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ISSN 1684-9833 • No.16 / October 1, 2010

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The Executive Secretariat Informs Preparations underway in France for the CIAT Technical Conference The General Directorate of Public Finance of France is working in close coordination with the Executive Secretariat, in the preparation of the 2010 CIAT Technical Conference to be held in Paris, France, on October 18-21, 2010.

The Executive Secretariat Informs Preparations underway in France for the CIAT Technical Conference CIAT will participate in the International Environmental Summit to be held in 2011 CIAT Technical Assistance Manager participates in Seminar in La Antigua, Guatemala

Information on the organization and technical program for the conference as well as other data of interest may be found in the Web page specially prepared for this event.

The main theme for this year’s Technical Conference is: “The Improvement of the effectiveness of the tax administrations through new organizational models”, to be developed on the basis of three fundamental aspects: •

The First Latin America and Caribbean Forum on Tax Policy was successfully held

•

Meeting of Tax Studies and Research was Successfully Concluded

•

The Tax Administrations Inform Argentina - Customs offices of Argentina and Uruguay move forward in a technical cooperation Colombia- Dr. Juan Ricardo Ortega, new director of DIAN United States - Senate proposal to repeal new tax-reporting rules Kenya - Delegation from Kenya visited the SRI of Ecuador Italy - Main tax innovations in Italy Mexico - To begin change toward Electronic Invoicing on January 1st, 2011 Netherlands -2011 Tax Plan: Incentives for entrepreneurship and innovation Portugal -New Decree-Law regulates the legal framework of arbitration in tax issues Peru -Distinguished tax specialists participated in SUNAT’s national juridical meeting Peru -SUNAT estimates 5% increase in central government revenues for 2011 Events Publications ¡Were you aware that!... ¡¿Really?!

The merger of competencies in the Tax Administrations as strategy for improving effectiveness and efficiency in public administration.

Key aspects for implementing the merger of competencies in the Tax Administrations.

Emerging aspects to be considered in the merger of competencies.

This will be another opportunity for the member countries of CIAT, other countries and international organizations to share tax experiences, as well as establish contacts with colleagues from other latitudes through this event promoted by CIAT and the General Directorate of Public Finance of France.

CIAT will participate in the International Environmental Summit to be held in 2011

Panama, Panama. On September 24, CIAT was honored with the visit of Mr. Gustavo Manrique, Ecuadorian professional, well-known in Latin America for the development of ecological solutions and analysis of the effects of environmental deterioration, as well as President of Soluciones Ambientales Totales SAMBITO, (Total Environmental Solutions) a company that promotes specialized ecoprojects for developing and providing innovative solutions to environmental problems.

In this, his second visit to our Organization, Mr. Manrique met with

Mr. Gustavo Manrique, President of Soluciones Ambientales Totales SAMBITO, (Total Environmental Solutions) with the CIAT Executive Secretary, Mr. Márcio F.Verdi.

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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.

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

From left to right: Mr. Jeff Dayton Johnson, Head of the Development Center, both from the Organization for Economic Cooperation and Development (OECD), Mr. Márcio F. Verdi, Executive Secretary of the Inter-American Center of Tax Administrations (CIAT), Mr. Alberto Vallarino Clément, Ministry of Economy and Finance of the Republic of Panama, Mrs. Grace Perez Navarro, Deputy Director of the Tax Policy and Administration Center (OECD), Mr. Bernardo López López - Ríos, Representative from the Embassy of Spain in Panama and Mr. Luis Cucalón, Director General of Revenue, General Directorate of Revenues of Panama.

the CIAT Executive Secretary, Mr. Márcio F.Verdi, to discuss important issues regarding the Environmental Tax Forum wherein CIAT will participate, within the framework of the next International Environmental Summit to be held in Guayaquil, Ecuador on March 14 through 17, 2011, to once again reaffirm its commitment to society, the environment and the way of contributing to its preservation.

CIAT Technical Assistance Manager participates in Seminar in La Antigua, Guatemala Guatemala, La Antigua. This event was held in the City of La Antigua, Guatemala, on September 19-23, 2010, organized by the Training Center of the Spanish Agency for International Cooperation and Development of the Spanish Tax Agency. The main instructors were: Julio Lesmes Anel, Deputy Director of External Communications and Rosa Prieto del Rey, Assistant Deputy Director of Tax Technique, both from the State Agency of Tax Administration of Spain.

The paper presented by Mr. Raul Zambrano dealt with the Electronic Services currently provided by the tax administrations, in particular, those of Latin America, and the future challenges and opportunities in this respect.

