ATI Regional Workshop on Tax Expenditures (Asia): Key Takeaways

The ATI Regional Workshop on Tax Expenditures (Asia) was co-organized by the Addis Tax Initiative (ATI), the Council on Economic Policies (CEP), and the German Institute of Development and Sustainability (IDOS), together with UNDP and the Philippine Department of Finance (DoF).

The Workshop Report is available for download on the ATI website.

Watch the highlights VIDEO.

  • The workshop held in Manila, The Philippines (1-3 March, 2023) brought together nearly 60 participants from 13 countries who shared a common commitment to enhancing national frameworks in the tax expenditure field. Building on the success of the regional workshops held in Nigeria and Kenya in 2022, the three-day event featured a range of sessions and panel discussions covering key topics such as governance, benchmarking, estimation as well as evaluation and reform of tax expenditures. In addition, the program discussed the implications of the Global Anti-Base Erosion (GloBE) Rules on the use of tax incentives for investment and, for the first time, included a session addressing the link between tax expenditures and the Sustainable Development Goals (SDGs), and one on the use of tax expenditures supporting the production and consumption of fossil fuels. 

    The workshop highlighted the following takeaways: 

    • A sound tax expenditure governance framework should involve both the Ministry of Finance as well as the Parliament.  
    • Defining a benchmark tax system is not always straightforward and there is no general blueprint. 
    • Governments need to address technical and methodological challenges, but often there is also a political dimension to the question whether a specific provision should be considered a tax expenditure or part of the benchmark system. 
    • Almost all governments use the so-called “revenue forgone” approach to assess the fiscal cost of specific tax expenditures. Yet, due to data and modelling limitations uncertainty might be considerable. 
    • According to the Global Tax Expenditures Database (GTED), more and more governments have started to publish data on tax expenditures. Yet, several challenges still prevail to ensure a minimum level of transparency in the field, going from lack of human as well as technical resources (e.g. electronic tax returns) to insufficient coordination across institutions and a lack of political will. 
    • The use of tax incentives for investment is widespread. The impact of the recently agreed international tax deal (GloBE Rules) and, in particular, of Pillar Two, will be significant when it comes to their prevalence. There will be strong reasons for governments to review the use of tax incentives since many will be affected by the new tax rules. 
    • Governments worldwide still subsidize fossil fuels, the combustion of which increases GHG emissions, and tax expenditures account for one of the largest shares of these subsidies. Phasing out fossil fuel subsidies is vital to combating climate change. 
    • When effective, tax expenditures can contribute to the achievement of the SDGs. On the other hand, if ill-designed, they can be highly ineffective and even run against the SDG agenda. 
    • Ex-ante as well as ex-post evaluation frameworks are strikingly rare and, yet crucial to identify which provisions are cost-effective and which ones need to be reformed. The quantity and quality of data are key to ensure that tax expenditures are comprehensively assessed. 
    • Tax expenditure reforms should aim at improving the effectiveness of tax systems, ensuring that they are better aligned with governments’ policy goals. Yet, reforming tax expenditures is challenging due to, among other factors, vested interests often associated with individual preferences and institutional mechanisms. 

  • The workshop built on the ATI Commitment 3 and the Global Tax Expenditures Database (GTED), which was launched by CEP and IDOS in June 2021. With its worldwide coverage, the GTED helps to increase transparency on tax expenditures and sheds light on their critical role in tax systems around the globe. As shown by the GTED, the number of countries reporting on tax expenditures has been growing steadily over the years. However, the scope and quality of reports still vary significantly. Only few countries in the world have started to systematically evaluate the tax expenditures they use in order to find out whether or not the benefits obtained match the fiscal costs incurred.

    The workshop in Manila, the Philippines, was the third in a series of regional workshops organised by ATI, CEP, and IDOS. On this occasion, the DOF joined as a local partner. The event provided a platform to ATI members and other interested governments in the region to exchange with regional partners and international experts on the estimation, reporting and evaluation of tax expenditures.

    Further details can be found here.

  • Wednesday, 1 March 2023
    Governance, Benchmarking & Estimation of Tax Expenditures (TEs)
    09.30-10.30Welcome Address & Introduction
    10.30-12.00Session 1 – A Governance Framework for TEs
    12.00-13.30Lunch Break
    13.30-15.00Session 2 – Establishing a Benchmark
    15.30-16.00Coffee Break
    16.00-17.30Session 3 – Estimating Revenue Forgone
    Thursday, 2 March 2023
    TE Reporting & Topical Sessions
    09.00-09.15Welcome to Day 2 & Setting the Stage
    09.15-10.45Session 4 – TEs Reporting
    10.45-11.15Coffee Break
    11.15-12.45Session 5 – TEs in the Extractive Sector & Fossil Fuel Subsides
    12.45-14.00Lunch Break
    14.00-15.30Session 6 – TEs in the International Tax System
    15.30-16.00Coffee Break
    16.00-17.30Session 7 –TEs & the Sustainability Development Goals (SDGs)
    19.00-21.00Social dinner
    Friday, 3 March 2023
    TEs Evaluation and Reform
    08.50-09.00Welcome to Day 3 & Setting the Stage
    09.00-09.30Presenting the ATI
    09.15-10.45Session 8 – Ex-ante Assessment & Ex-post Evaluation of TEs
    10.45-12.00Breakout Session (Evaluation)
    12.00-13.30Lunch Break
    13.30-15.00Session 9 – Driving TEs Reform
    15.00-16.00Closing Remarks