developing tax partnerships - oecd
TRANSCRIPT
involving non-OECD Economies in the global debate on international taxation
Developing Tax Partnerships
ContentsThe OECD .......................................................................................................................... 3Taxation and the OECD ................................................................................................. 5Partnerships and the CTPA ............................................................................................ 6Developing Tax Partnerships .......................................................................................... 7What we Deliver ............................................................................................................... 9World-wide Tax Partnerships......................................................................................... 12Current Non-OECD Partners ........................................................................................ 13Flexible Programmes ...................................................................................................... 14Relations with International Organisations ............................................................... 15Architecture ................................................................................................................... 17Architecture – OECD Multilateral Tax Centres ......................................................... 19Methods of Delivery ....................................................................................................... 20Meeting the Expectation of Our Stakeholders ......................................................... 21Evaluation and Outcomes ........................................................................................... 22
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Overall Objective of the OECD
The OECD has the broad objective of developing a wide rangeof human capacity across all economic and social policy ar-eas, making use of policy dialogue and peer review backedby high-quality, analytical work and the willingness of policymakers to exchange good practices.
It aims to promote sound, sustainable growth and poverty re-duction through global sharing of principles and values thatthe OECD promotes – commitments to democracy, market-based economies, and open, rule-based and non-discrimina-tory trading and financial systems, supported by good gov-ernance.
The OECD
The OECD programme of co-operation on taxation is highly
valued by all the stakeholders. Inmany instances, these programmeshave made a direct and measurablecontribution to the development of
tax policy and administration in theNOEs and improved bilateralrelationships between OECDcountries and the partners.
The OECD, and its partners, managesan efficient program that deliversquality results and demonstrable
outcomes for the recipient countries.(Independent Evaluation Services,Canada and the United Kingdom)
OECD Headquarters, Paris
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Korea
Luxembourg
Mexico
the Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Turkey
the United Kingdom
the United States
Current OECD Member Countries:
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
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The OECD, through the work of its Committee on Fiscal Affairs(CFA), is one of the recognised leaders in the development ofstandards and guidelines encouraging co-operation in interna-tional tax matters. The CFA was established in 1971 to providea forum for policy makers to discuss international and domestictax issues.
The Committee seeks to eliminate tax measures which distorttrade and investment flows, to prevent double taxation, to coun-teract tax evasion and avoidance and to promote best prac-tices in tax policy and administration.
The CFA’s work programme is carried out by subsidiary bod-ies where participants are primarily drawn from OECD coun-tries.
Taxation and the OECD
Structure of the Committee on Fiscal AffairsThe Structure of the Committee on Fiscal Affairs
TaxAdministration
Harmful Tax Practices
Co-operation with Non-
OECD Economies
Tax Conventions and Related Questions
Tax Policy Analysis and Tax Statistics
Taxation of Multinational Enterprises
Tax Avoidance
and Evasion
ConsumptionTaxes
Electronic Commerce
Compliance
Electronic Services
CID TAG
Advisory Group for Co-operation with
Non-OECD Economies
Revenue Statistics
Business Profits TAG
TIES
Electronic Commerce
Consumption Tax Tag
Dispute Resolution
Employee Stock Options
Steering Group on the Revision of
the Model Tax ConventionPartnerships Trusts and Other Non-Corporate
Entities Technical
Issues Related to Cross-Border
pensions
Transfer Pricing
Electronic Commerce
Cross-Border Related Party
Financial Dealings
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In taxation, the OECD’s Committee on Fiscal Affairs (CFA)functions as a forum in which policy makers can contribute toand be involved in a dialogue on key international tax issues.The association of countries outside of the OECD member-ship in the dialogue is of mutual interest to both OECD coun-tries and our non-OECD partners.
The partnership programme on taxation is aimed at enablingcountries to secure their tax bases and to promote the flow offoreign direct investment. A country’s ability to combat pov-erty, provide education, health and welfare services, and im-prove its infrastructure depends on its ability to collect taxesin an efficient and effective manner. At the same time foreigndirect investment can be encouraged through the adoption oftax systems which are transparent, certain in application andequitable.
The partnership programme on taxation is an indispensablepart in the development and promotion of global tax stand-ards and good practices.
