A new tax initiative dubbed the Addis Tax Initiative was launched Wednesday at the ongoing Third Financing for Development conference in Addis Ababa to strengthen international cooperation with developing countries and enhance domestic resource mobilisation.

Analysts argue that stepping up domestic resource mobilisation is central to ensuring solid financing of the Post-2015 Development Agenda.

This is because domestic public resources are a more stable and sustainable source of income as well as strengthening a legitimate relationship between citizens and the state to foster good governance.

Tax evasion

While the initiative aims to promote effective, fair and efficient tax systems and combat tax evasion and inappropriate tax practices on a global scale, activists maintain that creation of a UN Tax body is still necessary to enable the developing world to combat tax evasion by multinationals.

According to Claire Godfrey, Oxfam’s Senior Policy Advisor, the initiative needs to accelerate donor government commitments to improve progressive national taxation as well as bolster country efforts to tackle tax dodging practices.

“It should not divert energy from the drive to create an inclusive intergovernmental process on tax cooperation. Developing countries must have an equal say in the updating of global tax rules that have held them back in filling their public coffers,” Ms Godfrey said, pointing out that the same countries that initiated the Addis Tax Initiative need to support the creation of a new intergovernmental tax body under the UN in the final outcome document from FFD negotiations this week.

“We call on all countries, including those announcing the Addis Tax Initiative, to walk the extra mile needed to ensure that developing countries will be able to increase their tax revenues and build fairer tax systems at national and global levels,” she said.

READ: Political support in Addis summit seen as key in global tax reforms

Under the initiative, participating providers of development cooperation are expected to collectively commit to double support for technical cooperation in the area of taxation and domestic revenue mobilisation by 2020.

In addition, countries participating in the initiative will each share information on their current and stepped-up support with the OECD Development Assistance Committee as well as the International Tax Compact, so that the promised increase can be monitored.

Actual delivery also depends on the number of requests received for assistance and the extent that partner countries engage in reforms.

OECD Initiative

Earlier, a separate initiative - the Tax Inspectors Without Borders was launched by the OECD, in partnership with UNDP, under which tax experts will provide audit assistance in developing countries, building local capacity along the way as they work with local officials.

The experts are also expected to educate local officials on international tax matters. Pilot projects and workshops are already underway in Albania, Ghana and Senegal.

“The new partnership between the OECD and UNDP on Tax Inspectors Without Borders will significantly extend the global reach of existing efforts to build audit capacity while sending a strong message of international support to developing countries,” said OECD Secretary-General Angel Gurría said during the launch.

The programme will have a secretariat based at the OECD office in Paris, France, and will be supported by an oversight board. It will serve as a clearinghouse that will match demands for audit assistance worldwide.