressed key questions such as:

  • What reforms to international standards are needed that can strengthen the capacities of governments to raise revenue from multinational enterprises (MNEs) without discouraging economic activity?
  • What is the cost of tax havens for developing countries and what role can international cooperation play in dealing with this issue?
  • What might the future of tax reform look like in the post-COVID-19 era, given the growing digitalization of the economy?

Opening Remarks

1. Professor Carlos Maria Correa, South Centre Executive Director

Prof. Correa acknowledged the collaboration with the Policy Centre for the New South (PCNS) and welcomed the participants. In his opening remarks, he made the following observations:

  • Developing countries need to mobilize their domestic resources. This is not just to deal with the costs associated with COVID-19. It is necessary to reach the Sustainable Development Goals in order to have a long-term development perspective for developing countries.
  • The Southern countries face different challenges: a tax system that is not fair at the global level and that deprives some countries of their taxing rights, especially in activities related to the digital economy.
  • The agreement on new international tax standards to raise revenues brokered by the OECD is not sufficient to meet the needs of developing countries. Hence, there is a need to promote reforms in this area.
  • It is critical for the negative impact of tax havens to be addressed at international level to emphasize the need to achieve balance in the tax reform.


Panel Discussion

2. Natalia Quiñones Cruz, Colombia’s former representative in OECD tax negotiations

Ms. Cruz started by remarking that the new international regime that was adopted on October 8, 2021 by the OECD/G20 Inclusive Framework is  not stable and the proposed solution does not resolve the issues that have been raised by developing countries, in particular the allocation of amount A and the taxing right.

  • For Ms. Cruz, developing countries and international organizations should make sure that this agreement is revised and soon, to address properly significant distributional issues.
  • She emphasized the importance for developing countries to increase resource mobilization and suggested that this may be done through joint action involving all countries.
  • Given that MNEs are so powerful, it is easy for them to manipulate and to relocate each production factor, knowing the high mobility of these factors, depending on national policies. Tackling in a global way the global problem would be much less difficult for countries. Thus, it is not suitable for countries to undertake separate actions. Ms. Cruz found that it is better to coordinate joint actions, and 136 jurisdictions being able to speak together for solutions is already a good step.
  • It is necessary to expand the single entity approach instead of considering companies within multinational groups as separate entities. That may help reduce the space MNEs have to choose where they pay taxes and how much.
  • Developing countries need to create jobs and raise revenue for their economies but this is hampered by the lack of education, good public health and good infrastructure, which can attract investments as in developed countries, as the UK prime minister stated. In that case, Ms. Cruz thinks that the tax system may be addressed in a way to consider these differences.
  • On tax havens, Ms. Cruz stressed that countries need to be able to obtain information on the beneficial owners of structures. Unfortunately, the current Automatic Exchange Information System has not been enough and still does provide information on who owns what. Beneficiaries should be known and included in a global database. International cooperation can be used to achieve this.

3. Kim S. Jacinto-Henares, Commissioner, The Independent Commission for Reform of International Corporate Taxation (ICRICT)

For Ms. Henares, there is no need to discuss any more the effects, benefits, or disadvantages of the OECD two-pillar solution, and the ICRICT has sent a letter to the G20 clearly mentioning that these solutions will only benefit developed countries.

  • Thus, the resolution of the problem needs to address the heart of the problem, which is providing solutions to help developing countries mobilize resources.
  • For Ms. Henares, developed countries should have helped developing countries bring prosperity in their countries since it is to the benefit of MNES and developed countries that developing countries prosper, so their people have high purchasing power and are able to buy MNEs’ products and services.
  • She thinks that the whole tax system needs to be rethought because the postulate underlying economic activities and growth is no longer valid. The theory of economic growth supposes that activities are directed by capital and investments. Nowadays activities are not directed by capital and investments; activities are rather directed by consumption.
  • China is an example of a country that redirected its economy towards domestic consumption. Like in China, demand is high in developing countries. Knowing that one should not have a tax system based on income but focused on demand.

