Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘Tax Inspectors Without Borders’

OECD: Inclusive / transparent objectives

The OECD’s Task Force on Tax and Development met in Paris, France, on 1 March 2016, to discuss the new inclusive framework proposed by the OECD for the global implementation of the BEPS project and to support developing countries on their domestic resource mobilisation efforts. Over 180 participants attended.

Co-Chaired by South Africa and the Netherlands, the Task Force is a multi-stakeholder advisory group set up to help to improve the enabling environment for developing countries to collect taxes fairly and effectively.

Recognition and participation in the Tax Inspectors Without Borders partnership was also an agenda item, including present (and future) toolkits for developing countries as a practical resource to implement BEPS Actions.

Participants also highlighted the need for the documentation toolkit to provide clear guidance on how the Country-by-Country Report should be used for risk assessment purposes.

The Task Force will endeavor to take the following steps, commencing with the first meeting in Kyoto Japan, 30 June- 1 July 2016.

  • Support the development of 7 further toolkits to translate the BEPS deliverables into user friendly guidance for developing countries by 2018.
  • Starting now, fully endorse the ATAF/EC/OECD/WBG transfer pricing capacity building support to address the full range of BEPS challenges in developing countries.
  • Support the Tax Inspectors Without Borders programme project to increase the number of TIWB deployment programmes to 20 by the end of 2017 and 30 by the end of 2018.

A copy of the press release is provided for reference:

http://www.oecd.org/tax/tax-global/co-chairs-statement-task-force-tax-development-march-2016.pdf

Best Practices – To address mutual transparency, OECD and the member countries should be willing to share the contents, and objectives, of the various toolkits under preparation to better understand the risk process and actions by tax administrations around the world. 

 

 

OECD Tax Inspectors Without Borders (TIWB): Now a reality

The OECD’s long-awaited Tax Inspectors Without Borders (TIWB) initiative (posts of 9 June 9, 2013 & 30 January, 2015) has now become a reality.  The program is a collaboration of the OECD with the United Nations (UN) Development Programme.

A framework of international tax experts will augment local tax authorities on current audits, providing advice on transfer pricing and cross-border information exchange that will result in significantly increased tax revenue collection by developing countries.

http://www.oecd.org/tax/launch-of-tax-inspectors-without-borders.htm

Ways of Working / Transparency observations:

  • Will the list of countries’ receiving support be transparent?
  • How will issue consistency be assured for similar issues of different taxpayers across that jurisdiction: will the “experts” also be developing this process?
  • Will the “experts” be assisting in addressing/developing audit queries, issue determination, appeals and/or Competent Authority proceedings?
  • Will the “experts” be available to discuss issues directly with the taxpayer, if they have assisted with determination of such potential issue?
  • Is there a common “Memorandum of Understanding” that is shared with the taxpayer upon commencement of an audit, outlining the relevant processes that will be performed in collaboration by the relevant tax authority?

Answers to these questions, among others, will be helpful in providing additional context and understanding between taxpayers and tax authorities for this important initiative.

The metrics for monitoring such progress should include not only the amount of additional revenues assessed/collected, but should be inclusive of Best Practice methodologies and consistent methods of transfer pricing risk determination aligned with established laws in such jurisdiction.  

It is hopeful the UN and OECD will endeavor to provide additional mutuality and transparency for this initiative that will further enhance win-win opportunities.

 

 

OECD Tax Inspectors Without Borders (TIWB): Update

The OECD’s TIWB program’s trial phase ended in December, 2014, with a launch scheduled in 2015, subsequent to a review process.  (Refer to the 9 June, 2013 post).

The TIWB’s objective is to enable sharing of tax audit knowledge and skills with tax administrators in developing countries through a targeted, real-time “learning by doing” approach.  The program encompasses transfer pricing, thin capitalization, APA’s, anti-avoidance rules, pre-audit risk / case selection, and VAT, although customs is excluded. Links to the program summary and the Toolkit (published in Nov. 2014) are included for reference:

http://www.oecd.org/tax/taxinspectors.htm

http://www.oecd.org/tax/tax-global/tax-inspectors-without-borders-toolkit.pdf

The Toolkit details the role of a TIWB Secretariat as a Facilitator, and roles and responsibilities of the parties to this shared arrangement.  Eligible individuals must meet a 5-year minimum audit experience requirement, and they can be currently working or recently retired.  Most importantly, the Toolkit addresses legal liability considerations and confidentiality restrictions during, and after, their assistance. T

his initiative should be monitored closely, as there do not seem to be prescribed transparency rules for the company under audit.  Therefore, a question for the opening audit could be an inquiry as to the tax administration’s expectations for outside expert assistance from TIWB.  Additionally, an expert with limited experience, coupled with the lack of familiarity with subjective jurisdictional rules for GAAR assessments, for example, may place additional burdens on an expert and the host country in assessing inherently complex rules.

This initiative has a strong likelihood for implementation that further reinforces the OECD’s intent to provide additional guidance for developing countries as complex BEPS Actions are implemented on a domestic level.  Accordingly, it is imperative to review the Toolkit for current familiarity with this program and follow its developments in the near future.

OECD: Tax Inspectors Without Borders 2013 initiative

http://www.oecd.org/ctp/tax-global/Tax-Dev_3_CoChair_Statement.pdf

The OECD’s Task Force on Tax and Development will use this concept to assist developing countries by providing international auditing expertise and advice to better address tax base erosion, including tax evasion and avoidance.  This initiative  is led by the Commissioner General of the South Africa Revenue Service, South Africa’s Deputy Finance Minister and Director of the OECD’s Centre for Tax Policy and Administration.

The Tax Inspectors Without Borders program will match demand from countries requesting international tax audit assistance with a supply of international experts, primarily consisting of tax inspectors in other tax administrations.  Accordingly, the experts will now be made available to developing countries.

The initiative is being launched this year, thus communication with the auditors in developing countries should include a discussion on the use of this concept, a listing of the respective experts and the communications that could be shared with the corporation.

It will be interesting to see the development of this initiative, the sharing of information, memorandums of understanding with the corporation or, absent an explicit statement that the country is using this initiative, any impact on the appeal process resulting from assessments of this sharing program.  Additionally, it would be interesting to compare the developing countries that use this program versus, or along with, tax training from the United Nations, posted in the blog dated 2 June 2013.

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