Tax Treaties: Developing Countries

Debate between Lord Ashton of Hyde and Lord Judd

Thursday 25th February 2016 Lords Chamber

[Lord Ashton of Hyde]

DfID is involved in the consultations that the Treasury has every year on which countries should be involved and on new taxation agreements to be brought forward. It holds discussions on which goals should be taken forward, but the department is not involved in the individual negotiation of tax treaties, which is for the experts on taxation in the Treasury. It also helps to pay for tax education in developing countries, and the Government have doubled the amount that they are prepared to spend on this through DfID. We think development aid should be controlled and administered through DfID, subject to proper governance arrangements in keeping with our development strategy.

[Lord Judd (Lab)]

My Lords, the Government rightly take considerable pride in having stood by their 0.7% target, and I am sure we all applaud that. We may have arguments about how it is spent, but we applaud it. However, does the Minister accept that there is real urgency about this matter because it is impossible for developing countries to make a success of their economies, and thus provide the context in which that 0.7% can be well spent, unless the strategic fiscal and financial matters are given priority?

[Lord Ashton of Hyde]

I completely agree with the noble Lord and that is why we are actively seeking to update our tax treaties, particularly with developing countries. All modern tax treaties include anti-abuse measures and provide for an exchange of information so that we can bring them up to date and thus enable those countries to increase their tax rate, but it must be remembered that individual developing countries are also aware of the effects on investment of changing their local tax rates.