4. Abdul Muheet Chowdhary, Senior Program Officer, South Centre Tax Initiative

Mr. Chowdhary spoke on the need to reallocate taxing rights to developing countries and an assessment of the Two Pillar solution on taxing the digitalized economy.

  • The biggest victory for developing countries in the Two Pillar negotiations in the Inclusive Framework is that demand is now considered a factor in allocating profits. As they are mainly importers of goods and services, allocating profits to subsidiaries entirely on a supply basis was disadvantageous to developing countries.
  • Taxing rights are allocated under the model conventions, either the UN model or the OECD model. Both models excessively allocate taxing rights to developed countries or residence jurisdictions. The fight that has been waged in the UN model is to change it so that taxing rights are reallocated more to source countries. Some of the issues developing countries are raising relate to capital gains, permanent establishment, royalties, and shipping.
  • Pillar Two, or the minimum tax, is of little use to developing countries and can and should be ignored by developing countries. As structured right now it gives priority to developed countries to collect the undertaxed profits. Developing countries have better alternatives including Alternative Minimum Taxes or using anti-abuse rules such as Principal Purpose Tests or Limitation of Benefits rules.
  • Pillar One similarly allocates only around $10 billion to developing countries, which is not enough when revenue losses are between $100-240 billion per year by OECD estimates and even higher by others. Most demands made by developing countries in the negotiations were rejected.
  • Developing countries can wait and see whether developed countries ratify the agreement; until then they can continue with unilateral measures or Article 12B. They are under no legal obligation to abide by the political statement in the Inclusive Framework.

5. Larabi Jaidi, Senior Fellow, Policy Center for the New South

  • Mr. Jaidi began by welcoming this initiative to discuss such an important topic, which heralds many developments in the months to come. The questions that he asks himself are what the next steps in this agreement are and what the point of view of the South is on the agreement.
  • He reminded participants that the process of this agreement has been long and is not yet finished because the agreement must be adopted by national parliaments.
  • According to him, the future of this agreement will depend on the national regulations that will be put in place by national lawmakers, especially in the United States because it should pass through the American Congress, and this does not seem easy: as we know, these reforms are part of a set of global reforms of the tax system initiated by the Democrats.
  • He added that even if an agreement is reached, there are still a few issues that need to be addressed, including complex and difficult technical issues for implementation. For example, we know that even if it was agreed to redistribute 25% of the residual profits of multinationals, the question of how to obtain the necessary information in order to distribute this share is not yet clear.
  • Mr. Jaidi indicated that tax evasion is estimated to be worth $23 billion in the countries of the South, and the multinationals have been identified as the main cause. Tax reform is therefore essential, especially in the context of COVID-19, for which more resources are needed.
  • For him, Africa has been one of the continents that has called for the reform and clarification of tax practices. But the question today remains whether this package of solutions will be sufficient to curb the tax evasion Africa suffers from.
  • We have seen that organizations such as the African Union have called on African countries to fight to raise tax rates and balance the sharing of the right to tax, and a profound reform of the taxation of multinationals in the subsequent phases. Such calls should be considered, according to Mr. Jaidi.
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Gender equality and digital development are inextricably linked. Yet globally, men are 21 percent more likely to be online than women, a figure that rises to 52 percent in low-income countriesThe Web Foundation estimates that barriers that keep women and girls offline — high device and data costs, lower digital skills, and restrictive social norms, to name a few — have cost developing countries about $1 trillion over the last decade.

The Digital Development Global Practice recently launched a new approach to accelerate its work on gender equality, with an ambitious vision that centers women and girls across its financing and analytics. The approach orients solutions to the five foundational pillars of the digital economy: digital infrastructure, digital public platforms, digital financial services, digital businesses, and digital skills. It also emphasizes the need for more and better sex-disaggregated data and to tackle risks, such as algorithmic bias and online gender-based violence.

