The UK does not have an explicit policy to seek tax exemptions on ODA programmes.  UK programme rules and grant templates set out that the Foreign Commonwealth and Development Office expect our delivery partners to comply with tax legislation. The decision on whether to seek tax exemptions for programmes rests with the programme’s Senior Responsible Owner applying the normal value for money principles.

The exception is where the UK participates in multi-donor trust funds or co-funding through multilateral organisations, in this case the rules of the trust fund or the multilateral organisation apply. 

Most recent review: 2021

An informal review of the FCDO’s overseas network was undertaken in 2021 which reaffirmed that the majority of Posts do not seek tax exemptions for our ODA funded programmes.  Where exemptions were sought it was predominantly via existing domestic legislation or through the UK’s participation in multi-donor trust funds.  In some instances, tax exemptions were sought on duties and VAT but this was limited to a few projects rather than entire Posts.

The UK’s agreements and centralised guidance were also reviewed in 2021. The language was strengthened to help manage the risk of fraud/bribery. However, the language continues to advocate that taxes are paid where due.

Reviews of policies and guidance are undertaken on a periodic basis to ensure the UK is aligned with best practice. Future considerations will take account of the UN Subcommittee on Tax Treatment of ODA (ECOSOC) guidelines when deciding on tax agreements with partner countries alongside normal value for money principles.

Not applicable.