UK aid’s contribution to tackling tax avoidance and evasion

Review

We awarded the Department for International Development (DFID) an amber-red score and made four recommendations after finding its work on international tax was not well grounded in the needs and priorities of partner countries and had not made sufficient use of research or learning from its in-country tax programmes to inform its approach.

Findings

This review found that while the Department for International Development (DFID) had achieved some positive results with building capacity in partner countries, it had not done enough to ensure developing county needs and priorities were taken into account, either in policy discussions with other government departments about tax, or in the international processes.

DFID, whose role includes helping developing countries to join international policy discussions on tax avoidance and evasion, did not sufficiently ground its work in the needs and priorities of these countries, and followed a ‘top-down approach’.

We awarded DFID an amber-red rating, highlighting that the department did not set clear objectives for its influencing work in relation to international tax avoidance and evasion, and did not monitor its results. We also found that DFID needed to improve how it uses evidence and learning from its in-country tax programmes.

Recommendations

The UK aid strategy highlights tax as an area of important for DFID. As the department steps up its work in this area, ICAI makes a series of recommendations for improving performance:

1. DFID should make better use of in-country data, research and learning to inform its international influencing work.
2. DFID should take a more active approach to promoting coherence between the UK’s domestic and development policies on international tax.
3. DFID should be more proactive in sharing its expertise in development and capacity building when working with other government departments.
4. DFID should adopt a more strategic approach to influencing and cross-government working around international tax, setting objectives and ensuring these are adequately resources and properly managed.