Digital Infrastructure

Within infrastructure, practical solutions that increase access, affordability, and usage are critical. Intentional design that locates public Internet access points in safe spaces (for example, libraries and community centers) is a good start. Other interventions that support the closing of adoption gaps improve the affordability of devices and data plans and tailor digital skills programs for women. Traditionally underutilized universal service and access funds can help. However, only four out of 69 countries have deployed these funds to close the gender digital divide.  Device affordability schemes also show promise. The recently approved Uganda Digital Acceleration Project will test some of these innovations.

Digital Public Platforms

Access to digital public platforms often requires digital identification, which women lack compared to men. Barriers that women face often include legal requirements to present additional documents, for example, a marriage certificate. High registration costs and inconveniently located registration points also deter women. The Nigeria Digital Identification for Development Project conducted a qualitative study designed to understand the needs of women and marginalized groups, which surfaced several solutions. These include working through trusted networks and women’s groups to share information; locating registration centers close to communities; and designing registration policies that prioritize vulnerable groups. Other options include women-only registration centers, mobile registration services, and female enrollment agents.

Digital Financial Services

Digital payments, whether to provide wages, social assistance, or agricultural transfers, can save women time and provide added privacy, security, and control, thereby contributing to women’s empowerment. This is a key focus on the G2Px initiative, launched in early 2020 in partnership with the Bill and Melinda Gates Foundation.

In Benin, where an estimated 19 percent of women make or receive digital payments compared to 38 percent of men, another World Bank initiative aims to provide women smallholders with a safe and private place to store their money and connect them with other financial services. Complementary training on digital financial literacy for recipients and promoting a network of women agents can also help, as social norms often limit women’s ability to interact with male agents.

Digital Businesses

Women entrepreneurs often face a range of barriers, including unequal access to financing, legal discrimination, differences in skills, less access to networks, and more care responsibilities. They are also poorly represented in technology startups. To address these constraints, the Digital Cabo Verde Project aims to support women entrepreneurs with business and entrepreneurial mindset training, access to business networks, peer support, and mentoring.

Beyond comprehensive support for women-led businesses, tackling investor bias is critical. Research suggests that the persistent gender gap in financing cannot easily be explained by differences in education, experience, sector, intellectual property, or geography.

Digital Skills

Building digital skills starts early with hands-on exposure to technology to build girls’ interest and confidence. Typically, complementing technical skills training with soft skills, engaging role models, and creating structured linkages to the labor market through internships, apprenticeships, and job placement programs have positive outcomes. The Kosovo Digital Economy Project, which trains rural women in programming and web design to become online freelancers, shows how digital skills training can create pathways to economic prosperity. Women with disabilities, older women, and illiterate adults may require tailored curricula and flexible programs with active outreach to develop their basic digital skills — another key area for engagement.

Cutting across these pillars is the need to address restrictive gender norms that prevent women from fully participating in the digital economy. Solutions to tackle these vary with context but addressing gender stereotypes and engaging men and boys are essential steps in shifting beliefs and behaviors.

Ensuring that women and girls have equal access to and use of digital technologies — mobile phones, computers, and the internet — is central to their economic and social empowerment and inclusive economic recovery. As we accelerate our efforts on the digital inclusion of women and girls, we call on our partners to join us in this ambitious agenda.


Some 2.9 billion people still have never used the internet, and 96 per cent live in developing countries, a new UN report has found. According to the International Telecommunication Union (ITU), the estimated number of people who have gone online this year actually went up, to 4.9 billion, partially because of a “COVID connectivity boost”.

This is good news for global development, but ITU said that people’s ability to connect remains profoundly unequal – as many hundreds of millions might only go online infrequently, using shared devices or facing connection speeds that hamper their internet use.

“While almost two-thirds of the world’s population is now online, there is a lot more to do to get everyone connected to the Internet,” Houlin Zhao, ITU Secretary-General said.

“ITU will work with all parties to make sure that the building blocks are in place to connect the remaining 2.9 billion. We are determined to ensure no one will be left behind.”

‘Connectivity boost’

The UN agency’s report found that the unusually sharp rise in the number of people online suggests that measures taken during the pandemic contributed to the “COVID connectivity boost.”

