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ISSN 1684-9833 • No.15 / September 17

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The Executive Secretariat Informs Transfer Pricing and Information Exchange SeminarWorkshop was successfully held

Executive Secretariat Informs Transfer Pricing and Information Exchange Seminar-Workshop was successfully held Seminar on Key Aspects for Human Resources Management The Tax Administrations Inform Brazil - The Customs Office at Santos is an International Container Security Model Colombia- Without VAT, productive chain of goods consumed in borderline municipalities Ecuador - Ecuador and Kenya share working experiences Honduras – DEI of Honduras successfully carries out activities for controlling alcohols Peru - Between January and July over five million returns were filed before SUNAT via Internet Peru - Taxpayers issued over 410,000 electronic receipts for fees Dominican Republic - DGII of the Dominican Republic and CAPTAC hold regional seminar of tax administrations Events Publications ¡Were you aware that!... ¡¿Really?!

Quito, Ecuador. Within the framework of the Cooperation Agreement signed between the Inter-American Center of Tax Administrations-CIAT and the Organization for Economic Cooperation and Development-OECD, intended to strengthen and modernize the international taxation areas and the related administrative structures of the tax administrations of the CIAT member countries, and sponsored by the Internal Revenue Service (SRI) of Ecuador, the Seminar-Workshop on “Transfer Pricing and Information Exchange” was successfully held in the city of Quito, Ecuador on August 24-27.

The General Director of Revenues of Ecuador, Mr. Carlos M. Carrasco, the CIAT International Cooperation Manager, Mr. Gonzalo Arias and the OECD Transfer Pricing Expert, Wolfgang Büttner, made statements at the inauguration of the event. The distinguished international speakers from different tax administrations of the CIAT member countries were: Mrs. Donna O’Connor from the Revenue Canada Agency, Mr. Gerardo Montes from the SII of Chile, Mr. Sidi Mohamed Zeddoun, from the DGFIP of France, Mr. Stefano Gesuelli from the Guardia di Finanza of Italy, the Revenue Commissioner of the Kenya Revenue Authority, Mr. John Njiraini, Mr. Sergio Pérez Cruz from the SAT of Mexico, Mr. Joaquim Souza from the DGI of Portugal and Mr. Wolfgang Büttner.

Other participants were the Director of the Internal Revenue Service of Chile, Mr. Julio Pereira and representatives from Costa Rica, Dominican Republic, El Salvador, and Paraguay, as well as distinguished officials from the Internal Revenue Service and Customs Service of Ecuador.

The CIAT Executive Secretariat presented two papers: “Comparative analysis of the regimes for controlling transfer pricing in Latin America” and “Aspects to be taken into account for an effective application of the rules for controlling transfer pricing”, both by Mr. Gonzalo Arias.

Participants and speakers had the opportunity to discuss legal and operational aspects related to the control of abusive manipulation of transfer pricing, as well as consider the needs of the tax administrations that are beginning to work in this area, which were taken into consideration by the sponsoring international organizations and representatives of the countries present.

This event allowed for perceiving that there is a certain consensus on the part of Latin American countries for implementing, improving and effectively applying regimes for controlling abusive transfer pricing, which was evidenced through the knowledge of officials of the subject matter, the experiences presented and the accuracy with which needs were presented.

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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.

Official Photo: Transfer Pricing and Information Exchange SeminarWorkshop.

Executive Council Executive Secretariat The e-CIAT Newsletter is published and distributed electronically biweekly.

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Contact us: CIAT Executive Secretariat / e-CIAT Newsletter P.O. Box 0834-02129 Panama, Republic of Panama.

Phone (507) 265-2766 / 265-5994 Fax: (507) 264-4926 E mail:ciat@ciat.org Web Site: http://www.ciat.org

Mr. Gonzalo Arias, International Cooperation Manager

Seminar on Key Aspects for Human Resources Management Dominican Republic. The seminar on key aspects that affect human resources management was held on September 8-10 in Santo Domingo, organized by CIAT and the General Directorate of Income of the Dominican Republic. The event was inaugurated by the DGII acting director, Mrs. Germania Montás Yapur and the participants included top level human resources officials from the tax administrations of 10 CIAT member countries.

Representing the Executive Secretariat was the Director of Studies and Training, Ms. María Raquel Ayala Doval, who, on behalf of the CIAT Executive Secretary, Mr. Marcio Verdi, thanked the delegates for their participation and interest in exchanging experiences on such an important topic for the success of the organizations.

Some of the key topics discussed were Strategic Plans and Human Resources by Mrs. Germania Montás Yapur; ethics in human resources management by Mrs. Cuca Sacristán Sánchez; while the participating countries, through case studies and workshops, referred to their significant achievements in such aspects as human resources incorporation and mobility, the administrative career, training, compensation, and job manuals.

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The Tax Administrations Inform Brazil - The Customs Office at Santos is an International Container Security Model According to the U.S. Customs and Border Protection, the Customs Office at the Port of Santos should again be placed among the first five of the 58 ports that participate in the Container Security Initiative (CSI) program.

