This is the first comprehensive guide to fighting tax crimes. It sets out ten global principles, covering the legal, strategic, administrative and operational aspects of addressing tax crimes. The guide has been prepared by the OECD Task Force on Tax Crimes and Other Crimes (TFTC). It draws on the experience of the members of the TFTC as well as additional survey data provided by 31 jurisdictions: Australia, Austria, Brazil, Canada, Czech Republic, Denmark, El Salvador, Finland, France, Georgia, Germany, Greece, Iceland, Indonesia, Italy, Japan, Lithuania, Luxembourg, Malaysia, the Netherlands, New Zealand, Norway, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, the United Kingdom and the United States. The guide shows that the fight against tax crime is being actively pursued by governments around the world. Jurisdictions have comprehensive laws that criminalise tax offences, and the ability to apply strong penalties, including lengthy prison sentences, substantial fines, asset forfeiture and a range of alternative sanctions. Jurisdictions generally have a wide range of investigative and enforcement powers as well as access to relevant data and intelligence. Suspects’ rights are nearly universally understood in the same way and enshrined in law. Increasingly, jurisdictions are taking a strategic approach to addressing tax offences, which includes targeting key risks and leveraging the tools for co-operation with other law enforcement agencies, both domestically and internationally. At the same time, tax crime investigations increasingly need to be undertaken with greater efficiency and fewer resources. However, data shows that the investment is worthwhile, with some jurisdictions being able to calculate the return on investment from the criminal tax investigation teams and reporting recovery of funds well in excess of the expenditure, ranging from 150% to 1500% return on investment. The role played by criminal tax investigators thus contributes significantly to jurisdiction’s overall tax compliance efforts. The implementation of the 10 global principles around the world is critical in addressing the tax gap and supporting domestic resource mobilisation. Recommendations: This guide recommends that jurisdictions benchmark themselves against each of the ten global principles. This includes identifying areas where changes in law or operational aspects are needed, such as increasing the type of investigative or enforcement powers, expanding access to other government-held data, devising or updating the strategy for addressing tax offences, and taking greater efforts to measure the impact of the work they do. In particular, developing jurisdictions are encouraged to use the guide as a diagnostic tool to identify principles which may not yet be in place. Jurisdictions which have made commitments to capacity building for developing jurisdictions in tax matters (such as the Addis Tax Initiative or the G7 Bari Declaration) are recommended to consider how they can work with developing jurisdictions to enhance tax crime investigation based on this guide, including through providing support for the OECD International Academy for Tax Crime Investigation and other regional initiatives. The TFTC will continue its work in facilitating international co-operation on fighting tax crime, particularly on issues where multilateral action is required to address common challenges. This could also include collaborating to create an agreed strategy for addressing tax crimes that have cross-border elements. Such a strategy could include identifying the risks of such tax crimes, defining the additional data and other mechanisms that are needed to more effectively combat such tax crimes and working towards ensuring that data and mechanisms are available and efficient in practice. (2017)
OECD/ Global Forum on Transparency and Exchange of Information for Tax Purposes – AUTOMATIC EXCHANGE OF INFORMATION IMPLEMENTATION REPORT 2018
In 2014, the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) adopted the Standard for Automatic Exchange of Financial Account Information in Tax Matters (the AEOI Standard), developed by the OECD working with G20 countries. To deliver a level playing field, the Global Forum launched a commitment process under which 100 jurisdictions committed to implement the AEOI Standard in time to commence exchanges in 2017 or 2018. Exchanges accordingly commenced in September 2017 and a total of 86 jurisdictions are already exchanging financial account information automatically, marking a major shift in international tax transparency and the ability of jurisdictions to ensure tax compliance. This represents the vast majority of the jurisdictions that committed to implement the AEOI Standard. It also includes two developing countries that were not asked to commit to implement the AEOI Standard but which spontaneously committed commence exchanges under the AEOI Standard by 2018. So far in 2018, these 86 jurisdictions have completed around 4,500 bilateral exchanges. Each exchange contains detailed