It´s T time CIAT Newsletter on Human Talent
In this third issue of “It’s T(alent) time” you are invited to know key issues related to Tax Ethics
Inside In Favor Or Against: International Taxation: a matter of law or ethics? In an interview on the evolution of international tax regulations and tax optimization...
2 Ethics in Wonderland Once upon a time there was an organization established in 1998 which represented the business managers....
3 Silicone fingers of employees who did not go to work Silicone fingers with the fingerprints of employees…
5 Results - Specialized Course on Taxation The first edition of Module II of the Specialized Course on Taxation...
8 Results - Transfer Pricing Course The fifth edition of the Module III Course on Transfer Pricing was successfully held, involving 45...
8 The honesty of a reflective banker It all began after he found out that some of his employees, colleagues in the organization..
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Editorial Most countries collect corporate and personal taxes to fund national infrastructure and programs, including education, legal systems, transportation, and health care. Taxpayer trust is an essential element of a sound tax administration (TA). To build this trust, the TA needs to establish sound policies, systems, and programs (example: tax collection and Human Resources), and it is particularly important that the TA be ethical –always striving to do the right thing in the right way. The Canada Revenue Agency works with CIAT and other member countries, on TA ethics, by participating in the CIAT Permanent Committee on Ethics. This Committee works on behalf of CIAT member countries to develop tools and resources that we can all use to strengthen ethics within our TAs. Strong TA ethics is something we are all desire. We encourage you to explore the tools and training available on the CIAT web site. For more information, contact Raquel Ayala. Trust in a tax administration is a precious thing. Strong ethics need to be built into everything we do. Kerrie Lawn
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In Favor Or Against Prepared by: Isabelle Gaëtan, Head of the French Mission at CIAT An opinion on the interview to William Morris and Karine Uzan Mercié – Les Échos – 13/02/2013
In an interview on the evolution of international tax regulations and tax optimization strategies developed by large international groups for reducing their tax base, William Morris y Karine Uzan Mercié, chairman and deputy chairman of Business and Industry Advisory Committee, business representatives before the OECD said: -‐ to the question: As representatives of British businessmen do you believe that the optimization schemes intended to reduce the tax are reprehensible, even though they may be legal? -‐ the answer was: “one should not think that companies are always looking for existing tax flaws. Originally, those schemes arise from opportunities established by the very states to be more competitive at the international level. Taxation is a matter of law and not of ethics”. It might have been interesting to select this statement as one of the subtopics for the CIAT General Assembly in Buenos Aires to be discussed in a panel, for example. The authors justify this statement, on considering that tax regulations with an emphasis on ethics would be based on subjective criteria, which could generate discriminations, volatility and uncertainties that might affect growth and development. On the other hand, they explain that the objective pursued is to design international principles with the simple purpose of avoiding exceptions and “ram down” effects, while developing long-term regulations to thus
guarantee a certain level of juridical security and visibility to everyone. They add that it is crucial for international regulations not to allow for distortions or unfair competition between countries, regions or sectors.
It would seem that the objective sought deals with international ethics, since it would imply sharing a code of conduct and guaranteeing respect for principles. Would it be like M. Jourdain, Molière’s character? They practice ethics without knowing it? I can see at least 3 elements against stating that it is only a matter of law: 1- I always considered it dangerous to reduce the structuring of taxation, especially at the international level, to a simple matter of law. Diversity springs from wisdom. 2- Ethics and subjectivity do not automatically go hand in hand. On the contrary, by establishing shared rules at the ethical level, the countries will undertake a very objective path. 3- Whenever the rules originate from dialogue between the countries, the risk of discriminations, uncertainties is limited between the partners, while the growth of both is guaranteed or favored. Thus, introducing ethical principles, even without naming them, in international taxation rules, allows for condemning abusive tax strategies as amoral procedures.