The Partnerships in Taxation aim to
Bring non-OECD Economies into the global debate on in-ternational taxation, achieving through dialogue, a consen-sus on international standards and guidelines
Share experience on the implementation of measureswhich, in partnership economies, assist in sustainable de-velopment through a predictable tax base and enhancedability to attract foreign direct investment
Partnerships and the CTPA
The OECD program of co-operationhas been used to set up the taxpayer
services division in theAdministration and Collection
Department and in providing fortaxpayers rights under the new lawson tax administration and collection
(China)
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The development of partnerships with economies outside theOECD is a critical part of the Organisation’s work. While theultimate aim of the OECD is to achieve a rising living standardfor member countries, this cannot be achieved under an in-creasingly interdependent global economy without the sup-port of growth and prosperity in economies outside of theOECD membership. The OECD’s cooperation with its part-ners is designed
to fulfil its responsibility to contribute to the sound devel-opment of the world economy, and through it,
to maximise the relevance and impact of the work of theOrganisation for its members.
Developing partnerships in taxation is particularly importantbecause taxation problems cannot be resolved on a purelynational basis:
As economic and financial barriers disappear, tax differen-tials have a greater impact on trade and investment flows.Clear and transparent tax rules on cross-border trade andinvestment flows play an important role in attracting andretaining foreign direct investment.
Developing Tax Partnerships
OECD countries have beenexchanging information for many
years and have systems in place thatfacilitates the exchange. The OECD
program assists Non-OECDEconomies in developing appropriate
systems with their taxadministrations. It also promotes theprovision of necessary safeguards to
protect the confidentiality of theinformation
(the United States)
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Anti-competitive tax policies have worldwide effects. Taxcompetition can be of benefit but it needs to be fair, transpar-ent and carried out in a context where all countries areprepared to assist their partners in the enforcement of theirown tax laws.
The internationalisation of business enables corporationsor individuals to hide income or move it offshore. Tax offi-cials operate only within their sovereign borders, while tax-payers move freely and are able to manage their interna-tional activities to minimise their overall tax burden. In thiscontext international co-operation between authorities isin the interests of all.
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The OECD’s tax partnerships are founded on the expertise ofthe OECD’s Committee on Fiscal Affairs. The Committee is aworld leader in developing tax policy on tax treaties, transferpricing, international tax avoidance and evasion (including harmfultax practices), exchange of information and bank secrecy,consumption taxes (including electronic commerce), taxadministration and taxation of financial innovations/institutions.
These areas form the core of the partnership dialogue.
What we Deliver
The OECD programme has resulted ina lot of (informal) bilateral contacts
which are very useful whennegotiating with Non-OECD
Economies or when other problemsoccur in relation to these economies
(the Netherlands)
Tax Treaties Negotiation of taxtreaties, detailedexamination of taxtreaty provisionsand issues in theirimplementation
Develop with thepartners the skillsfor the negotiationand application ofbilateral taxtreaties
OECD Model TaxConvention onIncome and onCapital
Expanding taxtreaty networks,Improvedcapacity innegotiation andtreaty application
TransferPricingGuidelines
Encourage theadoption andeffectiveimplementation ofOECD TransferPricing Guidelines
General principles,implementation andadministrativeissues in the OECDapproach totransfer pricingproblems
OECD TransferPricing Guidelines
Transparent,effective andefficientadministration oftransfer pricingproblems anddisputes
Exchange ofInformationand BankSecrecy
Share experiencewith regards toexchange ofinformation,identify areas andpropose ways forimprovement
Provide practicalguidance on how toremove barriers toaccess to bankinformation
OECD approachesto EffectiveExchange ofInformation;OECDreport on “Improving Accessto Bank Informationfor Tax Purposes”
Improve effectiveexchange ofinformation whiletaking intoaccounttaxpayers’ rights
Issues Objective Focus Standards /Guidelines
Benefits
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TaxIncentives
Survey the typesof incentives andissues in theirdesign andadministration
Develop effectivetax incentives thatminimise potentialeconomicdistortions
Tax incentives incorporate andpersonal incometaxes andconsumption taxes,are examined withpractical examplestaken from OECDcountries and Non-OECD Economies
