ISSN 1684-9833 • Year 1 / Nº 1 / January 2010
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The Executive Secretariat Informs Márcio Ferreira Verdi, new Executive Secretary of CIAT Starting on January 1st 2010, Mr. Márcio F. Verdi took over as Executive Secretary, position that was occupied by Sr. Claudino Pita until December 2009.
The Executive Secretariat Informs Márcio Ferreira Verdi, new Executive Secretary of CIAT The Director of the Internal Revenue Service of Ecuador visits the Executive Secretariat CIAT technical assistance manager visits the General Directorate of Revenue of Panama Meeting of the CIAT Executive Council’s Financial Affairs Advisory Subcommittee The Tax Administrations Inform Chile joins OECD New tax rules in force in Ecuador Main tax innovations in Spain for 2010 Overview of the tax innovations in France for 2010 DGI of Nicaragua trains officials KRA Exceeds 2nd Quarter Revenue Performance by 2.5 Billion SET from Paraguay collected 22.7% more in December Training Publications ¡Were you aware that!.. ¡¿Really?!
Mr. Verdi was unanimously elected by the CIAT Executive Council in April 2009, following an international public process. Mr. Verdi has a degree in Economic Sciences from the University of Brasilia, as well as specialized degrees in International Economics and Advanced Quantitative Methods from the Mr. Márcio F. Verdi same University. He has a postgraduate degree in Theory and Operation of a Modern Economy from the Institute of Brazilian Business and Public Management Issues, from the George Washington University of the United States. He is Specialist in Preparation and Evaluation of Public Service Concession Projects from the “State University of New York”, USA; and Specialist in Analysis and Negotiation of Built Operate and Owner and Built Operate and Transfer Projects–Alternative Strategies for Infrastructure Development, from The American University of Washington, D.C. He is a Career Fiscal Auditor of the Federal Administration of Revenues of Brazil, and held different positions at the Secretariat of Federal Revenues of Brazil; among others: General Coordinator of Tax Policy, Coordinator of RFB’s Economic Studies, Head of Internal Tax Studies Division of the RFB. He was awarded the Noe Winckler Fiscal Auditor Merit Medal at the Secretariat of Federal Revenues of Brazil. At the same time, he was professor at the Getulio Vargas Foundation, (Economics and Taxation); the Brazilian Institute of Capitals Market (Applied Economics) and at the School of Finance Administration of the Ministry of Finance of Brazil, (Policy and Technique). He was a member of the Management Board in many Brazilian State Enterprises as well as an outstanding speaker in many international events. He has been part of the Executive staff of the Inter-American Center of Tax Administrations, CIAT, starting in July 2004 as Director of Studies and Planning, and then as Director of Operations from October 2007 until December 2009. Mr. Verdi’s professional experience and performance guarantee that CIAT will be well directed to face the current world challenges based on the continuation of its policies enriched by new strategies.
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The Director of the Internal Revenue Service of Ecuador visits the Executive Secretariat
CIAT is a public international organization which groups the tax administrations of 38 countries, (29 Amarican countries, 6 European countries, 2 African countries and one Asian country), for the purpose of providing an integral service for the modernization of those administrations, by promoting their evolution, social acceptance and consolidation through the exchange of knowledge, experiences and the rendering of specialized technical assistance.
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Mr. Carlos M. Carrasco Vicuña, General Director of SRI of Ecuador and SRI Economist Silvia Martinez, (center) with CIAT Executive Secretariat staff.
On January 21, Economist Carlos M. Carrasco Vicuña, General Director of the Internal Revenue Service of Ecuador, together with Economist Silvia Martinez, visited the CIAT Executive Secretariat headquarters. Mr. Carrasco met with the Executive Secretary, Mr. Márcio F. Verdi, the Heads of Missions of European countries assigned to CIAT, and other CIAT directors and coordinators. It is worth noting that in addition to discussing matters of interest to his organization, the purpose of his visit to the CIAT headquarters was to come in personal contact with the staff, and familiarize himself with the physical facilities of the organizations’ headquarters. In the working meetings, areas and activities of interest and benefit to the Internal Revenue Service of Ecuador and CIAT were identified and specified, such as the Training program, technical assistance and other events to be sponsored by the SRI of Ecuador. The Director of the Internal Revenue Service of Ecuador expressed his full and resolute support to the Executive Secretariat’s efforts as well as his awareness of the nature and impact of the different programs being carried out by CIAT for strengthening the Tax Administrations of its member countries.