There were an estimated 782 million additional people who went online since 2019, an increase of 17 per cent due to measures such as lockdowns, school closures and the need to access services like remote banking.

Uneven growth 

According to the document, users globally grew by more than 10 per cent in the first year of the COVID crisis, which was the largest annual increase in a decade. But it pointed out that growth has been uneven.

Internet access is often unaffordable in poorer nations and almost three-quarters of people have never been online in the 46 least-developed countries.

A ‘connectivity Grand Canyon’

Speaking in Geneva, Doreen Bogdan-Martin, Director of the ITU said: “The internet divide runs deep between developed and developing countries. Only a third of the population in Africa is using the internet.

“In Europe, the shares are almost 90 per cent, which is the gap between those two regions of almost 60 percentage points. And there is what the UN Secretary-General António Guterres, has called in his Common Agenda blueprint for the future, “a connectivity Grand Canyon”.

‘Digitally excluded’

The report found that younger people, men and urban dwellers are more likely to use the Internet than older adults, women and those in rural areas, with the gender gap more pronounced in developing nations.

Poverty, illiteracy, limited electricity access and a lack of digital skills continued to hinder “digitally excluded” communities, ITU noted.


For citizens in countries around the world, paying taxes is among their most challenging and time-consuming interactions with government.  For many governments, enhancing tax compliance and collecting sufficient revenue have been a matter of necessity to finance public goods and services.

That is why tax administrations are undertaking the digital transformation and automation of their systems. The adoption of technology can enable successful and sustainable tax reforms, ensure the proper taxation of the digital economy, and reduce the obstacles to compliance. The COVID-19 pandemic, which led to a boom in the use of digital commerce, made this change especially urgent for tax administrations.

The transformation has progressed increasingly rapidly over the past decade, as the cost of digital technologies has plunged and powerful tools to develop applications have become more user-friendly. One example of the falling cost: Cloud storage is now over 50% cheaper than it was a few years ago.

The rise of big data is an important factor in the shift because it can allow easy cross-checking of information, which enhances compliance by taxpayers. Overall, global data volume from mobile payment providers, electronic cash registers, online marketplaces, and other digital sources is expected to nearly triple from 2020 to 2024. 

Digital transformation is also being driven by the rapid growth of e-commerce, which is projected to expand 24% from 2020 to 2025, making it an increasingly important part of the tax base.

The increasing use of cashless payments, through mobile phones and other devices, is also powering the change. Such payments can be easily reviewed by tax administrations and often leave a digital trail that can be audited.

Digitalization makes life easier for authorities by easing the administrative burden, which gives officials more time to focus on higher-value activities.  But it also allows authorities to simplify procedures and reduce the compliance burden on taxpayers. Research shows that in South Korea, for example, digitalization has reduced compliance costs by as much as 19% in the 2011-2016 period.

A real-time, more user-friendly future

With these changes underway, taxation is likely to look a lot different in the future:

  • Instead of storing huge amounts of taxpayer data, administrations will have access to encrypted, distributed ledgers that allow them to capture tax information seamlessly and in real time. This has the added benefit of making tax administrations “less visible” to the public.
  • The decisions of the tax administrations will increasingly be supported and strengthened by artificial intelligence. But the system will need to be closely monitored for errors.
  • Tax administrations could become warehouses for more and more government data. That will give them a central role in the formulation of economic policy, enabling policymakers to review transactions in the economy and allowing better forecasting.
  • The tax system could become much more user-friendly. Services could include prefilled tax returns, taxpayers’ access to their own filing information, the sharing of data with banks to expedite credit approval, along with privacy preserving queries on the tax file by researchers and local communities.
  • Tax administrations will streamline the interface between taxpayers and tax officials, for instance by connecting corporate accounting systems with the tax administrations’ e-filing and e-payment platforms.

Making change work

Despite all the benefits, this transformation is up against major challenges. Research shows that most digital transformation initiatives don’t succeed. Of the $1.3 trillion spent in 2018, an estimated $900 billion was wasted.

