Bridging Tax Gap Demands Urgent Attention, Deputy Secretary-General Tells Group of 20 Side Event
Following are UN Deputy Secretary-General Amina Mohammed’s remarks at the Group of 20 (G20) side event — Domestic Resource Mobilization: Bridging the Tax Gap, held in Cape Town, South Africa, today:
It is a pleasure to join you for this important discussion on domestic resource mobilization and bridging the tax gap. This challenge stands at the heart of financing sustainable development and demands our urgent attention.
We are not on track to achieve the Sustainable Development Goals (SDGs). We have an estimated $4 trillion sustainable development financing gap annually. Domestic public finance is essential for financing the Sustainable Development Goals, increasing equity and strengthening macroeconomic stability.
Robust fiscal systems, including both tax and expenditure, drive economic growth, industrial transformation and environmental sustainability — contributing to alleviating poverty and reducing inequalities. Beyond raising revenue, taxation remains fundamental to fairness, trust and sovereignty.
Yet, after significant increases in taxation in developing countries in the decade before 2009, average tax-to-gross domestic product (GDP) ratios for all developing country groups are below 2010 levels, remaining far below those of developed countries.
Successive shocks over the last two decades have severely impacted the mobilization of domestic resources for development. As global crises intensify, it becomes more critical than ever to increase countries’ taxation capabilities.
The good news is that there is a large unmet tax potential in many developing countries. Many Governments have invested in tax reforms, demonstrating how nations can unlock unmet potential.
Strengthening tax systems requires sustained investment in capacity development based on country needs and priorities. As economies evolve, so must tax systems.
The increasingly digitalized economy presents new opportunities but also poses new challenges to an international tax system that has been designed for traditional business models.
We must develop future-ready tax policies that ensure global fair taxation without imposing excessive burdens — both on taxpayers and tax authorities. Many organizations — including the UN, International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), World Bank and regional and national tax bodies — are supporting countries in this effort.
Initiatives like Tax Inspectors Without Borders help countries enhance domestic revenue mobilization. The Addis Tax Initiative and broader multilateral and regional efforts provide platforms for collaboration, knowledge-sharing and technical assistance.
However, political will remains insufficient — with countries not investing enough in tax system reform and administration capacity, and donors not delivering promised assistance for supporting revenue mobilization.
The fourth International Conference on Financing for Development in Sevilla in June offers a pivotal moment to turn commitments for domestic tax reforms into actions and make tax systems more fair, transparent, efficient and effective.
In our interconnected world, strengthening countries’ fiscal frameworks must go hand in hand with international tax cooperation. Every year, billions of dollars that should fund education, healthcare and infrastructure are lost to tax avoidance and evasion, illicit financial flows and financial crime.
Africa alone loses approximately $88.6 billion annually to illicit financial flows — around 3.7 per cent of the continent’s GDP — draining resources vital for economic development.
The G20 has played an important role in advancing tax transparency and tackling tax avoidance. Expanding the automatic exchange of information and enhancing transparency in beneficial ownership remain paramount.
But, more must be done to ensure that all countries — particularly those with limited administrative capacity — can fully participate in shaping global tax norms.
The ongoing negotiations on a UN Framework Convention on International Tax Cooperation present a historic opportunity for progress towards a fair, inclusive, and effective international tax system.
Through the Pact for the Future, Member States have committed to improving the inclusiveness and effectiveness of tax cooperation under the UN. Ensuring that international tax rules reflect the diverse needs, priorities and capacities of all countries is central to this effort.
The two early protocols in the UN Convention — on taxation of income from cross-border services in a digitalized and globalized economy and on preventing and resolving tax disputes — can demonstrate an inclusive and impactful approach.
The UN process can strengthen global cooperation, enhance legitimacy, certainty, resilience and fairness of international tax rules, while addressing challenges in domestic resource mobilization and ensuring that all countries have a seat at the table.
Today’s discussion is an opportunity to drive forward these critical issues. The United Nations remains fully committed to these efforts. Together, we can build a fairer, more transparent and more effective international tax system — one that provides every country with the means to invest in its future and achieve the Sustainable Development Goals.