CIAT technical assistance manager visits the General Directorate of Revenue of Panama On January 22, 2010, the CIAT TEchnical Assistance Manager, Raúl Zambrano, visited the General Directorate of Revenues of Panama, where he met with the Head of Information Technology, Engineer Edmundo Arce J., to discuss issues dealing with the use of Information Technologies in the Tax Administrations. Another important topic considered was Panama´s participation in the CIAT ICT Committee, as well as in the next meeting on Electronic Invoicing to be held in Mexico in March 2010.
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Meeting of the CIAT Executive Council’s Financial Affairs Advisory Subcommittee The CIAT Executive Council’s Financial Affairs Advisory Subcommittee will meet on February 1st to 5, at the Executive Secretariat headquarters in Panama City. Specialized officials from the financial area of the Canada Revenue Agency and the Tax Administration Service of Mexico will be participating in the meeting. The Subcommittee will analyze the CIAT audited Financial Statements through June 30, 2009; the 2009-2010 budget execution report through January 2010 and projections through June 30, 2010; the draft Annual Operational Plan and draft 2010-2011 Budget prepared by the Executive Secretariat. Likewise, it will prepare a report to be considered and approved by the Executive Council, prior to its presentation for approval by the General Assembly of Representatives.
The Tax Administrations Inform Chile joins OECD The Ministry of Finance of Chile and the Organization for Economic Cooperation and Development – OECD, signed an agreement for Chile’s incorporation to said organization. The acceptance of Chile as a member of the OECD, apart from being a recognition to the structure and management of its economy, confirms the high level of efficiency and effectiveness of the Internal Revenue Service in the administration of the Chilean tax system. Chile is the first South American country to be accepted by OECD.
New tax rules in force in Ecuador The Law amending the Internal Tax System Law and the Law amending Tax Equity in Ecuador were approved by the National Assembly and ratified by the President of the Republic. Since December 23, 2009, the Internal Revenue Service (IRS) has a new element for continuing to improve the levels of Collection, and reducing tax evasion and avoidance. This legal document includes interesting changes that will allow for improving taxpayer control. Economist Carlos Marx Carrasco, General Director of the IRS stated that the most important innovation is the reform of Corporate Income Tax which has been limited to one payment that constitutes a Minimum Tax and is calculated on several factors such as Sales, Assets, Net Worth and Costs-Expenses. The new law also eliminates the exemption of dividends (profits) of individuals. The purpose of this reform is to improve equity in the Ecuadorian tax system. On the other hand, the Law increases from 1% to 2% the tax on the drain of foreign exchange, but increasing within the exempt amount, remittances abroad of up to USD $1.000. With respect to incentives, the increase in deduction for reinvestment of assets intended for R&D within society is included as mechanism for promoting investment. The Reform also provides for lifting bank secrecy of citizens, only for tax purposes, since the law itself guarantees the most absolute confidentiality and reserve of data that are available to the Internal Revenue Service. Byron Vásconez Vásconez Correspondent
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Main tax innovations in Spain for 2010 Law 26/2009 of December 23 on the General State Budgets (GSB) for 2010 was published in the State’s Official Newsletter (SON) on December 24, 2009. This law introduces in the area of taxation, in addition to the innovations and usual annual updates, a series of measures dealing with main aspects of the tax systems. Some of these are: Individual Income Tax: (i) tax rates applicable to “savings income” (dividends, interest, net worth gains) are increased up to 19%/21% (to date they were taxed at 18%); and (ii) and application of the system to “impatriate” workers is limited to taxpayers whose anticipated annual compensations do not exceed 600,000 Euros annually. Two types of reduced rates (20%/25%) are established for Corporate Income Tax of small and medium businesses that create or maintain employment. Likewise, the rate of withholding and on account payment of Corporate Tax is increased up to 19%. General and reduced rates of Value Added Tax (VAT) are increased from 16% and 7% to 18% and 8%, respectively, starting on July 1st, 2010. With respect to Non-Resident Income Tax, the rate applicable to savings income is currently 19%. Apart from the previously described innovations by the LPGE, worth noting is the publication in the Son of December 29, of the Resolution of December 23 of the General Directorate of Taxes, relative to the application and interpretation of specific community guidelines on VAT in order to begin applying the community provisions within the established term. Fernando Díaz Yubero Correspondent
Overview of the tax innovations in France for 2010 The numerous tax measures of the finance law for 2010, of the amending finance law for 2009 and other regulations anticipated for 2010, have as main characteristic the desire of the in-depth reform of French taxation. The objective of these measures is to promote the competitiveness of the economy by reducing the tax burden, which affects, in particular, future expenditures (investment, innovation) and make the tax tool available to the environment. Efforts continue as well for achieving greater international tax transparency and reinforcing the struggle against illegal activities. Promoting investment and innovation The professional tax which was the main local tax paid by businesses and the main resource of the territorial communities. A new territorial economic contribution will enter into force on January 1st, 2010. It consists of a quotation based on the values of real estate property of the businesses and a complementary quotation whose base will be the value added. This reform which results in a medium term tax reduction of approximately 5.8 billion Euros per year for the companies will consolidate the entrepreneurial structural productive investment, as well as reinforce the employment capacity. With a view to sustaining the treasury of the innovative companies, it was decided to extend the system established in 2008 within the framework of the economic reactivation plan which involved the immediate refund of the tax credit anticipated for research and development. In this way, companies will continue to benefit from the immediate refund of a tax credit equal to 30% of research expenses incurred Turing the year, with a limit of 100 million Euros. Approximately 2.5 billion Euros will be contributed to the treasury of the innovative companies.
