Brief (2014) which sheds light on the tax policies and practices of Scandinavian development finance institutions (DFI). 

Tax revenues form the basis of a sustainable economy and are crucial for developing countries that seek to invest in poverty reducing services while also becoming less dependent on foreign aid. However, research shows that illicit financial flows amount to at least one trillion US dollars leaving developing countries every year. 

Meanwhile, European governments have increasingly put private finance at the core of their international development efforts, and development finance institutions (DFI) are playing an ever more central role channeling investments to developing countries. 

DFIs hold a considerable opportunity to influence private actors’ tax practice by setting criteria and standards for responsible tax policies and practice when selecting partners and projects. With this they could take a lead role in being agents for change and enable more domestic resource mobilisation in developing countries.  

This briefing analyses the three Scandinavian DFIs IFU (Denmark), Norfund (Norway) and Swedfund (Sweden) by looking at how they: 

  • Use tax as an indicator to measure development impact
  • Report on tax and development
  • Consider tax more strategically in their investments. 

The briefing highlights best practices and presents recommendations for how they can further improve their policy and practice and play a more leading role in tax and development. 

Amongst these recommendations are: 

  • Measuring development: Publish your development indicators and include tax as an important indicator in your project evaluation. 
  • Transparency and reporting: Require full country by country from partners and information on beneficial ownership
  • Tax policy: Establish a clear responsible tax policy and require this from companies
  • Internal: Engage in a dialogue with a variety of stakeholders and ensure exchange of best practice

Read the policy brief:

Briefing on Scandinavian Development Finance Institiutions

Prtepared by IBIS