Building Tax Capacity in Developing Countries

Building tax capacity is central to the role of government in achieving the sustainable development goals,addressing climate change,and ensuring debt sustainability.Despite progress in revenue mobilization,there is still a large unmet tax potential in low-income developing countries.Increasing tax capacity requires a firm commitment to building institutions that govern the tax system and manage tax reform,and to improving the design of core taxes.To enhance understanding,this article provides a synopsis of why improving tax capacity is important and contains insights on trends in revenue mobilization,how to strengthen tax policy and the role of supporting institutions.Furthermore,it explores the importance of a sound legal framework for tax certainty,which plays a crucial role in shaping investment choices and can significantly affect economic growth.

Why China’s Tax Revenue Is Likely to Maintain Its Rapid Growth: An Explanation within the Framework of Tax Capacity and Tax Effort

An analysis of the dynamics of the rapid growth of tax revenue in China within the framework of tax capacity and tax effort reveals three major drivers following the tax sharing reform. First, the nature of the decentralization contract under the tax sharing system provides strong incentives for taxation. Second, the system of indirect taxes boosts taxpayers’ taxable capacity. And third, China is enjoying the intensively present tax growth dividend. In the future, the first factor will diminish; the second factor will partially cease functioning; and the third factor will remain constant. Over the long term, the tax growth dividend will be long lasting and tax revenue will keep growing at a high speed.

Enhancing Tax Administration Capacity

The COVID-19 pandemic has shown us the societal importance of tax administration service delivery capacities and agility.Tax administration capacity is a key factor for nurturing both societal resilience and domestic resource mobilisation.Tax administrations around the globe are implementing new digital technologies to enhance taxpayer service quality,reduce operational and compliance burdens and increase revenues.In addition to the ongoing incremental improvement of the core tax administration functions,there are also increasing signs of transformation towards a more fundamental change in the nature of tax administration.This concerns a more system-wide compliance management approach in which tax administrations try to closely engage with the natural systems that taxpayers use to manage their business,engage in transactions and communicate in order to reduce errors,minimise burdens and increasingly build tax compliance.This paper explores the way in which tax administrations are enhancing the capacity of core functions and are preparing for a more holistic compliance management approach,including using an increasing amount of digital data sources facilitated by the introduction of new digital innovations.

Enhance Tax Administration Cooperation in the Spirit of the Silk Road:A Glance at BRITACOM on the 10th Anniversary of the Belt and Road Initiative

In April 2019,the Belt and Road Initiative Tax Administration Cooper-ation Mechanism(BRITACOM)was inaugurated in the spirit of peace and cooper-ation,openness and inclusiveness,mutual learning,and mutual benefit,to ensure unimpeded cross-border capital flow and facilitate trade and investment through tax administration cooperation.During the past four years,it has produced promising outcomes in tax cooperation,capacity building and mutual learning.Going forward,the BRITACOM will carry out practical cooperation of a wider scope,in broader ar-eas,and at elevated level,to revive the spirit of the Silk Road in the new era.