The First Latin America and Caribbean Forum on Tax Policy was successfully held Panama, Panama City. The Ministry of Economy and Finance of the Republic of Panama hosted on September 16 and 17, at the Meridien Hotel in the city of Panama, the first meeting of the Latin America and Caribbean Forum on Tax Policy. Speaking at the inaugural ceremony were His Excellency, the Minister of Economy and Finance of Panama, Mr. Alberto Vallarino Clément, Mrs. Grace Perez Navarro, Deputy Director of the Tax Policy and Administration Center and Mr. Jeff Dayton Johnson, Head of the Development Center, both from the Organization for Economic Cooperation and Development (OECD), Mr. Márcio F. Verdi, Executive Secretary of the Inter-American Center of Tax Administrations (CIAT), and Mr. Bernardo López López - Ríos, Representative from the Embassy of Spain in Panama.

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This initiative is a new regional program launched by OECD, financed mainly by Spain and with the support of CIAT, its main partner in the region.

The LAC Forum gathers expert officials from the Ministries of Finance of the greater part of countries from Latin America and the Caribbean. The topics discussed dealt with the role of the tax system in reducing inequality and in the promotion of social cohesion, while the bases were laid for developing a working program that will be focused on the work of the LAC Fiscal Initiative for the future, beginning with the tax policy issues that were identified as priorities by the LAC countries.

The main purpose is to afford the opportunity for the exchange of experiences, to thereby generate feedback that may result in conclusions for improving the tax systems of the region.

Participants included representatives from the Ministries of Finance and/or Tax Administrations of 18 Latin American, Caribbean and European countries, as well as various national and international organizations such as IDB, ECLAC, IEF of Spain, IMF, ICEFI from Guatemala, the Getulio Vargas Foundation of Brazil, USAid, in addition to OECD and CIAT. OECD is an international organization formed by 33 countries of the Americas, Europe and Asia, and by means of this program it endeavors to provide the countries of the LAC region a forum where they may consider how to improve their tax policies, while sharing the know-how it has been accumulating since its creation, almost fifty years ago.

CIAT, an international organization aimed at strengthening the tax administrations with headquarters in Panama and a strong presence in the LAC region, has 38 member countries from the Americas, Europe, Africa and Asia.

The Second Meeting of the Forum will be held in July 2011.

Mr. Jeff Dayton Johnson (OECD), Mr. Márcio F. Verdi (CIAT) and Mr. Alberto Vallarino Clément, Ministry of Economy and Finance of the Republic of Panama.

Participants of the First Latin America and Caribbean Forum on Tax Policy.

Mrs. Grace Perez Navarro (OECD).

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Meeting of Tax Studies and Research was Successfully Concluded Panama, Panama City. The First Meeting of Tax Studies and Research Units, organized by the CIAT Executive Secretariat for member country tax administration officials working in these units, came to a successful conclusion.

The meeting, which was attended by representatives from 16 member countries and 4 international organizations, was held on September 13 through 15, 2010 in Panama City, Panama, under the main theme of: “Micro-simulation methods and their usefulness for policy analysis and tax administration”.

On the first day, experts from the Institute of Fiscal Studies (IEF) of Spain, Organization for Economic Cooperation and Development (OECD), Inter-American Development Bank (IDB), Economic Commission for Latin America and the Caribbean (ECLAC) delivered keynote presentations, while the second day was devoted to case studies. In this regard, 8 countries presented their experiences in the use of micro-simulation methods. Finally, on the third day, participants considered various technical assistance alternatives for implementing micro-simulation models in their countries.

The meeting also served as starting point for the activities of the CIAT Network for Tax Studies and Research Areas.

The Tax Administrations Inform Argentina - Customs offices of Argentina and Uruguay move forward in a technical cooperation The General Customs Director, María Siomara Ayerán, visited her Uruguayan colleague, Enrique Canon, to analyze the bases of future assistance and cooperation agreements between both administrations in issues dealing with Customs Transit Security Initiative (CTSI), the Reliable Operators Customs system (ROCS), which is similar to the Authorized Economic Operator used by the Uruguayan customs office, regulations regarding the Faithful Depositary, digitalization of customs documents and the Electronic Precincts Monitoring Center.

The meeting was held in Montevideo, where both officials noted the benefits which cooperation will provide their administrations, by sharing the objective of facilitating foreign trade with a greater intelligent and nonintrusive control of cargo, by means of the incorporation of technologies.

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Colombia - Dr. Juan Ricardo Ortega, new director of DIAN The ceremony was chaired by the Minister of Finance and Public Credit, Juan Carlos Echeverry.

The new director has a degree in Economics from Universidad de los Andes and also completed postgraduate studies at Yale University in the United States. He has been holding public positions for over a decade.

Edgar Oswaldo Peña Salamanca Correspondent

United States - Senate proposal to repeal new tax-reporting rules A Senate proposal to repeal new tax-reporting rules opposed by small businesses is “not acceptable in its current form,” a Treasury Department official said.

But the Obama administration wants to try to make those requirements less burdensome, said Michael Mundaca, assistant secretary of the Treasury.

The Senate is set to take a procedural vote Tuesday on a proposal from Sen. Mike Johanns (R., Neb.) to repeal the information-reporting rules. Enacted as part of health care-overhaul legislation, the rules would require businesses to report to the IRS payments to suppliers that exceed $600 in a single year.