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Making the tax tool available to the environment To promote restraint behaviors with respect to carbon and reduce gas emissions in accordance with France’s international commitments, a rate on energetic products sold, used or intended to be used as carburetant or fuel will enter into force on July 1st, 2010. Based on the contents of carbon of taxable products, this rate will be calculated on the basis of the cost of a ton of carbon set at 17 Euros for 2010. Specifically, the carbon rate will increase by 4.11 cents of a Euro, the price per liter of gasoline and by 4.52 cents of a Euro the liter of gas oil. The main challenge of the new rate is to follow up an in-depth change of behaviors as regards the consumption of fossil energy, but in a progressive manner. For this purpose, an income tax credit is established for 2010, to refund to individual taxpayers the amount of the carbon tax. Reinforcing the transparency of international taxation According to the conclusions of the G20 in Pittsburgh, the States and territories that do not abide by the demands for transparency established by the international community in relation to taxation, will be penalized with specific fiscal sanctions that will affect the financial flows to their territories. Strong measures are adopted, in particular, to tax up to 50% of the amounts paid in those States or also to limit the corporate tax deductions of amounts paid in those same territories. On the other hand, rules for fighting against the artificial location of income in those States are strengthened. These measures are applied to the States or territories which, in early 2010 continue in the OECD list or have not signed information exchange agreements with France. Reinforcing the struggle against illegal activities Tax services will be strongly involved in the struggle against criminal trafficking. Likewise, rules regarding professional secrecy are modified to allow spontaneous Communications of information by the tax agents to the police services. On the other hand, the General Directorate of Public Finances will be able to control and tax much more effectively the illegal activities, especially, by officially taxing illegal income and using an income presumption for an amount equivalent to the value of the products illegally held by the persons doing the trafficking. Other important tax measures will be implemented or adopted during the current year, in particular for training tax service agents to carry out judicial investigations or setting up a recording of banking premiums. These measures will be presented in a future CIAT publication. Josiane Lanteri Correspondent
DGI of Nicaragua trains officials In order to expand tax knowledge in all economic sectors of the country, the officials of the General Directorate of Revenues at the national level are being trained on Law No. 712, “Law on Amendments and Additions to Law No. 453, Tax Equity Law and Law No. 528, Law on Amendments and Additions to the Tax Equity Law”. Mr. Walter Porras, General Director of Revenues said that this type of training will be provided to all economic and political sectors of Nicaragua, in order to clarify any doubt which taxpayers may have on this matter, as was done with Tax Harmonization”. On the other hand, these Amendments to the Tax Equity Law will benefit the Nicaraguan people by means of the different social programs being carried out by the Government of Reconciliation and National Unity, such as gratuitous health and education, the Productive Bonus, the Zero Usury program, the construction of highways and homes for the people, among others.