Issues Objective Focus Standards /Guidelines
Benefits
InternationalTaxAvoidanceand Evasion
AuditingMultinationalEnterprises
Examine taxavoidance andevasion problemsin internationaltransactions andpossibleresponses
Examine commonstructures used toavoid and evadetaxes and examinestrategies that taxadministration couldadopt to counteractthese structures
Develop ways toprotect acountry’s taxbase throughimproving accessto bankinformation,effectiveexchange ofinformation andother international‘good practices’
Examine the legaland practicalissues that acountry is likely toface when auditingmultinationalenterprises
Administrativeprovisions,informationrequirements andthe audit processneeded to facilitatethe work of taxexaminers. It alsodeals with complexinternationaltaxation issues thatcould arise in thetaxation ofmultinationalenterprises
Provide thepartners with aframe ofreference forissues that theyare likely toencounter whendealing withmultinationalenterprises
OECD approachesto EffectiveExchange ofInformation;OECD report on “Improving Accessto Bank Informationfor Tax Purposes”
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Value AddedTax
Provide anunderstanding ofhow VAT law isdeveloped andhow the taxoperates at theinternational level
Impact of VAT oninternational trade,place of supplyissues for bothgoods and servicesand more specificissues such as newmeans of transport,e-commerce, thefinancial servicessector andtelecommunications
Improved policyandadministration ofVAT andencouragegreatersimplification andcohesionbetweencountries’systems
Taxation ofFinancialInstrumentsor Institutions
Explore how taxsystems need tobe modernised toadapt to the newglobal financialand capitalmarkets
Examineappropriate taxpolicies towardinnovative financialinstruments andfinancial institutionsthat encourage thedevelopment offinancial marketsand providesufficient protectionto the tax base
Encourage thedevelopment oftax policies thatpromote thedevelopment offinancial markets,but at the sametime protect thecountries’ taxbase againstavoidance andevasion practicesmade possible byfinancial marketdevelopments
OECD events influenced BulgarianNon-Member positions and triggeredsome changes in the Bulgarian Tax
Treaty Model(Bulgaria)
Issues Objective Focus Standards /Guidelines
Benefits
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World-wide Tax Partnerships
The OECD’s programme of co-operation on taxation with Non-OECD Economies (NOEs) began in 1992.Following the first programme of co-operation with Russia, which focused on taxation issues for transitioneconomies, the OECD’s programme of co-operation on taxation has developed significantly both geographicallyand thematically.
The taxation partnership is now a worldwide network of partnerships encompassing the OECD Multilateral TaxCentres, partnerships with individual countries, co-operation with international and regional tax organisationsand active consultation with businesses.
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Work is underway to draft the lawon Transfer Pricing and in the
process we shall take intoaccount OECD Transfer Pricing
Guidelines as well as the expertiseof staff who participated in the
OECD events.(Azerbaijan)
Current Non-OECD Partners
The following countries participate in OECD events on taxation:
AlbaniaAlgeriaAngolaArgentinaArmeniaAzerbaijanBangladeshBahrainBelarusBotswanaBrazilBulgariaCambodiaCameroonChileChina, People’s Republic ofChinese TaipeiCongo, Democratic Republic ofCroatiaEcuadorEgyptEstoniaGabon
GeorgiaHong KongIndiaIndonesiaIsraelIvory CoastKazakhstanKyrgyzstanLaosLatviaLesothoLithuaniaMacedonia, FYRMalawiMalaysiaMaltaMauritiusMoldovaMongoliaMoroccoMozambiqueNamibiaNepalNigeriaOman
PakistanPapua New GuineaPeruthe PhilippinesQatarRomaniaRussiaSenegalSingaporeSloveniaSouth AfricaSri LankaSwazilandTajikistanTanzaniaThailandTunisiaTurkmenistanUkraineUzbekistanVenezuelaVietnamZambiaZimbabwe
Expertise gained in OECD eventshas been used to improve
corporate tax legislation, indrafting law provisions regarding
indirect methods of taxation,taxation of associated persons,
thin capitalization, transferpricing, tax incentives etc. Advicefrom OECD experts has also been
used to carry out the taxadministration reforms
(Latvia)
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The programme of co-operation is flexible and focussed accordingto the nature of the mutual interests between OECD and itspartners. In general, it is possible to identify three different formsof partnership approaches:
1. Comprehensive partnership– with particular countriesis based on a three year rolling programme of co-operation bothbilaterally and multilaterally and association of partners with thework of the CFA, annual negotiations/outcome analysis and co-ordination with other international partners such as theInternational Monetary Fund and the World Bank through theInternational Tax Dialogue.