The program was created in 2002 in response to the terrorist attacks of September 11, 2001. The purpose was to establish a series of measures to render difficult the sending of potentially lethal cargo, such as chemical and nuclear weapons to the U.S. territory. Some of the measures include risk management, use of scanners and safe sealing methods.

Santos was the first port to join the CSI in Latin America, in 2005. followed by Buenos Aires and Cartagena.

In addition to taking a step further in cooperation with other customs administrations, participation in the program also affords the Brazilian exporter a competitive advantage, by investing in a better service for taxpayers. “The advantage of being a CSI port is that Brazilian cargo leaving said port, is guaranteed a faster and secure treatment upon arrival in the United States,” said the Head of the Customs Management and Infrastructure Division, Digin, Cleiton Alves dos Santos João Simões.

Marcos Aurelio Valadao Correspondent

Colombia- Without VAT, productive chain of goods consumed in borderline municipalities To further guarantee the exclusion of VAT for five groups of goods commercialized in 37 municipalities bordering with Venezuela, the national government issued decree 3148 of August 23, 2010.

The benefit of purchasing without VAT is now extended to producers and dealers in the productive chain, who will also enjoy the exclusion of said tax when receiving from their suppliers, such goods and even inputs for producing them.

Thus, citizens acquiring goods taxed with VAT, not only are not obliged to pay it, but likewise dealers should refrain from collecting it, inasmuch as they themselves can acquire these goods from their suppliers, without said tax.

Edgar Oswaldo Peña Salamanca Correspondent

Ecuador - Ecuador and Kenya share working experiences Last August 23, top authorities of the Internal Revenue Service of Ecuador (SRI), Mr. Carlos Marx Carrasco, General Director of the SRI and of the Kenya Revenue Authority, Messrs. John Njiraini and George Obell, met to discuss topics of importance for both entities.

A working meeting was held between the representatives of the two Tax Administrations to exchange experiences in relation to tax control of transfer pricing in the flower growing sector.

The SRI Director, Mr. Carlos Marx Carrasco, highlighted the mutual support between the two Tax Administrations and invited representatives of the KRA to participate in the General Assembly of the Inter-American Center of Tax Administrations (CIAT) to be held in Quito, Ecuador next year.

Byron Vásconez Vásconez Correspondent

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Honduras – DEI of Honduras successfully carries out activities for controlling alcohols The irregular import of alcohol is being controlled by the Executive Directorate of Revenues (DEI) in Honduras, following the investigation in the country of several companies devoted to the import of industrial alcohol to be used in the manufacture of paints, solvents, anticorrosives and other chemicals which are irregularly used in the illegal manufacturing of drinks for human consumption.

The DEI Director, José Oswaldo Guillén, reported favorable results up till now in solving this type of tax offense, which is also detrimental to the health of individuals. “We have established a team to detect the location of these ilegal distilleries in the country,” he said. Other drastic measures have been applied, such as prohibiting the introduction of alcohol from Guatemala through the customs offices of El Poy, Agua Caliente and El Florido, with only the customs offices of La Mesa in the north of Honduras and Toncontin in Tegucigalpa being authorized for that activity.

After the DEI’s Antifraud Unit located an artisan liquor Factory operating in Tegucigalpa, where barrels with 70-degree industrial alcohol were found, which were being mixed with water and glycerin for human consumption, other operations were undertaken for confiscating some of these products that were distributed for commercial purposes.

Based on this action, the Honduran authorities ordered the imprisonment of the manufacturers of illegal liquor who, according to the investigations were commercializing the product at the national level, to the detriment of the Hondurans population.

The Director Minister in addition requested the National Congress to approve, as soon as possible, the Tax Anti-Evasion Law, in order to strengthen the DEI to more efficiently combat corruption and smuggling at the customs offices.

Dinia Granados de Marín Correspondent

Peru - Between January and July over five million returns were filed before SUNAT via Internet The implementation by SUNAT of several computerized tools to facilitate compliance with their tax obligations has resulted in the filing, through Internet, of five million 981 thousand returns between January and July.

This represents 62% of total returns filed and shows that the use of virtual services is being consolidated, since the procedure can be carried out quickly and simply, in a safe environment, available 24 hours a day.

In this same period, over 280,000 requests for obtaining the TMF have been processed through Internet. This is equivalent to 37% of total procedures carried out under this item.

Likewise, over one million payment vouchers have been processed through Internet. It must be noted that these services are available at the institutional portal in the SUNAT Online Operations module.

Clara Loza Ramírez Correspondent

Peru - Taxpayers issued over 410,000 electronic receipts for fees Since SUNAT implemented the system for issuing Electronic Receipts for Fees (ERF), in October 2008, 410,168 vouchers using this virtual support, thus showing that taxpayers are ever more making use of this service, which eliminates printing expenses and the use of paper, which definitely contributes to the preservation of the environment.