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Ethics in Wonderland Prepared by: Isabelle Gaëtan Head of the French Mission at CIAT A good example of a sprinkler that ended up sprinkled
Once upon a time there was an organization established in 1998 which represented the business managers. In 2008, the President of this organization created the Ethics Committee within the organization. The press release drafted on said occasion stated that the Committee was endowed with appropriate autonomy to reflect and express itself. Its mission was to respond to numerous questions from civil society regarding the company and the market economy. The honeymoon lasted almost 5 years. In March 2013, there arose a controversy. It all began during the Ethics Committee monthly meeting. The Committee’s chairman asked the members for their opinion regarding the amendments to the bylaws of the organization proposed by the President, whereby she could run for re-election for the third time. According to the Committee’s Chairman, the majority of members disapproved the modification, for which reason he deemed it justified to notify the President of the Committee’s rejection to the change in the bylaws The President reacted stating that the Ethics Committee’s function was not to decide on the internal operation of the organization, but rather to develop moral codes for its members. Is that true? Is one of them or both mistaken? Did the Ethics Committee exceed its functions and display an unprofessional behavior?
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(Continuation) The President’s attitude is very common and revealing.
We are all familiar with similar examples of: Do what I say, but don’t do what I do. It is also a matter of credibility. To think that one may have authority, legitimacy and credibility to give an opinion on ethics, without committing thereto, is quite unrealistic. At times, theory and reality may seem different. In this case, it was apparently true: the President requested the Chairman’s resignation and obtained it. But ultimately, the President could not change the bylaws in order to be re-elected. Once upon a time …
Obtained in:: http://2.bp.blogspot.com/_unLdkA4_Ro8/S8n8xwrooI/AAAAAAAAIeY/Rf_RfhuaPLY/s1600/alicia-en-el-pais-de-lasmaravillas.jpg
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Silicone Fingers of employees who did not show up to work BBCMundo.com; Date of query 12-mar-13; Available in: http://www.semana.com/vida-moderna/articulo/dedos-silicona-empleados-no-ibantrabajar/336478-3.
Silicone fingers with the fingerprints of employees who actually did not show up to work. This is the peculiar finding of the Brazilian authorities investigating alleged irregularities by physicians and nursing staff of the emergency public service which used these devices to collect their wages without working. One Sunday, a doctor from the Emergency Mobile Assistance Medical Service (SAMU) was captured by the police using silicone fingers to clock in her colleagues and thus cheat on the biometric control machine through which all of the institution’s employees must check in. Given the seriousness of the matter, the local government of Ferraz de Vasconcelos, a municipality of the metropolitan region of São Paulo, appointed a sixmember committee, which was allowed 90 days to reach their conclusions. The doctor, 29-year old Thauane Nunes Ferreira, was discovered by the Municipal Guard clocking in her colleagues with the silicone fingers that Sunday morning and arrested for public document falsification, but was then released following a petition for habeas corpus. Ferreira was arrested following a two-week investigation. At the time of her capture, the police said she had with her six silicone fingers, three of which were already identified and include the fingerprints of her fellow workers. The city mayor, Acir Filló, removed five allegedly involved employees from their positions in the medical service.
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"Phantoms" The incident has reached Brasilia, the country’s capital, and the Health Ministry announced it will carry out its own auditing in the hospital. Filló stated that approximately 300 public employees were actually "an army of phantoms'', in reference to the individuals he believed collected their wages without going to work. A spokesman from the city council told BBC that among the alleged “phantom employees” as the Brazilians informally call those who receive their regular salaries without going to work, there are public employees from the health, education and security areas. The employee confessed that the plan included 11 physicians and 20 nursing staff members and that they were organized by the SAMU coordinator in the municipality, Jorge Cury. Cury told the O Globo newspaper that he was unaware of the irregularities and seemed to be surprised with the news. "The health secretary called me and I showed up at the police station. This is absurd! I have been a city officer for 25 years. I never knew about this. I go to SAMU every Sunday and there is never nobody missing. I precisely did not go today”. Ferreira’s attorney, Celestino Gomes Antunes, said his client got involved in the fraud, because otherwise she would have been dismissed from her job, that actually she was a victim rather than a criminal. According to the authorities, quoted by the local press, each of the six physicians paid 4.800 Reales -some
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US$2.400-, to the emergency service coordinator, Jorge Luiz Cury, for not having to work every Sunday, the four 24-hour monthly shifts.
