Combating tax evasion and avoidance as part of domestic resource mobilisation is a critical prerequisite for tackling the multiple crisis and making the Sustainable Development Goals (SDGs) a reality.This is, on the one hand, due to the generated revenue that countries need to spend to recover from the COVID 19 pandemic and to address environmental challenges, such as climate change and biodiversity loss. And, on the other hand, combating tax evasion and avoidance helps to avoid conflicts, as tax systems generating sufficient revenues to finance sustainable development help to reduce inequality. Furthermore, tax systems, in which wealthy individuals cannot hide their wealth and multinational enterprises cannot shift their profits to low tax jurisdictions, feel fairer to other taxpayers.


Despite the many benefits of an increasingly globalised world, the free movement of goods, services and capital provides an opportunity to shift profits artificially and abusively, but nonetheless legally and thus erode tax bases (tax avoidance) or even hide taxable income from tax authorities illegally (tax evasion).This undermines the taxpayers´ confidence in the tax system and in the government as a whole. Moreover, countries lose significant amounts of much-needed revenue for public services and general development. Therefore, combating tax evasion and tax avoidance is central when it comes to improving domestic resource mobilisation.  


Apart from mobilising domestic resources, combating tax evasion and tax avoidance helps reducing inequalities. This is because access to advisors is unevenly distributed within a society: It is mainly the rich and wealthy including companies who can afford advisors to set up complex tax planning schemes that might be used for tax evasion or tax avoidance.


Therefore, providing countries with support for deterring and detecting tax evasion and tax avoidance is crucial. The following section presents several products that have been co-created or financially supported by the German development cooperation. What they all have in common is that they are pragmatic products to support tax policymakers and/ or tax administrators in generating much-needed domestic resources for a sustainable and equitable recovery from the pandemic by addressing tax avoidance and tax evasion.