Fiscal Regimes

11. Sources of support to governments

In terms of support for revenue administration, there are a variety of sources of technical assistance. It should also be noted that many developing states have self-financed technical assistance to support with revenue collection. There are many examples of this with customs reform and IT hardware and consultancy. Although there are upfront costs, there are identifiable benefits in terms of increased revenues plus greater control than when a project is donor finances and thus involves donor procurement processes. Extractives naturally lends itself to such self-financed technical assistance as there is a focused area of need (often a few big companies) with very large returns from acquiring international expertise. An extreme approach worth considering would be the wholesale outsourcing of revenue collection.

Another approach, more suited to developing long-term expertise is the use of embedded advisors, an approach used by Liberia Natural Resources Tax Unit to develop capacity of a new specialised unit. In addition, or perhaps instead of such long-term support, there is the option of specialised short-term training on particular aspects of extractive industry revenue collection, including auditing.

IMF Fiscal Affairs Department is able to undertake technical assistance upon request from states, such to its own resource constraints, often through its regional technical assistance centres. Amongst donors, the World Bank, DFID, GIZ and AfDB have at various points supported states to procure technical assistance as part of country specific programmes.

A further recent source of support is OECD’s Tax Inspectors without borders programme which matches developing countries with experienced tax auditors willing to provide support on auditing issues. This is not extractives specific support, but can assist with tax administration improvements which will be helpful for revenue collection from all sectors.

Another recent initiative is the Addis Tax Initiative, signed in 2015, whereby technical partners promise to double tax technical assistance by 2020 and developing states promised to do more to improve domestic resource mobilisation. If implemented, this will mean there should be a significant increase in resources available to assist countries in domestic resource mobilisation in future years.