While the developed countries will most definitely feel the effect of coronavirus mostly in the unemployment rate, it is not them who will suffer the most. Indeed, developing economies that are still transitioning to stable economies and highly depend on the help of the 1^st world will be hit the hardest by coronavirus. Is the global pandemic already making its mark on the world? Unfortunately, yes it does – and we are already facing many changes.

The Financial Shockwave for developing economies

Developing countries, such as Bangladesh, sub-Saharan countries, and many others, strongly depend on the external help they get from many countries of Europe and the USA. Now that nearly everyone is economically struggling, each country has turned to itself, naturally prioritizing its citizens before anyone else. So, where does this leave developing economies that can’t make it on their own, How will they find a way to come out of the coronavirus crisis unscathed?

Unfortunately, nobody has offered a solution yet, but we are witnessing a lot of negative effects. Bangladesh, which spent millions on educating its young nation and improving its health care system, will probably be forced to stop funding these two areas. The money will go directly into fighting the epidemic and the potential economic crisis following it.

This is only one country out of many that are suffering from the same or worse effects from COVID-19. And this is exactly what might set the world back, nullifying the many accomplishments we’ve made so far.

In 1990, 36% of the world’s population was considered to be living on a little bit more than $1 a day. This sums up to about 1.9 billion people, more than North America and Europe combined. By 2016, this number dropped to approximately 700 million people, which represents a revolutionary improvement. This sums up to only 10% of the world’s population.

Mostly, some of the Asian and African countries owe these numbers to their first-world partners, whom they have put a lot of hope into stabilizing their economies. In India, for example, global initiatives saved over 170 million people from poverty, while Bangladesh lifted over 20 million people out of poverty.

Now, these numbers are rising again, and it is a legitimate reason to worry because poverty leads to illness and disease.

Cutting-down investment

Over 90 countries have already asked for emergency help from the International Monetary Fund, however, not many developed, well-standing economies are willing to help for now. The USA alone has decided to invest almost $3 trillion to help its working class and small businesses and, protect people from falling into poverty. Japan invested almost a trillion, and many European countries have followed the same path.

India, on the other hand, has decided to invest only $22.5 billion, and Pakistan plans to spend only $7.5 billion on helping its working class, even though it is the fifth largest and most populated country in the world.

Now that countries have come to a halt, we have yet to see whether the countries of the first world will be able to help those in need. Many experts say that this might be necessary because the biggest reason the world recovered from the WW2 is precisely strong economic ties between the countries. In a way, everyone hopes that this already established and tested tactic will come to life one more time to help humanity through a difficult time.

The post The coronavirus’ effect on Developing Economies appeared first on Dti.

Paying taxes is one of the fundamental principles of any country in the world, it is considered a duty of every conscientious, grown citizen. And while in some countries, citizens are aware that paying taxes benefits them, in others, they don’t.

Why Efficient Tax Collecting Matters

Having an efficient tax collecting system is one of the most important points any government should focus on. After all, this is what survival of a country and its nation depend on. Paying and collecting taxes allows governments to invest into infrastructure, health care, and education.

Unfortunately, developing countries are in a state where their citizens won’t, or very often can’t, fulfill their tax-paying duties. And even though one would think this is a problem only in the 3^rd world countries, 1^st world countries are not immune to tax evasion either. In 2017, the EU suffered a tax loss of 137.5 billion Euros.

Although it may seem like a lot of lost money, statistics show that the European citizens pay their taxes for the most part. The EU will definitely find a way to fight tax evasion, but its citizens still enjoy good public health care and education.

In African countries, however, things are different. Developing countries collect only a small part of taxes, approximately only 10%-20% of the overall GDP. In developed countries, it is more than double compared to this. An important question is raised here – what exactly is stopping developing countries from collecting taxes from their citizens?

The most obvious answer is the lack of political transparency. The institutions in these countries tend to be weak, and the freedom of the media is on a low level. Some of these countries also went through conflicts in their recent past – civil wars or wars for independence. All of this represents seemingly infertile soil when it comes to a good taxing atmosphere.

Additionally, most developing countries rely on sales taxes than personal taxes. This is mostly because the first one is easier to administer.

The most important part of tax collecting is having transparent politics where the citizens know exactly what their tax money is being spent on. Holding the statesmen accountable for everything they do with taxes gives a lot of power to people. They are allowed to have demands, and it feels like this is the culture that needs to be nurtured.

Moreover, statistics say that transparency plays a more important role than forcing citizens to fulfill their tax duty when it comes to tax revenue.

Tanzania can serve as the perfect example of how a lack of transparency and accountability by the statesmen can have a devastating effect on a country’s budget. The tax collection rate in Tanzania is barely over 12%.

In 2018, Mussa Assad, the controller and auditor general presented his annual report of 2016/2017. The report discovered that the country has spent 25.3 trillion Tanzanian Shillings into ghost ventures. This is equal to $10.88 billion. Accordingly, there was a lack of documents from the Ministry of Finance, such as “the proper cash book for the consolidated funds and bank reconciliation statements that provide crucial underlying information for the figures under verification.”

The issue is obvious, Tanzania is not successful in its attempts to keep a record of its transactions. More importantly, public institutions, such as the Ministry of Finance, refuse to share the information with the public. This manner of behavior allows them to remain uncountable for all the mismatches in numbers.

There Is a Solution

Now that we’ve established how transparency is the key to better tax revenue and higher GDP, how can a certain country accomplish it? The solution hides in modernization and using advanced technologies that are at the reach of our fingertips.

Data Tech International developed TaxCore as a solution that can help both developed and developing countries collect taxes more efficiently. TaxCore has been implemented in Fiji and is currently being successfully implemented in Samoa. There are many reasons why it is a state-of-the-art solution – the most evident one being the fact it offers complete transparency.

Once a local tax authority fully implements the TaxCore platform into its system, it becomes capable of following every single receipt printed out to a customer. This allows for tax authorities to regularly check whether any tax or vat fraud is occurring, or if a certain business is regularly printing receipts to the consumers. Secondly, it is a platform that takes advantage of modern technologies to their full capacity. Constantly using internet connection means that every single business is directly connected to the local tax office 24/7. This leaves no space for any fraud to pass unnoticed.

In cooperation with the governments, TaxCore even found a way to motivate customers to ask for receipts by introducing the CCA (Customer Compliance Award) program. The program motivates businesses too, as it can help them shape their marketing campaigns around it, attracting even more customers.

Data Tech International realized how modern technologies can significantly help in the fight against tax evasion, and we’ve successfully proved that this can be done successfully and easily with TaxCore.

To find out more about how TaxCore can help governments all over the world, feel free to get in touch with us.

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