Menu

Tax Incentives in the Global South: a business and civil society brief

The purpose of this briefing is to reflect a growing convergence between businesses and tax advocacy groups, on the use of tax incentives in the Global South. It follows a roundtable discussion of the UK Tax Dialogue – a forum for action and discussion between corporates and civil society groups – in which a strong degree of consensus was reached.  

Who produced the briefing? 

This briefing has been developed jointly by the Confederation of British Industry (CBI) – the leading business organisation in the UK – and by ActionAid UK, Christian Aid and Oxfam.

What does it include? 

  1. A civil society perspective on tax incentives, which is largely concerned with the negative impacts that poorly designed incentives have on revenue collection in the Global South.
  2. A business perspective, which focuses on the need for a level playing field which can be maintained through well-designed incentives that promote genuinely positive outcomes such as decent jobs and growth.
  3. Some joint reflections from all parties – the CBI and the three civil society organisations.

We hope that it demonstrates that whilst taxation can be highly contested, there is scope to find a common way forward. We also hope that it will be considered by a range of stakeholders – businesses, tax advocacy organisations and, primarily, policymakers in the Global South – and that it might form the basis of better policymaking in the future.

How was it produced?

The basis of the roundtable was the discussion paper: ‘Getting to Good: Towards Responsible Corporate Tax Behaviour’, which argues, amongst other thematic areas of the fair and responsible tax agenda, that tax-responsible companies should approach tax incentives by:

  • Seeking equal treatment under a country’s tax regime and avoiding the use of company-specific incentives;
  • Being transparent about the incentives that they use; and
  • Regularly monitoring and evaluating their use of incentives to ensure that they are delivering their intended outcomes at the intended costs.

The role of incentives

Whilst challenging companies to demonstrate responsible behaviours, the paper also accepts that incentives can – when deployed in a particular way – have a positive role to play. It therefore does not suggest that tax incentives or reliefs offered by governments are universally negative, or that companies should voluntarily refrain from claiming tax reliefs. 

Against that backdrop, a positive discussion was had between around fifteen large companies and the Tax Dialogue’s founding civil society groups – ActionAid UK, Christian Aid and Oxfam. It became clear that whilst certain tax issues remain contested, there was a strong degree of consensus about tax incentives.   

It was agreed that this common ground should be communicated to policymakers and other stakeholders, and this briefing is the product of that agreement.

Global map from tax incentives report May 2018