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The 51�Թ� Handbook on Selected Issues in Protecting the Tax Base of Developing Countries (the Handbook) is a result of a project, undertaken by the Financing for Development Office in the context of its Capacity Development Programme on International Tax Cooperation, aimed at strengthening the capacity of developing countries to increase their potential for domestic revenue mobilization by protecting and broadening the tax base.

The 51�Թ� Committee of Experts on International Cooperation in Tax Matters (UN Tax Committee) has, over the years, been addressing issues in international tax cooperation, giving special attention to developing countries. Its deliberations have included issues relevant to protecting and broadening the tax base of developing countries, as well as the effective combating of tax evasion and tax avoidance. In recent years, then, there has been strong political momentum among developed countries to curtail tax base erosion and profit shifting (BEPS) by multinational enterprises engaged in a wide range of cross-border tax planning techniques that allow them to pay little or no tax anywhere in the world. Major work in this area has been undertaken by the Organisation for Economic Co-operation and Development (OECD). Its focus, however, is naturally on the priorities of member States of the OECD, which do not always reflect particular concerns of developing countries.

The Handbook draws upon the work done in this area by the UN Tax Committee, as well as the OECD work on BEPS, with a view to completing that work from the capacity development perspective for the benefit of developing countries. It aims to simplify, summarize and systematize all relevant materials, with a view to providing information geared towards the needs of developing countries, including through the provision of practical examples tailored to the realities of these countries.

The Handbook is intended to assist developing countries in three important areas: a) engagement and effective participation in relevant international norm-setting and decision-making processes, including in the OECD fora; b) assessment of relevance and feasibility of different options to protect and broaden their tax base, including those proposed in the context of the OECD work on BEPS; and c) effective and sustained implementation of the most suitable options from which they would benefit.

To this end, the Handbook provides a study of the OECD work on BEPS, along with an analysis of the strategies proposed so far to address the relevant issues. In doing so, it aims to define the most appropriate modalities to protect the tax base of developing countries, taking into account their needs and levels of development. In addition, it offers an overview of several approaches that might be relatively easy to implement, in light of the resource and capacity constraints of these countries.

Moreover, the Handbook analyses some major shortcomings of existing international tax norms, in the context of promoting domestic resource mobilization to foster sustainable development. On the one hand, it deals with matters that are considered also in the context of the OECD work on BEPS, with a view to reviewing the underlying fundamental policy and implementation aspects from the perspective of developing countries. On the other hand, it goes further to address other topics, which developing countries reported to be of particular relevance to them in protecting their tax base, namely: a) the taxation of cross-border services; b) the taxation of capital gains realized by non-residents; and c) tax incentives.

Inputs and feedback from developing countries, members of the UN Tax Committee, as well as relevant international and regional organizations, have been sought throughout the development of the Handbook. To this end, two workshops were held with the participation of these stakeholders: in New York, on 4 June 2014, and in Paris, on 23 September 2014. Overall, these meetings were attended by 24 government officials from developing countries in all regions of the world, 12 members of the UN Tax Committee, as well as representatives from the African Tax Administration Forum (ATAF), the Inter-American Center of Tax Administrations (CIAT), the Economic Commission for Latin America (ECLAC), the International Tax Compact (ITC) and the OECD.