This system is currently being used by over 75,000 taxpayers who also use the Electronic Receipts and Disbursements Register which allows for recording all the vouchers issued, thereby reducing the legalization costs of this type of documents.

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To issue a receipt for fees and generate the electronic revenues register, the taxpayer must previously register in the system through SUNAT Virtual (www.sunat.gog.pe). When the information on the service rendered is recorded, a voucher will be automatically issued, which may sent by e-mail to the customer (business or consumer) or printed.

Clara Loza Ramírez Correspondent

DGII of the Dominican Republic and CAPTAC hold regional seminar of tax administrations The General Directorate of Internal Taxes and the Regional Technical Assistance Center of Central America, Panama and the Caribbean (CAPTAC) held the first International Regional Seminar: “An integrated vision of the tax control processes according to the basic elements of a tax administration”, with the participation of 36 officials from the tax administrations of eight countries.

The meeting, organized by the DGII and the Regional Technical Assistance Center of Central America, Panama, and the Caribbean (CAPTAC) covered an extensive working program with the participation of officials from the tax administrations of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Spain and the cooperation of the International Monetary Fund (IMF) and the Inter-American Center of Tax Administrations, CIAT. The inaugural ceremony was held that Monday at the V Centenario Hotel, with the statement by Nieves Vargas, who is in charge of the International Cooperation Department of the DGII, as well as Patricio Castro, senior economist of the International Monetary Fund.

At this meeting, lectures were presented by Marcio Verdi, CIAT Executive Secretary; Patricio Castro, senior economist of the International Monetary Fund; Oscar Vásquez, resident expert in Tax Administration of CAPTAC-DR; and taxation experts from Spain, Fernando Díaz Yubero and Carlos Herrera, whose presentations dealt with: “Main trends in the Tax Administrations of Latin America and Europe”; “Key elements for the efficient operation of the Tax Administrations” and “The special control units”.

Nieves Vargas Collado Correspondent

Events VI Session of the Office of the Taxpayers’ Ombudsman. Environmental taxation in the framework of the reform to the Local Treasuries Law. The VI Session of the Office of the Taxpayers’ Ombudsman of the Madrid City Council will take place on September 22, 1010 in Madrid, Spain. The same is organized by the Institute for Tax Studies, The Ministry of Economy and Treasury and the Office of the Taxpayers’ Ombudsman of the Madrid City Council with the collaboration of FEMP, and the Institute for Environmental Dsipciplines and Sutdies (Instituto de Disciplinas y Estudios Ambientales-CEU). The topic of the Session will be “Environmental Taxation in the framework of the reform to the Local Treasuries Law”, and the diverse mechanisms that may be offered by environmental examination in the field of Local Treasuries will be analyzed.

VXII Seminar on Public Management in Financial and Tax Administration.

The excellence of financial and tax administrations: A right of the citizen.

November 29 - December 03, 2010 Montevideo, Uruguay

The XII Seminar on Public Management in the Financial and Tax Administration. Excellence of the financial and tax administrations: A right of the citizen will be held on November 29 through December 3, 2010 in Montevideo, Uruguay.

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It is organized by the Ministry of Economy and Finance of Spain, the Institute of Fiscal Studies, the Spanish Agency of International Cooperation for Development and the Development Center of Uruguay.

One of the objectives of this seminar is to discuss and reflect on the modernization of the financial and tax administration, by incorporating excellence, good practices, quality and transparency criteria and approaching the citizen who is the end user of the services it renders.

Publications Our documents Management of the Tax Administration, Performance Evaluation and the New Technologies Technical Conference Paris, France, 2002

This book includes the papers that were presented at the CIAT Technical Conference held in Paris, France on October 28 - 31, 2002. --- The Technical papers deal with: “The managerial function of the tax administration in the contemporary world”, “Desing and application of an integrated system for performance evaluation” and “The new technologies to support management of the tax administration and to improve the treasury-taxpayer relationship”.

¡Were you aware that!...

Tax Administration Review CIAT/AEAT/IEF, No.17 October 1998 The review included in its No. 18 edition of October 1998, the first and second prize winning entries of the X CIAT/AEAT/ IEF Essay Contest.

¡¿Really?!

History of Taxation in Peru Hispanic Peru The Spanish invasion brought with it a series of changes in social relations and in the production of “Tawantinsuyo”.

This series of changes involved the obligation of the native population to pay taxes to the conquerors. The means for collecting taxes from the indigenous populations, as well as the existing tax obligations for the other classes of the viceroyalty were determined. In addition, the institution that administered the collected taxes was established.

The way of paying taxes within the western context had its own characteristics. The tax consisted of delivering to the Government part of the personal or community production, which action was based on a legal or juridical order. This then involved a reversion in the relationship existing in the Pre-hispanic period where the delivery of goods or labor force was based on the bonds of kinship which were the groundworks of reciprocity. The new form of taxation was organized according to the decrees and orders of the king, according to established rates or systems.