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The Olive Tree – Edition 16

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Company contributor Travel Impact Newswire

The Olive Tree – Edition 16

Country: International
Language: English
Year: 2019
Pages 112
License Read here
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Publication Author
Imtiaz Muqbil

Description
The Battle for Sustainability is set to be a long and expensive affair. Revamping and restructuring a system that has been based on fossil fuels for an entire century will take its toll on the financial system globally. Developing countries, which are already paying the price of a crisis not caused by them, will now face the challenge of paying the costs, too.

They are not likely to take this double-whammy burden lying down.

This Edition 16 of The Olive Tree examines some of the concerns now increasingly coming to the fore. The UN Conference on Trade and Development, which champions the causes of the developing world, has issued its 2019 annual report showing how the entire global financial system is stacked against the developing countries. Noting that “unrestrained private capital flows can cause resource transfers from developing to developed countries”, it sees capital controls as an essential part of the macroeconomic policy toolkit for meeting the SDGs.”

The report also notes that “a further drain comes from tax-motivated illicit financial flows and foregone taxes on digital transactions.” It calls for “ensuring a fair taxation of international business, whether analogue or digital, in order to build an inclusive and sustainable global order.” Says the report. “Tax-motivated illicit financial flows of multinational enterprises (MNEs) are estimated to deprive developing countries of $50 billion to $200 billion a year in fiscal revenues….

The rapid digitalization of economic activity is changing how value is created, measured and distributed, adding new challenges to the international tax framework. Mitigating serious fiscal leakages requires a fresh examination of existing international corporate tax norms and rules..”

Picking up on this warning, the Paris-based Organisation of Economic Cooperation and Development is pushing ahead with an initiative to improve the developing countries’ ability to tax multinational enterprises and boost domestic revenue mobilisation. It’s Tax Inspectors Without Borders (TIWB) initiative was launched jointly with the UN Development Progamme in July 2015 to strengthen developing countries’ auditing capacity and multinationals’ compliance worldwide.

According to the OECD, expert tax auditors sent to work with interested tax administrations in developing countries have helped them close tax loopholes, improve transparency, and most critically, reduce tax avoidance by multinational enterprise. TIWB assistance has delivered nearly USD 500 million in additional revenue for developing countries through April 2019, allowing them “to advance their national development priorities and achieve the Sustainable Development Goals.”

That is still only a small percentage of the total amount that flees the coffers of the developing countries. Sooner or later, this scrutiny of the tax collection system will target Travel & Tourism companies, especially the multinational corporations. This could yield some rather nasty headlines for digital economy companies and/or investors who have their funds stashed in tax havens.

This edition of The Olive Tree offers some food for thought. If taxi-evading and -avoiding Travel & Tourism companies choose to prioritise prevention over cure, they may want to move to Do The Right Thing now, rather than pay the price later.

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