International Development CommitteeFurther written evidence submitted by the Department for International Development

APPENDIX TO THE TRANSCRIPT OF THE ORAL EVIDENCE SESSION ON 15 MAY 2012

The following should be appended to the transcript of the evidence session in order to correct some errors in what was said and to provide clarification:

Question 160

The ratio of tax to GDP which was mentioned in the reply should be a minimum level of 20% (not 19%).

Question 164

In discussing the level of tax related spending, a figure of £159 million relating to the period 2001–06 was referred to. The period concerned was the five and a half years from January 2001 to June 2006. However, the £159 million figure quoted is not the estimated expenditure during this period. It is the estimated total tax related financial commitment for projects which were operational during the period and a few which, at the end of the period, were planned but not yet operational. The estimated tax related expenditure for the projects during the five and a half year period was £81 million.

Question 173

The DFID contribution to helping the Burundi revenue authority (the OBR) was about £5 million (not about £30 million).

The £19 million project in Afghanistan is in its early stages, so it should be described as assistance we are providing, rather than have provided, and the increase in revenue referred to cannot be attributed to this project (although DFID did help with increasing revenue through an earlier project).

The project in Tanzania is on-going, so the £8 million should be described as funding we are contributing, rather than funding we have contributed. The project period is 2009 to 2013.

Question 181

The example of preference for traditional courts over formal courts is a finding about attitudes in Liberia and an example of a challenge when promoting the spread of formal legal institutions. It is not the explanation for why informal businesses do not become formal or a finding about processes for resolving tax disputes.

Question 189

The response should not be interpreted as DFID helping with transfer pricing wherever we are supporting the development of large taxpayer units. The situation should be described as follows: “We are supporting the development of large taxpayer units in some countries. In Bangladesh, this includes help on transfer pricing”.

Question 190

The latter part of the response refers to efforts in the EU. To clarify, this is not about the EITI, but about EU proposals to introduce rules requiring extractives companies to report their payments to governments.

Question 194

The last sentence of the response, about CDC not making new investments through harmful tax regimes should be qualified by the statement “where it has the discretion as originating or sole investor”, to be in line with the new CDC policy.

Question 195

The statement about CDC having the power and discretion to apply that as a policy should be qualified by the statement “in many cases”, (because in some cases CDC may not be the originating or sole investor and may not have discretion).

To be clear, the last sentence of the response refers to international tax transparency and exchange of information standards. Therefore the sentence should say “Regimes that do not comply with the international tax transparency and exchange of information standards are defined by the OECD and Global Forum on Transparency and Exchange of Information for Tax Purposes”.

Question 198

To improve clarity the initial part of the response should say: “Yes. That is what has been put out, that the previous shareholding structure of Actis meant the taxpayer and Government did not receive any direct financial return at all, and that is my understanding.”

The end of the last sentence, which refers to the Government’s rights should be expressed as “have therefore given the Government rights to receive not only a value for the sale of 40%, but also a share in the carried interest profits of certain of Actis’s funds”.

Question 199

In the last part of the response, the explanation of the situation under the new deal should be expressed as follows: “under the new deal, the Government now has the right to receive a cash payment of US$ 13 million and a share in the carried interest profits of certain of Actis’s funds, rather than, as before, effectively an entitlement to share in the profits of Actis only after the Executive of the partnership has been able to take out the revenues, which, as you reported from the 2007 accounts, is broadly what has happened, leaving none for the contributing members.”

19 June 2012