information on the financial accounts held in the sending jurisdiction by tax residents of their partner jurisdictions. This milestone represents a major success, with even more jurisdictions expected to commence exchanges in the coming months. This widespread move to the automatic exchange of information is particularly remarkable when it is considered that all the jurisdictions exchanging information had to (i) introduce detailed domestic rules requiring their financial institutions to collect and report the data to be exchanged, (ii) put in place international agreements with each of their partners to deliver the widespread networks necessary for automatic exchange, and (iii) put in place the technical solutions to link into the Common Transmission System (CTS) that was put in place by the OECD’s Forum on Tax Administration and which is being managed by the Global Forum. While the vast majority of the 100 jurisdictions committed to commence exchanges in 2017 or 2018 delivered on their commitments, an effective AEOI Standard based on a level playing field requires full delivery by all. As set out in this report, the remaining gaps are mostly due to delays in some jurisdictions putting in place the domestic legislative framework for the collection of the information or the international legal agreements required for the exchanges. The Global Forum is therefore working with the remaining jurisdictions to maintain the focus on the implementation and to complete the delivery of the commitments. In addition to timeliness, the quality of implementation is also important. The Global Forum is therefore reviewing in detail each jurisdiction’s domestic legislative frameworks to ensure their compliance with the AEOI Standard, as well monitoring the international legal frameworks being put in place to ensure the delivery of the commitments made. The Global Forum is also developing a peer review process to ensure the effective operation of the AEOI Standard in practice. This is the second detailed annual report to be published by the Global Forum on the implementation status of those jurisdictions committed to implement the AEOI Standard. Its contents reflect the situation as at 22 November 2018. The latest developments can be found on each jurisdiction’s website and/or on the AEOI Portal.
Declaración de Punta del Este. UN LLAMADO A REFORZAR LAS MEDIDAS CONTRA LA EVASIÓN FISCAL Y LA CORRUPCIÓN
Considerando que es importante consolidar la política fiscal y la administración tributaria para movilizar mejor los recursos nacionales en beneficio de nuestros ciudadanos, proporcionando a los gobiernos los recursos e instrumentos necesarios para alcanzar nuestros respectivos objetivos de desarrollo y el mantenimiento del crecimiento económico a fin de lograr los Objetivos de Desarrollo Sostenible; Considerando que los países de América Latina se enfrentan a importantes desafíos con respecto a la recaudación fiscal, ya que muchos países poseen una proporción de impuestos en el PIB significativamente inferior a la media de la OCDE del 34,3 %; con una proporción media en América Latina y el Caribe del 22,7 %, inferior en más de diez puntos; Considerando que la Agenda de Acción de Addis Abeba de las Naciones Unidas afirmó la necesidad de redoblar los esfuerzos para reducir sustancialmente los flujos financieros ilícitos para 2030, con el objetivo de eliminarlos eventualmente, incluyendo la lucha contra la evasión fiscal y la corrupción a través de una regulación nacional reforzada y una mayor cooperación internacional; Considerando que los esfuerzos para afrontar los flujos financieros ilícitos pueden mejorarse adoptando una perspectiva del gobierno en su conjunto, como se refleja en el Diálogo de Oslo de la OCDE y se describe más detalladamente en las publicaciones Fighting Tax Crime: the 10 Global Principles («Lucha contra la delincuencia fiscal: los diez principios globales»); Effective Inter-Agency Co-Operation in Fighting Tax Crimes and Other Financial Crimes («La cooperación interinstitucional efectiva en la lucha contra los delitos fiscales y otros delitos financieros») y Improving Co-operation between Tax Authorities and Anti-Corruption Authorities in Combating Tax Crime and Corruption («Mejora de la cooperación entre las autoridades fiscales y las autoridades anticorrupción en la lucha contra la delincuencia y la corrupción»); Considerando que el hecho de afrontar la evasión fiscal, la corrupción y otros delitos financieros es de vital importancia para mejorar la confianza pública en las instituciones estatales, asegurar una distribución justa y equitativa de la carga financiera asociada con el suministro de bienes y la prestación de servicios públicos y lograr una recaudación fiscal sostenible; Considerando que la comunidad internacional ha identificado pasos importantes que pueden mitigar la evasión fiscal, la corrupción y otros delitos financieros; Considerando que se ha logrado un progreso sin precedentes en la promoción de una mayor transparencia fiscal y el intercambio de información en la última década con el apoyo del Foro Global y otras plataformas internacionales; (…)