2. Flexible partnership – includes a bilateral discussionof the needs and priorities of particular countries, deliveredthrough multilateral events with opportunities for demand drivenbilateral dialogues on key issues and linkages with internationaltax organisations.
3. Development focussed partnership – aims atsecuring a country’s tax base and providing a clear andtransparent tax system to attract Foreign Direct Investment. Itreflects the wider development agenda and is focussed primarilyon tax administration as well as tax policy. The OECD’s flexibleapproach to the development of tax partnerships recognises andreflects the complex international economic relations betweena state, international businesses and international organisations.In this context, taxation partnerships with particular states arenecessarily intertwined with other partnerships with internationalorganisations and international businesses.
The OECD programme has impactedin that tax administrations are awareof generally accepted guidelines andin some cases are quite familiar with
them. It creates a good basis forongoing dialogue
(An International Business)
Flexible Programmes
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A critical component of the OECD’s tax partnerships is the co-operative programmes with other tax organisations. Partnershipswith international organisations aim to co-ordinate and undertakejoint technical co-operation on taxation issues and to shareinformation to avoid duplication of effort and build on each other’swork.
Asian Development Bank (ADB)
Centre de Rencontre et d’Etudes des Dirigeants desAdministrations Fiscales (CREDAF)
Commonwealth Association of Tax Administration (CATA)
Inter-American Centre of Tax Administration (CIAT)
International Seminar on Taxation (ISTAX)
Intra-European Organisation of Tax Administrations (IOTA)
Southern African Development Community (SADC)
Study Group on Asian Tax Administration and Research(SGATAR)
In 2001, the OECD together with a number of the organizationsabove set up the Committee on International Organisationson Tax Administration (CIOTA). The objective of thiscommittee is to exchange views on emerging issues and promote
In the case of our country, some of thetaxation issues which we have been
able to significantly refined andimproved as a direct results of theOECD programme of co-operation
are:1. Transfer pricing
2. Treatment of double taxation3. Development of effective revenue
codes for E-commerce4. Exchange of Information & Bank
Secrecy5. Taxation of Financial Instrument
(Thailand)
Relations with InternationalOrganisations
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good practices in tax administration.
Co-operation also takes place with other relevant internationalorganizations. The International Tax Dialogue (ITD) wasestablished as a joint initiative by the staffs of the IMF, OECDand the World Bank to facilitate increased co-operation on taxmatters between governments and international organizations.The objective of the ITD is to encourage increased dialoguebetween governments on tax systems, identify and share goodpractices in taxation, provide a clear focus for technicalassistance and avoid duplication of effort in respect of assistanceactivities.
The ITD operates a free, multilingual, multinational internet siteto help facilitate these objectives. www.itdweb.org provides anopportunity for tax officials to share experience and knowledgeon taxation issues. A range of both administrative and policytopics are covered with over 1400 documents currently available.The site also includes news, calendar events, links and a researchguide. Discussion groups and a database of technical assistanceactivities will be coming soon. The site can be accessed inEnglish, Spanish, French, Norwegian, Japanese and Russian.
To find out more visit www.itdweb.org
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ArchitectureThe partnership programmes are delivered through an expandingnetwork of OECD Multilateral Tax Centres and in-country trainingfacilities.
OECD Multilateral Tax Centres
There are currently four OECD Multilateral Tax Centres in Austria,Hungary, Korea and Turkey, respectively. The purpose of thesecentres is to assist tax officials to develop and implement effectiveand efficient tax policies. These centres serve as an effectiveinteraction mechanism by exploring regional interlocutors,absorbing region-specific demands and transmitting OECDmessages to policy makers.
In-Country Tax Centres
There are currently two in-country tax centres that we havedeveloped with our partners:
- Beijing International Tax Training Centre (BITTC) Around fiveweeks of seminars and workshops are organised for Chinesetax officials at the centre every year. The seminars offered coverboth tax policy and tax administration issues. Since its launchin 1997, a total of 42 seminars have been organised at the BeijingCentre. On average, these seminars are attended by around60-80 participants per seminar.
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- Moscow International Tax Centre (MITC) Since its creationin 1993, more than 100 activities have been organised at theMoscow centre, ranging from two day workshops for high-levelofficials on strategic management to two week seminars ontechnical tax issues. More than 4,000 Russian tax officials haveparticipated in programmes to date. Policy dialogue events arecurrently held for more senior Russian officials using the facilitiesat the MITC.
