
Nick Shaxson ■ Some quotes of the week: don’t sign OECD tax treaties

Via Martin Hearson, who has done a useful new blog on Uganda’s tax treaties entitled Uganda’s tax treaties: a legal and historical analysis. The article is by Mr. Hearson (of the London School of Economics) and Jalia Kangave of the East African School of Taxation.
For aficionados of tax and developing countries his post is well worth looking at in its entirety; we’ll just paste a few choice quotes here.
The present system of tax agreements creates the anomaly of aid in reverse – from poor to rich countries
Charles Irish, 1974
The ones claiming [reduced taxation] under the DTAs [Double Tax Agreements] are many, about one per day. The worst culprits are Mauritius, Netherlands. There is a lot of treaty shopping. A lot of companies trading in Uganda have their HQs in Mauritius.
An unnamed Uganda Revenue Authority official
In treaties between developing and developed countries . . . re-allocating tax revenues means regressive redistribution – to the benefit of the developed countries at the expense of the developing ones.
Tsilly Dagan, 2000
“Most of the time developing countries are disadvantaged by treaties. Treaties do not attract investment. It is other factors. . . . I know there’s empirical evidence that it [a treaty] has no effect on investment, but the reality country-to-country is that there’s a bluff that goes on, and countries don’t want to take the risk of losing big investments.”
Unnamed African treaty negotiator
When you sign an OECD model treaty, you say there is no withholding, or hardly any withholding, on outflows of cash to multinationals. Now why in hell do you want to sign that?
Lee Sheppard, 2013
The evidence that tax treaties attract new FDI into developing countries is inconclusive at best . . . most of the academic literature on tax treaties and developing countries consists of:
– Econometric papers often making herculean assumptions
– Legal papers that do not always consider realities “on the ground”
Martin Hearson
And there is plenty more good stuff where those came from.
See more about tax treaties here, and more background about Uganda’s treaties here.
Related articles

Beneficial ownership verification: exploring Belgium’s sophisticated system

Tax Justice Network Portuguese podcast #22: América Latina perde US$ 43 bi por ano; valor dá pra vacinar toda região

Casino Capitalism and a just transition: the Tax Justice Network podcast, February 2021

A tide-turning moment in the global struggle for tax justice

Making a killing from care

Submission to New York State Assembly: the case for Financial Transactions Taxes

Call for papers: Human rights and the 4 “Rs” of tax justice – Tax Justice Network annual conference

Making the UN Tax Committee more effective for developing countries: report

The Tax Justice Network February 2021 Spanish language podcast, Justicia ImPositiva: Nueva ley, nueva constitución, nuevo mundo #56

And you can find the full analysis on Uganda here http://www.actionaid.org/uganda/publications/double-taxation-treaties-uganda-impact-and-policy-implications
Thanks. We already have this on our tax treaties page, but I will update the blog with this too.
tax not people’s efforts, tax privilege (like land and patents).. :)
http://vimeo.com/38500767