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By means of these new Reforms, published in “The Gazette” No. 241 of December 21, 2009 and which entered into force on January 1st, 2010: Solidarity Year, the government endeavors to obtain 0.7 of the Gross Domestic Product, (GDP)., of the Republic’s Budget deficit, to continue with the social benefit programs. Starting in January, officials from the General Directorate of Revenues will be conducting this type of seminars to taxpayers and the population, in general, of the different departments of the country. Source: General Directorate of Revenues - Nicaragua
KRA Exceeds 2nd Quarter Revenue Performance by 2.5 Billion Kenya Revenue Authority collected Kshs 136.8 billion against a target of Kshs 134.3 billion representing 24.6 percent of the Financial Year 2009/10 target during the second quarter of 2009/10 Fiscal Year, October to December 2009. Commissioner General Mr. M G. Waweru while releasing the performance report at Times Tower, Nairobi on 7th January 2010 said the surplus of Kshs2.5 billion was realised in the quarter, despite the adverse economic environment. He said the Authority is optimistic of surpassing the third quarter target and ultimately exceeding the target for the Financial Year. The Authority is expected to realise an ambitious target of Kshs. 545.2 billion representing a growth of 13.4 percent over the Kshs. 480.6 billion collected in 2008/09 Fiscal Year. The Authority collected a total of Kshs 121.802 billion over a similar period during the 2008/09 Financial Year representing 12.3% revenue growth. KRA is expected to collect Kshs. 126.8 billion in the third quarter of 2009/10(January – March 2010). Source: Kenya Revenue Authority
SET from Paraguay collected 22.7% more in December Tax revenues in December 2009 showed an increase of 22.7% with respect to the same month in 2008, according to a report from the Ministry of Finance. In the past month, collection amounted to 752 billion Guaranies, versus 613 billion in 2008, which represents an additional 139 billion. Within said framework, the cumulative amount from January through December 2009 represented a surplus of 7.8%, with respect to the same period during the previous years. In the year ended, total collection amounted to 9.139 billion Guaranies, as compared to 8.480 billion in 2008. SET collections in December exceed those of 2008 by 26%. Cumulative collection from January through December shows an increase in internal taxes of 25.4%, as compared to the same period in 2008. Revenues of the General Customs Directorate increased 20.6% in December, as compared to the same month in 2008. In fact, in December, Customs collected a total of 442 billion Guaranies, versus 366 billion in 2008.On the other hand, the cumulative amount from January through December 2009 showed a negative variation of 6.5% with respect to 2008. Likewise, collections of the General Directorate of Collection and the General Large Taxpayers Directorate showed increases in December of 41.3% and 20.3%, respectively. Elizabeth Fernández de Corrales Correspondent
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Capacitando ILADT and ICDT to hold Tax Law Symposiums Sponsored by the Latin American Tax Law Institute (ILADT) and the Colombian Tax Law Institute (ICDT) the XXV LATIN AMERICAN and XXXIV COLOMBIAN TAX LAW SYMPOSIUMS will be held in Cartagena de Indias, Colombia, on February 14 – 19, 2010. Distinguished expert speakers on Tax Law will present and discuss issues of current national and international importance for improving Tax Law.
Announcement of Transfer Pricing Course, 3th ed. One of the challenges faced by every tax administration is to improve the quality of its human resources. Therefore, CIAT facilitates access to first level training for all the tax administrations that are members of the organization. CIAT announces the Transfer Pricing Course, 3rd ed., which consists of three modules covering Theoretical, Practical and Advanced Aspects. It is intended for officials and individuals from the tax administrations of the CIAT member countries working on transfer pricing issues, international taxation, or who may be interested thereon. The course is aimed at training officials for the adequate examination of the transfer pricing international operations carried out by taxpayers. The first module on Theoretical Aspects will begin on April 27, 2010 and those interested in participating may register until February 20, 2010. The course will be conducted by our distinguished tutors, who have vast knowledge and experience in management issues. Tax administration officials interested in participating may request additional information at capacitacion@ciat.org
Announcement of the Specialized Course on Tax Administration, 4th ed. One of the challenges faced by every tax administration is to improve the quality of its human resources. Therefore, CIAT facilitates access to first level training for all the tax administrations that are members of the organization. CIAT announces the Specialized Course on Tax Administration, 4ed., which is intended for tax administration officials of the CIAT member countries, as well as the public in general working in the area of taxation or who may be interested therein. The course endeavors to expand and consolidate the knowledge of the participants in relevant areas for carrying out the essential and support functions of a tax administration. Also to be considered are those topics of current importance that involve a more direct action with the taxpayers and society in general. This Course will begin on March 1st, 2010 and those interested in participating may register until February 4 of the same year. The course will be conducted by our distinguished tutors, who have vast knowledge and experience in management issues. Tax administration officials interested in participating may request additional information at capacitacion@ciat.org
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Announcement of Tax Management Course, 2ed. One of the challenges faced by every tax administration is to improve the quality of its human resources. Therefore, CIAT facilitates access to first level training for all the tax administrations that are members of the organization. CIAT announces the Tax Management Course 2ed., which is intended for Managers, Administrators, Directors of Heads of the various Departments of the Tax Administration and other staff directly related to administration, planning and management in the tax administrations. The Tax Management Course, 2ed., will begin next May 17, 2010 and those interested in participating may register until March 29, 2010. The course will be conducted by our distinguished tutors, who have vast knowledge and experience in management issues. Tax administration officials interested in participating may request additional information at capacitacion@ciat.org
Publications New in the Web 2009 Naples Technical Conference Compilation by CIAT of lectures presented during the Naples Technical Conference held in Naples, Italy on October 1922, 2009.