In addition, other in-country tax centres are currently underdiscussion.
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Architecture – OECDMultilateral Tax Centres
We follow closely the OECD’s principleon what is arm’s length basis
(Singapore)
Hungary(Budapest)
Austria(Vienna)
Korea(Chonan)
Turkey(Ankara)
Website www.gerlirler.gov.trwww.kipf.re.kr/taxcenter
Date ofCreation
1992
Weeks ofEventssinceCreation
1992 1997 1993
117 weeks 86 weeks 26 weeks 120 weeks
Participantssince creation
over 1800 taxofficials
over 1600 taxofficials
over 500 officials over 2700 taxofficials
CountriesInvited
Central andEastern Europe,the Baltic States
Central and EasternEurope, the BalticStates
Asia includingCentral andSouth East Asia
the Balkans, CentralAsia, theCommonwealthIndependent Statesand Mongolia
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The OECD events on auditing hasfacilitated our policy and
administration procedures fromformal assessment to self assessment.
(Malaysia)
The programme of co-operation consists of experiencesharing and policy dialogue. This dialogue developsprogressively as the programme of co-operation with aparticular country deepens.
Experience sharing takes place in a multilateral settingwhere experts from OECD countries and NOEs sharetheir respective country experiences, the problems theyhave faced and solutions they have adopted.
Policy dialogue focuses on the problems which NOEsface in dealing with particular tax policy andadministration issues, emphasise ‘good practice’ andare usually focussed on a topic that is demand driven.
Methods of Delivery
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The impact is that negotiations gomore smoothly with these countries asthey are more inclined to follow theOECD Model in their negotiations
and generally have a betterunderstanding of tax treaty policy
(Canada)
The key stakeholders of the taxation partnerships are thepartners, governments of the OECD member countries andinternational businesses. The partnership programme reflectsa strong mutual recognition by all these stakeholders of theneed to develop a common framework to discuss internationaltaxation issues.
Partners For our partners, the partnership programme aims atdeveloping and implementing acceptable solutions to the taxationproblems that they face.
OECD Countries The OECD countries share the concerns ofour partners in the needs to develop international solutions totaxation issues. The partnership programme is an indispensablepart in the development and promotion of global tax standardsand best practices, particularly in the areas of negotiation,application and interpretation of tax treaties, transfer pricing andeffective exchange of information between tax administrations.
International Businesses The promotion of tax policies that aimto be neutral and tax rules that are clear and transparent andtax administrations that are both effective and efficient providethe certainty and confidence that international businesses requireto allow them to carry out their businesses in an efficient manner.
Meeting the Expectation ofOur Stakeholders
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Personal contacts establishedthrough deliveries of the OECD
events on Exchange of Informationand Bank Secrecy has led to some
improvement in the quality ofexchanges.
(the United Kingdom)
The partnership begins with an initial assessment of needs thatis used to establish a clear set of objectives. These objectivesprovide a benchmark for evaluations that are carried outperiodically.
Evaluations of the taxation partnerships take place at two levels.Firstly, all OECD events are subjected to rigorous independentevaluation. Participants at OECD events are surveyed at theconclusions of each event and their comments are analysedand fed into the redevelopment of the partnership programme.
However, we recognise that quantitative measures of a programmeof this type are in short supply and that legislative developmentsare influenced by a number of factors and do not necessarilyindicate the success of the programme. Consequently it isnecessary to maintain close ties with the administrationbenefiting from the programme to discuss its impact andeffectiveness over a period of time. Other ways of measuringthe impact of the programme are also developed through dialoguewith partner governments. These dialogues are intended to gleanobjective, measurable outcomes that the partnership hasachieved in terms of concrete legislative or policy developments.
Evaluation and Outcomes
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www.oecd.org/daf/ctpaCTPA
September 2003
InquiriesRichard ParryHead of Unit for Co-Operation with Non-Member EconomiesCentre for Tax Policy and AdministrationOECD2, rue André Pascal75775 Paris Cedex 16FranceTelephone: (33) 1 45 24 96 65Fax: (33) 1 45 24 18 84Email: [email protected]
Daria OstaptschukUnit for Co-Operation with Non-OECD EconomiesCentre for Tax Policy and AdministrationOECD2, rue André Pascal75775 Paris Cedex 16FranceTelephone: (33) 1 45 24 96 91Fax: (33) 1 45 24 61 48Email: [email protected]