OECD – Guidance for the development of synthesised texts. Multilateral Convention to Implement Tax Treaty Measures to Prevent. BEPS BEPS ACTION 15
OECD – Guidance for the development of synthesised texts. Multilateral Convention to Implement Tax Treaty Measures to Prevent. BEPS BEPS ACTION 15. The OECD Secretariat has prepared this Guidance for the development of synthesised texts to facilitate the interpretation and application of tax agreements modified by the Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting (hereafter the “MLI”). The Secretariat is grateful to several jurisdictions for their input to the guidance. This Guidance has been prepared to provide suggestions to Parties to the MLI for the development of documents they could produce to help users of the MLI to understand its effects on tax agreements it covers and modifies (the “Covered Tax Agreements”). The objective is to present in a single document and for each covered tax agreement: the text of a Covered Tax Agreement, including the text of relevant amending instruments; the elements of the MLI that have an effect on the Covered Tax Agreement as a result of the interaction of the MLI positions of its Contracting Jurisdictions; and information on the dates on which the provisions of the MLI have effect in each Contracting Jurisdiction for the Covered Tax Agreement. Such documents would be referred to as “synthesised texts”. To ensure clarity and transparency for the application of the MLI, Parties that intend to develop documents setting out the impact of the MLI on their Covered Tax Agreements should be as consistent as possible. This Guidance sets out a suggested approach for the development of synthesised texts. The Guidance also suggests sample language that could be included in the synthesised texts. At this stage, the sample language includes: a sample general disclaimer on the synthesised texts; a sample disclaimer on the entry into effect of the provisions of the MLI; for each MLI Article, “sample boxes” of the provisions of the MLI that could modify the covered tax agreements; and sample footnote texts on the entry into effect of the provisions of the MLI. This Guidance exists as a tool for members of the ad hoc Group of the MLI and they may use this tool to develop their own approach taking account of legal constraints and existing practices. It is also expected that third parties, including publishers and advisors, will also develop synthesised texts. To ensure clarity on the application of the MLI and to maximise consistency in the development of tools to ease the understandings of the MLI, it would be helpful for third parties to follow the approach set out in this Guidance. The OECD Secretariat therefore intends to make the Guidance available to a wider audience in 2018. The Guidance may be updated in future years on the basis of real-life experiences with developing synthesised texts. (November 2018).
OECD – Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting: Entry into effect under Article 35(1)(a)
OECD – Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting: Entry into effect under Article 35(1)(a). Note by the OECD Secretariat. 1. This note, prepared with the assistance of the OECD Directorate for Legal Affairs, seeks to clarify the interpretation and application of Article 35 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) on the entry into effect of the provisions of the MLI. 2. The question which has arisen on Article 35(1)(a) is this: when will the MLI have effect for taxes withheld at source where the latest of the dates of entry into force of the MLI for a pair of Contracting Jurisdictions is on 1 January of a given calendar year?(…)
1. The International Compliance Assurance Programme (ICAP) is a programme for a multilateral cooperative risk assessment and assurance process. It is designed to be a swift and coordinated approach to providing multinational groups (MNE groups) willing to engage actively, openly and in a fully transparent manner with increased tax certainty with respect to certain of their activities and transactions, while identifying areas requiring further attention. ICAP does not provide an MNE group with legal certainty as may be achieved, for example, through an advance pricing agreement, but gives assurance where tax administrations participating in the programme consider a risk to be low. 2. This handbook contains information on a pilot for ICAP, which commences in January 2018 including tax administrations from eight jurisdictions (the participating tax administrations): Australia, Canada, Italy, Japan, the Netherlands, Spain, the United Kingdom and the United States. The information contained in this handbook will be revised based on experiences gained in the pilot, and will be used as the basis for an ICAP Operating Manual, which will describe in detail the process to be applied beyond the pilot. 