Reports from the 7th meeting of the Forum
The Forum on Tax Administration (FTA) was set up by OECD Centre for Tax Policy and Administration (CTPA) ten years ago with a key aim to
“improve taxpayer services and tax compliance – by helping revenue bodies increase the efficiency, effectiveness and fairness of tax administration and reduce the costs of compliance.”
On average about every 18 months the Tax Commissioners meet to discuss relevant developments. In January 2008 they adopted the Tax Intermediaries report that described an enhanced relationship between tax administrations and taxpayers and their advisers to be underpinned by a risk assessment approach to enforcement.
Four years later Tax Commissioners from more than 40 countries met in Argentina on 18 – 19 January 2012 and adopted a number of reports, on transfer pricing, the shadow economy and working smarter.
The overall theme of the latest meeting as set out in the Communiqué was:
“how to strengthen tax compliance through closer co-operation. Specific subjects of discussion included the ongoing fight against offshore tax abuses, the relationship between tax administrations and large businesses and initiatives to drive even greater efficiency in tax administration.”
Transfer pricing
A major report to the Forum Dealing Effectively with the Challenges of Transfer Pricing was led by the UK. The report covers the practical administration of transfer pricing programmes by tax administrations. The report identifies key stages in a Transfer Pricing Enquiry which are:
- Effective risk assessment of appropriate businesses.
- The way in which the case is opened so that the relevant facts can be established in conjunction with the taxpayer.
- A robust and transparent governance programme so that the business under investigation can be reassured about the consistency in the approach.
- Maintaining the progress of the enquiry.
- Finishing the fact finding at an appropriate moment.
- Having appropriate skills and knowledge to be able to cope with the demands made by Transfer Pricing cases which require good knowledge management and appropriate skills training.
The report contains a separate chapter on developing countries and notes that an HMRC senior specialist in transfer pricing has recently been seconded to South Africa for a five year period. While in South Africa he has also been working with the African Tax Administration Forum (ATAF) to draw up an action plan to help the 30 or so African member countries of ATAF build up their skills and knowledge to improve their individual Transfer Pricing capabilities.
Working Smarter
There are two detailed reports and an Executive Overview as to how to control demand management, or the demands that taxpayers put on the system for information and assistance and how to provide this more automatically, and how to work smarter by changing the structure of the administration and improve compliance and legislation. One interesting fact was the number of administrations that use pre-filled tax returns and in Chile 98.8% of returns are prefilled and most tax returns filed by individuals were fully prefilled by the tax administration.
The two detailed reports are:
Working smarter in revenue administration— using demand management strategies to meet service delivery goals
Working smarter in structuring the administration, in compliance, and through legislation
Tax avoidance
Cutting down on tax avoidance/evasion remains a major concern of FTA:
“The global challenge of offshore tax abuse demands coordinated action between countries that keeps the pressure up and makes it more difficult and risky for those taxpayers unlawfully and secretly hiding money offshore. We owe that to the majority who play by the rules and pay their fair share of taxes.”
FTA published two information notes:
Reducing opportunities for tax non-compliance in the underground economy
Right from the Start: Influencing the Compliance Environment for Small and Medium Enterprises
Electronic services
Finally there is a report on some aspects of the use of electronic services Security and Authentication Issues in the Delivery of Electronic Services to Taxpayers. The report does not deal with service issues as such which is the matter of the greatest current concern in the UK.