To have the desired result, the digitalization of tax systems must enlist a broad coalition of stakeholders to make the necessary legal reforms and provide the funding. 

The shift should also focus on providing value by simplifying procedures and permanently bringing taxpayers into the e-filing, e-payment, and e-document ecosystem. The value could be provided by reduced compliance costs, increased tax certainty, and higher compliance.

In addition, reform should aim to change the culture from managing processes to managing data, and administrations should focus on getting the right data. One high-income jurisdiction told us that there were errors in 15% of their taxpayer files and that 98% of returns could be prefilled with data from just banks.

Finally, tax administrations must develop scalable and interoperable systems that can be used across departments, in headquarters and in the field. 

The process can be cumbersome, but by providing finance and technical assistance, the World Bank has already supported administrators’ efforts on automation and digitalization in dozens of countries—benefiting governments and citizens alike.


ITU Digital World 2021 SME Awards showcase sustainable digital solutions, helping creative start-ups forge partnerships and attract investment

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Winning solutions from digital SMEs based in Hong Kong (China), Mexico, Saudi Arabia, Switzerland, South Korea, and the United States were showcased and announced at the ITU Digital World Awards Ceremony, the finale of the ITU Digital World 2021 event and a key SME promotion programme from the United Nations tech agency on Wednesday.

The International Telecommunication Union (ITU) – the UN’s specialized agency for information and communication technologies (ICTs) – has highlighted SMEs as crucial contributors to help harness the world’s ongoing digital transformation to ensure sustainable development.

The latest ITU Digital World Awards recognized outstanding SME contributions to advance connectivity, smart cities and smart living, e-health, digital finance, and education technology.

“Innovative tech SMEs – fast-moving and responsive to the needs of different markets on the ground – have a vital role to play in accelerating digital transformation,” said ITU Secretary-General Houlin Zhao. “Governments and the ICT industry need to act together to foster a climate that supports technology and business innovation, helping companies like our award winners scale up and flourish.”

Six winners emerged this year, spanning the five key categories.

Winning SMEs

The winners were:
Company Category​ Country
Benefit Vantage Limited – Ipification Connectivity Hong Kong, China
WIWI Connectivity Mexico
URBIT GROUP LLC Digital finance United States of America
Baobabooks Education Sàrl Education technology Switzerland
Mawidy E-health Kingdom of Saudi Arabia
SCE Korea, Inc. Smart cities, smart living Republic of Korea

ITU Deputy Secretary-General Malcolm Johnson recognized the winners and presented their certificates in the presence of Viet Nam’s Deputy Minister of Information and Communications, Phan Tam.

This seventh edition of the Awards marked the final event of a three-month online conference and exhibition co-hosted by Viet Nam. Opening in September, ITU Digital World 2021 also marked the 50th anniversary of ITU’s flagship Telecom conference and exhibition series.

During the ceremony, a new partnership for ITU with US technology firm Hewlett Packard Enterprise (HPE) was announced, aimed at accelerating the programme next year and equipping SMEs with access to HPE tools, networks, and mentoring.

Competitive selection

The competition was open to all SMEs worldwide, with winning projects ranging from mobile authentication and information accessibility to connectivity for public transport, financial technology (fintech), creative writing, and healthcare powered by artificial intelligence (AI).A jury of experts, representing the fields of business, technology and entrepreneurship, selected the winners from a total of 133 eligible applicants from 53 countries.

Prepping transformative SMEs

The ITU Digital World Awards formed part of an expert-led SME Programme of online masterclasses and pitching for digital SMEs. Maintaining the virtual format, the final awards ceremony celebrated the creativity and innovation behind digital solutions meeting real-world needs.

The special masterclasses explored areas such as sustainable start-ups and SME-corporate collaboration, bidding for government procurement opportunities, customer service and innovation, e-health, designing for disability inclusion and fundraising. The SME Programme and Awards are key components of ITU Digital World 2021, which was co-hosted with the Government of Viet Nam and took place from September-December 2021.

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