A new IMF policy paper (pdf) examining tax spillovers warns that downward pressure on corporate tax rates - and tax rules which enable profit-shifting by companies - have 'significant and large' effects on the ability of poor countries to raise revenue from corporate taxes.
The IMF has today advised developing countries to show ‘considerable caution’ in signing tax treaties with other countries which can deprive them of taxing rights and are vulnerable to exploitation by companies.
Diarmid O’Sullivan, ActionAid’s Tax Justice Policy Adviser said:
“The IMF analysis raises some very worrying concerns about the impact of tax rules and practices in rich countries on the ability of poor countries to raise their own revenues.
“We see a clear message to the UK and other major capital-exporting countries to review their tax rules and make sure they are not harming the ability of poor countries to raise the revenues they need for their development.”