Our documents Tax Collection Observatory No. 3/November Detailed study on the behavior of collection, to determine the possible impact o f the international economic crisis on public finances in the member countries.
¡Were you aware that!.. CIAT has a model tax code updated in 2006, which was the result of the work of the working group formed by Argentina, Brazil, Chile, Colombia, Spain and Mexico and sponsored by the AEAT of Spain and CIAT. The winner of the 3rd CIAT – AEAT – IEF Research Scholarship was Mrs. Flora María Castillo Contreras, Local Collection Administrator of the Tax Administration Service – SAT -of Mexico, whose work dealt with “Enforced collection in the tax administration. Authority, opportunity and efficiency”.
Really?! El Nillómetro The Nilometer (Kiosk of the Nile; known in Arabic as al-Miqyas) is considered among the enduring architectural foundations tied to the Egyptian culture and way of life. It is in fact unique in the Islamic world. Its importance goes back to a time when measuring the rise of the waters of the Nile was closely related to the levying of taxes on agricultural lands. Taxes were levied only when the waters of the Nile had risen to a certain designated level, which would irrigate the land during flood season.
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The Nilometer itself is the equivalent of a well whose walls are built from skilfully hewn stone blocks. The thickness of the walls increases the greater the depth. The well consists of three levels: the lowest level is a circular base, while the middle level is a square whose sides measure more than the diameter of the level below. The highest level is also square in shape, and bigger than the middle level. It is due to this design that the walls can bear the horizontal pressure of the earth that increases the greater the depth. The waters of the Nile would flow into the well by means of three tunnels, which discharged their waters into the well by means of three ‘mouths’ on the eastern side that are in the form of subterranean entrances in the wall. These openings are oriented towards pointed arches supported by compact decorated columns with globular bases. These arches are considered to be not only the oldest known examples in Islamic Egypt, but precede the European Gothic type by three centuries. We may also view similar examples on the arches of the Ibn Tulun Mosque in Cairo (AH 265 / AD 879). A staircase curves around the inside walls of the well and extends all the way to the bottom. Adorning the upper reaches of the well on two sides, the northern and the eastern internal walls, are inscriptions in kufic script, which represent the oldest (dated) Arabic inscription in Egypt ever recorded. In the centre of the well stands the principal component of the monument, an octagonal marble pillar whose length extends to 16 cubits (10.50 m). It is engraved with measurements in cubits (kirat) and inches (zira’), which demarcate the water inundation levels. Ahmad ibn Tulun (r. AH 254–70 / AD 868–84) carried out restoration of al-Miqyas in AH 259 / AD 873 and replaced the two bands of ancient inscriptions with more contemporary ones on the south and west sides. He placed his name within the new inscription, but kept the original date of construction untouched. Throughout the ages the building has been subject to many restorations and renovations (Fatimid, Mamluk and Ottoman). It was renovated in the modern age in 1925 when the Mamluk dome crowning the outside of the building was replaced by a conical-shaped roof covered by lead panels. How monument was dated: Historians concur that al-Miqyas was built in the year 247 / 861 by order of the Abbassid Caliph al-Mutawakkil, although some scholars trace its foundation back to the Caliph al–Ma’mun (r. 169–217 / 786–833). However, the historian Ibn Khalkan (d. 681 / 1282) mentions that the name of the al-Mutawakkil and the year the Nilometer was constructed (247 / 861) was engraved within an inscription on the walls of the well, and that this inscription dated to the foundation of the monument. This inscription has now been lost and may have been removed when Ibn Tulun carried out his restoration of the building in the year 259 / 873.