Having done an analysis showing that the tax treaty between Denmark and Ghana could undermine Danish development policies, our team in Denmark developed a framework for analysing “spillovers.”
Tax spillovers are the (generally unintended) indirect impact that one country’s tax policy has on other country and its tax collection.
The framework helps to assess how or to what extent tax rules and practices in one country affect tax revenues in other countries. It’s a tool for European governments looking to know more about how their tax policies and treaties might impact developing countries, in line with the European Union commitment to “Policy Coherence for Development”.
But it turned out to be more than that. Today, it forms the basis of much of the national and international advocacy on tax that we are doing in Denmark.
In 2017 we published “Stemming the spills: Guiding Framework for National Tax Spillover Analysis”. We included recommendations as to how spillover analysis should be conducted, identifying which policy areas to keep in mind and who to include in the process.
The report has been shared with politicians, public servants, and other organisations working with tax justice. Around 200 prints of the report have been distributed at meetings and conferences in Brussels and other places. Our engagements following the launch of the report also included a meeting with the Danish Ministry of Taxation and several presentations both in Denmark and in EU institutions.
ActionAid has pushed the issue of tax treaties between poor and rich countries onto the global tax reform agenda, and the report played a big role in making this happen. In terms of advocacy, in Denmark we experienced the report as a door opener. Having a well-written report to support our arguments was a great advantage when doing presentations and holding discussions with various stakeholders.
At the European Commission’s Platform on Tax and Good Governance, the chairperson proposed developing a toolbox that could be used by EU member states when aiming for a more balanced approach on tax treaties with developing countries. We found ourselves to be able to exert substantial influence on the process, with a particular focus on how to ensure fair treatment of developing countries in bilateral tax treaties. ActionAid’s contribution is evident in the toolbox as it stands today.
We’re proud to say that the report and our advocacy work laid the foundation for discussions about the impact of EU Member States’ tax policies. The report was presented at the European Development Days, at the Addis Tax Initiative, at the European Parliament and several conferences in Denmark.
And it’s not just the ActionAid team in Denmark using the report; in addition to teams in the Netherlands and the UK, the report is also being used by partner organisations outside the ActionAid federation. It continues to be a great tool for advocating the significance of spillover analyses in ensuring fair tax policies and treaties.
The report was produced thanks to financial support from DANIDA.