3. The process of the pilot can be summarised as follows. • In advance of the pilot launch, a number of MNE groups have been identified, which have headquarters in the jurisdictions of one of the eight participating tax administrations. It has been agreed with the MNE group which jurisdictions of participating tax administrations will be covered by its ICAP risk assessment (i.e. these will be the covered tax administrations). All MNE groups and participating tax administrations will be invited to participate in a Participant Orientation Event, to be held in Washington DC in January 2018, hosted by the IRS. • Following the Participant Orientation Event, MNE groups participating in the pilot will be invited to provide a package of documentation, the content of which is set out in this handbook. Depending on the approach agreed between the MNE group and the tax administration in its headquarter jurisdiction (the lead tax administration), this package may be delivered by the MNE group (i) to each covered tax administration directly, or (ii) to the lead tax administration, which shares the package with other covered tax administrations through existing tax information exchange agreements. Approximately six weeks after the documentation package is provided, a kick-off meeting will be held between the MNE group and all covered tax administrations, to discuss the documentation package and ensure a common understanding of its content and the process to be followed. • The covered tax administrations then conduct an assessment of the transfer pricing risks and permanent establishment risks (the covered risks) posed by the MNE group, based on the information contained in the documentation package and other information held by the covered tax administrations. This will begin with a high level initial risk assessment (a Level 1 risk assessment) but may be extended to more in-depth risk assessment (a Level 2 risk assessment) if required. The covered tax administrations will seek to gain assurance that the MNE group poses no or low risk for each of the covered risks, within the timeframes described in this handbook. At the end of the risk assessment process, and subject to domestic requirements and processes, each covered tax administration will issue an outcome letter to the MNE group, which will set out each of the covered risks where the tax administration has been able to gain assurance, and any identified tax risks that remain. • The ICAP process and the pilot is based on a collaborative working relationship between the MNE group and covered tax administrations, built on transparency, cooperation and trust. Throughout this process, the lead tax administration will engage in regular and timely communication with the MNE group to ensure it is kept abreast of the status of its risk assessment and any issues as they arise. (2018).
OECD Taxation Working Papers N. 39. SIMPLIFIED REGISTRATION AND COLLECTION MECHANISMS FOR TAXPAYERS THAT ARE NOT LOCATED IN THE JURISDICTION OF TAXATION. A REVIEW AND ASSESSMENT
OECD Taxation Working Papers N. 39. SIMPLIFIED REGISTRATION AND COLLECTION MECHANISMS FOR TAXPAYERS THAT ARE NOT LOCATED IN THE JURISDICTION OF TAXATION. A REVIEW AND ASSESSMENT. This paper reviews and evaluates the efficacy of simplified tax registration and collection mechanisms for securing compliance of taxpayers over which the jurisdiction with taxing rights has limited or no authority to effectively enforce a tax collection or other compliance obligation. Although the experience of jurisdictions in addressing this problem has involved primarily consumption taxes, that experience, and the lessons that can be learned from it, are applicable as well to other tax regimes that confront the same problem. Many jurisdictions have implemented (and are in the process of implementing) simplified registration and collection regimes in the business-to-consumer (B2C) context for taxpayers that are not located in the jurisdiction of taxation. Although the evidence regarding the performance of the simplified regimes adopted by jurisdictions is still quite limited, the best available evidence at present (in the European Union) indicates that simplified regimes can work well in practice and a high level of compliance can be achieved since there is a concentration of the overwhelming proportion of the revenues at stake in a relatively small proportion of large businesses and since the compliance burden has been reduced as far as possible. It also indicates that the adoption of thresholds may be an appropriate solution to avoid imposing a disproportionate administrative burden with respect to the collection of tax from small and micro-businesses in light of the relatively modest amount of revenues at stake and that a good communications strategy is essential to the success of a simplified regime (including appropriate lead time for implementation). In sum, simplified registration and collection regimes represent an effective approach to securing tax compliance when the jurisdiction has limited or no authority effectively to enforce a tax collection or other compliance obligation upon a taxpayer.
