Investment Climate Advisory Services (FIAS): Tax Simplification, 2012.16

Tax is the most important, the most beneficial and the most sustainable source of finance for development. However, tax revenues in developing countries remain well below the levels of developed countries. By improving the legal framework and efficiency of international taxation procedures related to Transfer Pricing (TP) & the Exchange of Information (EoI), developing countries are better prepared to protect their tax base. TP relates to the determination of taxable profits that an enterprise realizes from transactions with associated companies/branches. Today, it is estimated that about 60 percent of international trade takes place within multinational corporatiorations. EoI deals with the problem of taxpayers shifting income from one jurisdiction to another, which leads to important tax revenues losses for developing countries.