Capacity Support for Domestic Revenue Mobilization: The case of Belgian development cooperation and partner countries

Developing countries face various challenges in raising adequate tax revenue to ensure sustainable and credible financing of their development needs. Some of the problems lie in the design of tax policies. In contrast, others emanate from weaknesses in implementation, including the low administrative capacity of tax agencies and political obstacles to tax reforms. Furthermore, resource-rich countries and those in post-conflict scenarios face extra challenges in tax collection. Yet, the low tax revenue in developing countries is not only explained by domestic problems. In particular, challenges to taxing cross-border economic activities also play a significant role in contributing to explaining the low tax collection in developing countries. For these reasons, bilateral and multilateral donors are actively engaging in assisting developing countries to address the challenges. This paper has two main objectives. The first is to assess recent developments in donor capacity support for domestic resource mobilization (DRM) in developing countries... (download) 

R. Houssa