The Chinese government has launched a series of Value-added Tax (“VAT”) reforms over the past few years to align its VAT system with internationally accepted principles, and to adapt to the economic development in China and the world at large, with an aim to modernize the country’s governance system and administration capabilities. On 1 July 2014, the multiple VAT rates of 6%, 4% and 3% (for small-scale VAT payers) were simplified and unified into a single rate of 3%. On 1 May 2016, the Business Tax (“BT”)-to-VAT reform was rolled out nationwide wherein BT on taxable services was replaced by VAT, such that input tax credit could be fully available along all cycles of value chains in order to avoid the cascading effect of BT. On 1 July 2017, the 4-tier VAT rates of 17%, 13%, 11% and 6% were simplified and unified into the 3-tier rates of 17%, 11% and 6%. All the above measures were made to continuously develop a simpler, clearer and more scientific VAT system.
OECD – IMPROVING CO-OPERATION BETWEEN TAX AUTHORITIES AND ANTI-CORRUPTION AUTHORITIES IN COMBATING TAX CRIME AND CORRUPTION
OECD – IMPROVING CO-OPERATION BETWEEN TAX AUTHORITIES AND ANTI-CORRUPTION AUTHORITIES IN COMBATING TAX CRIME AND CORRUPTION. This report was prepared jointly by the World Bank Group’s Governance Global Practice and the OECD Centre for Tax Policy and Administration, and was developed within the OECD Task Force on Tax Crimes and Other Crimes. This report has been prepared by Graeme Gunn and Emma Scott, under the guidance of Anders Hjorth Agerskov, Melissa Dejong, and Mark Johnson. Introduction 1. Countries around the globe are facing a common threat posed by increasingly complex and innovative forms of financial crime. By exploiting modern technology and weaknesses in local legislation, criminals can now covertly move substantial sums between multiple jurisdictions with relative ease and great speed. As a consequence, criminal activity such as tax evasion, bribery and other forms of corruption are becoming ever more sophisticated. Meanwhile, law enforcement structures have, in many cases, not evolved at the same speed and the international community has struggled to keep up with this threat. 2. While viewed as distinct crimes, tax crime and corruption are often intrinsically linked, as criminals fail to report income derived from corrupt activities for tax purposes, or over-report in an attempt to launder the proceeds of corruption. A World Bank study of 25 000 firms in 57 countries found that firms that pay more bribes also evade more taxes. 1 More broadly, where corruption is prevalent in society, this can foster tax evasion. A recent IFC Enterprise Survey found that 13.3% of businesses globally report that “firms are expected to give gifts in meetings with tax officials”, with the frequency of this ranging across countries from nil to 62.6%. 2 3. The links between tax crime and corruption mean that tax authorities and law enforcement authorities can benefit greatly from more effective co-operation and sharing of information. Tax authorities hold a wealth of personal and company information such as income, assets, financial transactions and banking information, that can be a valuable source of intelligence to anti-corruption investigators. Similarly, anticorruption authorities can provide tax administrations with important information about ongoing and completed corruption investigations that could assist a decision to reopen a tax assessment, initiate a tax crime investigation, or more generally promote integrity among tax officials. The investigation into Brazilian majority-state-owned oil company, Petrobras, initiated in 2014, is a prime example of this. Civil tax auditors played a critical role in this transnational corruption investigation by analysing suspects’ tax and customs data and sharing this with the police and public prosecutor as permitted by law. As a result, officials were able to uncover evidence of money laundering, tax evasion, and hidden assets, and to track financial flows. While criminal investigations and prosecutions are still ongoing, as of August 2018, the operation has resulted in dozens of charges against high profile public officials and politicians and billions of dollars in criminal fines, tax penalties, and recovered assets. 4. However, there remains significant room for improvement in co-operation between tax authorities and anti-corruption authorities. Despite success stories, anecdotal evidence provided by many jurisdictions involved in this report suggests that reporting and information sharing between authorities often occurs on ad-hoc basis rather than systematically. This is reinforced by the OECD’s 2017 study on the Detection of Foreign Bribery, which provides that only 2% of concluded foreign bribery cases between 1999 and 2017 were detected by tax authorities.3 5. These issues are at the heart of the current global agenda. In 2015, the United Nations agreed 17 Sustainable Development Goals, including a specific target of substantially reducing corruption in all of its forms. 