Chapter 4 | Page 163 their tax burden to low tax havens, depriving the host government of the tax revenue. The main challenges in tackling tax avoidance include State culpability for allowing tax avoidance to be practised by companies in other States and in frustrating the efforts of other States to combat these practices. Fair, transparent, accountable and equitable taxation systems are key requirements for maximising State resources for ESC rights realisation. Yet tax evasion and avoidance drain developing countries of billions of dollars each year as the result of systemic and deliberate minimisation of the tax share of companies and wealthy individuals.107 Such illicit financial flows from non-tax-abuse activities in developing countries to secrecy jurisdictions is a significant component of capital flow from developing countries to developed countries which negatively impacts resources available for these States.108 This is particularly relevant in the area of corporate tax planning practices that are deliberately designed to avoid taxes. Another key area of concern are the various types of tax incentives, such as tax holidays and tax concessions, which are used by governments to attract investors in selected areas. It is argued that tax incentives are ineffective in countries with a poor investment climate.109 The practice of tax exemptions and tax incentives also creates huge revenue problems for developing countries. According to the OECD, tax incentives tend to reduce government revenues by 1-2 percent of GDP.110 Tax incentives for investments may not always achieve their objectives, and may not be sustainable in the future. It 107 CIDSE Resources for Development Working Group, Financing Sustainable Development: Are we up to the challenge? (CIDSE, 2014), 5. 108 For example see, Dev Kar and Joseph Spanjers, Illicit Financial Flows from Developing Countries: 2003-2012 (Global Financial Integrity, Washington, D.C., 2014); Petr Janský, 'Updating the Rich Countries’ Commitment to Development Index: How They Help Poorer Ones Through Curbing Illicit Financial Flows' (2014) Social Indicators Research 1-23. 109 International Monetary Fund et al, Supporting the Development of More Effective Tax Systems: Report to the G-20 Development Working Group (IMF, 2011), <http://www.oecd.org/ctp/48993634.pdf>. 110 Tax Justice Network-Africa and ActionAid International, Tax competition in East Africa: A race to the bottom? (TJNA & ActionAid, 2012), <http://www.actionaid.org/sites/files/ actionaid/eac_report.pdf>.