Results – Specialized Course on Taxation The first edition of Module II of the Specialized Course on Taxation was held from November 26, 2012 through February 8, 2013 jointly with Universidad Externado de Colombia, with the participation of 47 officials from the Tax Administrations of Bolivia, Brazil, Chile, Ecuador, El Salvador, Mexico, Panama, Paraguay, Peru, Dominican Republic and Uruguay. The lessons covered during these weeks dealt with the main aspects of tax law. We avail ourselves of this opportunity to congratulate Mayra Chicas from the Ministry of Finance of El Salvador for her outstanding performance in course and for which reason he obtained the highest average. We also wish to thank the tutors Isabel Veliz, Roberto Insignares and Julio R. Pizza for all their support during the development of the Module.
Results – Transfer Pricing Course The fifth edition of the Module III Course on Transfer Pricing was successfully held, involving 45 officials from the Tax Administration of Argentina, Colombia, Chile, Ecuador, El Salvador, Panama, Paraguay, Peru and Dominican Republic. We avail ourselves of this opportunity to congratulate Evelyn Ceballos from SRI of Ecuador for her outstanding performance in Module III and for which reason he obtained the highest average. We also wish to thank the tutors Alfredo Sosa, Solange Lizewski and Diego Osternann for all their support during the development of the Module.
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The honesty of a reflective banker Bohórquez Aya, Edwin; Date of query 21-mar-13; Available in: http://www.elespectador.com/noticias/economia/honestidad-de-un-banqueroreflexivo-articulo-411789. Carlos Raúl Yepes, CEO of Bancolombia, known as the man of the ‘most humane banking system’, became last year the role model of the organization he leads —the country’s largest bank—, after setting a precedent of honesty. By: Edwin Bohórquez Aya. Carlos Raúl Yepes, CEO of Bancolombia. / Gustavo Martínez-‐Cromos
It all began after he found out that some of his employees, colleagues in the organization, had taken advantage of a mistake of a well-‐known retail company. It happened in the Web page of Almacenes Éxito, where all the goods and services of this commercial group are publicized. Due to an involuntary error of those who input the information, a group of refrigerators were put on sale at $400,000 each, when the real price was around $4 million. There appeared bank employees as regular purchasers, although somewhat ‘crafty’ as Yepes labeled them, took advantage of the mistake, made several purchases and even advised others to take advantage of the impasse in order to buy a luxury good at a ‘cheap’ price. “Even if it was for resale”, they told each other. Yepes, whose working record in the organization is faultless, learned about the situation. As he is in the habit of doing, he apologized with a personal message to the Éxito Group and thereafter, he sent a letter to the over 20,000 employees of Bancolombia. It was a simple message, but one ladened with deep sadness. He referred to values, honesty, principles, integrity. “Shouldn’t our behaviour be guiltless within and outside our organization? Can we talk about values when we do not put them into practice”, he wrote. And a few days later, the repented opportunists showed up. The messages implicit in each paragraph were loaded with emotion: “I urge all of you to always be coherent with what we think, say and do. But above all, I call on you to advance in this transformation process toward a more humane banking system as an opportunity for our lives: let us create value through values”. The case became one of the examples of ethical behavior that is currently being applied in over 20 companies worldwide. All because Yepes, true to his style, in the many reflections appearing in the document sent to them, he wrote: “I hope that every day, when we look at our children and dear ones straight in the eyes, we may tell them, with pride, that we are honest (...) because honesty does not admit any intermediate point: either you are or you are not”. It is a document that has served as basis for analysis in communication schools and ethical and behavioral programs in society, by opinion journalists, in digital forums, by entrepreneurs, directors and employees. “We are developers of long-‐term relationships, that is what we must do
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``` in business”, doctor Yepes had told some twenty peasants and agricultural entrepreneurs some months ago in San Vicente del Caguan, where he was inaugurating a small office that some months later became the focal point of regional development. He is a reflection of a banker that does not wear a tie; who has lunch at the casino with the employee on duty who is ready to sit with him at the table; who answers each and every one of the e-‐mails sent to him and who has been classified as a thoroughbred of the new generation of Colombian entrepreneurs. A reflection which, in addition, made Colombians unrelated to Bancolombia to also want to answer the questions he asked: “What would happen if it were one of us who made an error in offering a product? Would we expect the customers’ understanding and support? We should always put ourselves in the other person’s shoes. As the popular saying goes: “Don’t do unto others what you don’t want others do unto you”. [Asunto] :: [Fecha]
Directorate of Training and Human Talent Development Ave. Ramón Arias, El Carmen, Panamá talentohumano@ciat.org www.ciat.org