4 The World Bank and OECD strongly support these goals and recognise the importance of dealing with corruption and tax evasion at a policy and technical level. In this context, for many years, international organisations including the OECD and World Bank have been active in supporting countries to strengthen their legal and institutional frameworks for the prevention, detection, investigation, and prosecution of tax crime and corruption, and the recovery of the proceeds of these crimes. In 2012, the Financial Action Task Force (FATF) recognised these links by including corruption, bribery, and tax crimes in the list of designated predicate offences for money laundering purposes in its International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation. 5 6. In 20096 and 20107 , the OECD issued two Council Recommendations calling for greater co-operation and better information sharing between different government agencies involved in combating financial crimes. These are supported by the Oslo Dialogue, an initiative which encourages a whole of government approach to tackling all forms of financial crime. 8 As part of this initiative, in 2017, the OECD published its third edition of Effective Inter-Agency Co-operation in Fighting Tax Crimes and Other Financial Crimes (the Rome Report) which analyses the legal gateways and mechanisms for inter-agency co-operation between authorities responsible for investigating tax and other financial crimes. At the same time, the OECD published Ten Global Principles for Fighting Tax Crime, the first report of its kind which allows countries to benchmark their legal and operational frameworks for tackling tax crime, and identify areas where improvements can be made. 7. The OECD continues to advance practical tools and training to combat tax crime and corruption. OECD Handbooks on Money Laundering Awareness and Bribery and Corruption Awareness provide practical guidance to help tax officials identify indicators of possible criminal activity in the course of their work. In 2013, the OECD International Academy for Tax Crime Investigation was launched in co-operation with Italy’s Guardia di Finanza to strengthen developing countries’ capacity to tackle illicit financial flows. In 2017, a sister Academy was piloted in Kenya and will be formally launched in Nairobi, in late 2018. In July 2018, OECD and Argentina’s Federal Administration of Public Revenue (AFIP) signed a MoU to establish a Latin American centre of the OECD Academy in Buenos Aires, Argentina, with the first programme planned for late 2018. 8. The World Bank is also helping strengthen developing countries’ capacity to stem tax evasion. In 2015, the World Bank and the International Monetary Fund (IMF) launched the Joint Initiative to Support Developing Countries in Strengthening Tax Systems to give greater voice to developing countries in the global debate on tax issues. 9 Through this joint initiative, the World Bank and the IMF are assembling a set of tools and guidance aimed at addressing developing economy needs. As part of this work, the World Bank has also partnered with the governments of Norway and Denmark to launch the Tax Evasion Initiative to enable enforcement agencies in developing countries to more effectively combat tax crimes and other financial crimes. Under the Tax Evasion Initiative, the World Bank is developing a set of tools, including a handbook on tax evasion schemes and red flags for tax investigators and auditors, as well as a methodology for assessing the performance of criminal tax investigation units which is currently being piloted. 9. In researching, developing, and publishing this joint report on the legal, strategic, and operational aspects of co-operation between tax authorities and anti-corruption authorities, the World Bank and OECD aim to complement their existing work and advance the shared objective of improving the capacity of all countries to effectively combat financial crime. Published: 22 October 2018.
IGF-OECD PROGRAM TO ADDRESS BEPS IN MINING TAX INCENTIVES IN MINING. MINIMISING RISKS TO REVENUE. In a world of mobile capital and profits, many developing countries use tax incentives in the hope of attracting domestic and foreign investment. Their effectiveness, however, has often been disputed, not least in relation to the mining sector, which involves location-specific resources that cannot be moved. Tax incentives are also costly, leading many countries to forgo vital revenues in exchange for often illusive benefits. Nonetheless, governments may determine that they would still benefit from introducing tax incentives for the mining sector because of some specificities in their jurisdiction. For example, changing tax arrangements may appear easier to deliver than other investment promoting actions such as infrastructure. In such cases, tax incentives need to be carefully designed to be effective (that is, they achieve their policy objective) and efficient (the policy goal is achieved at the minimum cost to government revenue).