The Market Monitor Minding the Nation's Business
By Riza Lozada
The Asian Development Bank (ADB) said it is revising its lending procedures after an update on its anticorruption policy to address tax secrecy, tax evasion, and aggressive forms of tax planning, collectively referred to as “tax integrity issues,” in the wake of recent global developments.
Globally, it is estimated that developing countries lost about $5.6 trillion as a result of illicit tax flows between 2001 and 2010, including tax evasion, with Asia accounting for over 60 percent of the total, ADB said in a statement.
“Tax evasion, including the misuse of offshore structures for concealing wealth, deprive countries of badly needed tax income and can also become a potential vehicle for illicit activities like money laundering and terrorism financing,” said Clare Wee, head of the ADB’s Office of Anticorruption and Integrity.
“ADB, as an international financial institution, has a global and regional role to play to promote global tax transparency and to help its developing member-countries to combat tax evasion and to protect their tax bases against aggressive forms of tax planning,” she said.
Wee also said the policy update will set out ADB’s commitment to provide assistance to its developing member-countries, to adopt best practices at the project level, and to assess and mitigate the risk of tax evasion and other tax-integrity issues.
Significant progress has been made in recent years on global measures to increase tax transparency, but the misuse of offshore vehicles and aggressive forms of tax planning by multinationals are of pressing concern, the ADB statement said.
ADB noted that many developing countries, including a number in Asia and the Pacific, lack the resources and expertise to comply with international standards for tax transparency and to protect domestic tax bases against aggressive forms of tax planning.
“The update to ADB’s anticorruption policy will include measures to strengthen and promote tax integrity at country and project levels.
It includes a commitment to provide technical assistance to ADB’s developing member-countries to stem tax evasion, meet international standards for tax transparency, and participate in global initiatives against aggressive forms of tax planning,” it said.
It added that ADB’s update supports the work of organizations, including the Global Forum on Tax Transparency and Exchange of Information for Tax Purposes, the Organization for Economic Co-operation and Development, and the United Nations.
ADB said it has posted on its website a draft consultation paper to gather feedback from relevant external stakeholders on its proposed policy update.
“Feedback may be sent to integrity@adb.org until 31 July. ADB will revise the draft consultation paper as appropriate, taking into account feedback received from all stakeholders,” it said.
The policy update will go to ADB’s board of directors for consideration and approval in the fourth quarter of thus year.
In December this year, ADB will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2015 ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.