THE TAXATION OF FOREIGN AID
Foreign aid is often exempt from taxation in recipient countries. Research on the topic is sparse and debate infrequent, and the system has become entrenched over 70 years.
A renewed focus on taxation for development has re-opened the debate on official development assistance (ODA) tax exemptions. The Addis Tax Initiative (ATI) goals on capacity-building and policy coherence (ATI, 2015) are potentially inconsistent with ODA tax exemptions. Two ATI members – the Netherlands and Norway – have unilaterally decided to refrain from requesting some ODA tax exemptions.