Mr. Johanns offered the repeal proposal as an amendment to a small-business-lending bill pending in the Senate. The amendment will require 60 votes to overcome procedural objections—a tall order when Republicans control only 41 in the Senate.

Business trade associations have come out in force to lobby in favor of repeal.

“The extent of this new paperwork requirement on business owners is astounding, as businesses estimate that they will have to file hundreds and sometimes thousands of new 1099s per year,” wrote the Coalition for Fairness in Tax Compliance in a letter this week.

The U.S. Chamber of Commerce said it may factor the vote into its annual vote ratings.

Raúl Pertierra Correspondent

Kenya - Delegation from Kenya visited the SRI of Ecuador Through the help CIAT, a delegation from Kenya Revenue Authority led by Commissioner for Large Taxpayers visited Internal Revenue Service (IRS) of Ecuador on 23rd August 2010.

Fruitful discussions were held between the two tax administrations which focussed on opening opportunities for future cooperation’s on the following areas; 1) Sharing of information and strategies when dealing with Multinational companies which do business in both countries particularly in floriculture.

2) Kenya to tap Ecuadorian experience on Advance pricing arrangements (APAs), which Kenya is exploring the possibilities for future use.

3) Opening channels of general mutual cooperation in all areas of Transfer Pricing since both countries have similar challenges as third world countries when dealing with Multi national corporations (MNCs).

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During the discussions it emerged that Ecuador and Kenya shared a lot in common beside both countries sitting along the Equator, both countries have similar weather conditions suitable for Agriculture which is the main economic activity for both countries. Flower business was identified as the common crop in both countries and both countries specialise in growing roses which are sold to Europe and America. Roses are grown by large scale Multinational companies MNCs) some of which also operates in both countries and thus provide excellent opportunities for mutual cooperation.

John Karimi Njiraini Correspondent

Italy - Main tax innovations in Italy This summary covers Italy’s main news of tax interest in the month of September.

It includes brief accounts on agreements, resolutions and circulars.

Stefano Gesuelli Correspondent

Mexico - To begin change toward Electronic Invoicing on January 1st, 2011 The Tax Administration Service reports on new mechanisms for tax verification to be applied starting on January 1st, 2001.

Printed tax vouchers are currently being used and, starting in 2005, electronic invoicing began to be used as an optional scheme. The amendment to article 29 of the Fiscal Code of the Federation provides that, starting on January 1st, 2011, taxpayers must issue digital documents as vouchers for activities carried out, which implies a transition from the optional scheme to the generalized use of electronic invoicing.

As part of the transition scheme, taxpayers having printed vouchers on January 1st, 2011, may continue using them for a two-year period.

Roberto López Vides Correspondent

Netherlands -2011 Tax Plan: Incentives for entrepreneurship and innovation To ease the pain of the crisis we are making great efforts in 2011 to stimulate entrepreneurship and innovation. Because it is the entrepreneurs who are helping us back on our feet. At the same time, everyone must pay their share. And so we will take measures against people or companies purposely circumventing the tax rules. And also the focus on hidden savings will be expanded”, says Minister De Jager.

Entrepreneurs The 2011 Tax Plan comprises a number of measures to encourage entrepreneurship. For example, corporation tax will be reduced in 2011 by one-half per cent to 25%. And the SME rate will be introduced on a permanent basis: corporation tax on the first € 200,000 in profit will be reduced to 20%.

Source: The Duch Tax and Customs Administration Marian Bette Correspondent

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Portugal -New Decree-Law regulates the legal framework of arbitration in tax issues This Decree-Law, approved on September 23, in general, within the framework of the legislative authorization of the Assembly of the Republic, introduces the Portuguese legal system in tax arbitration, as an alternate solution to jurisdictional conflicts in the tax sphere.

Through fiscal arbitration, the processes to which the taxpayers may have objected, with respect to tax issues may be decided through speedier structures – the arbitration courts, that will decide disputes with the same effects and legal strength of a tax court.

The purpose of tax arbitration is the prompt solution of controversies between the tax administration and taxpayers and, accordingly, the reduction of processes pending in judicial courts.

Maria Angelina Tibúrcio da Silva Correspondent

Peru -Distinguished tax specialists participated in SUNAT’s national juridical meeting With the participation of the Minister of Justice of Peru, Victor García Toma and the National Superintendent of Tax Administration, Nahil Hirsh Carrillo, SUNAT successfully held the “VII National Juridical Meeting”, on Septembver 1-3, in the city of Lima. Distinguished international and national speakers and panelists shared their knowledge and experiences on legal issues of special relevance for the Peruvian Tax Administration.

This event was aimed at contributing to achieve the objectives of SUNAT; among them: permanently train its professionals on various tax and customs law issues, as well as disseminate the new doctrinal trends on such topics. Participants in the event also included professionals from public entities linked to SUNAT such as the Judicial Body, District Attorney’s Office, Fiscal Court, among others.

Clara Loza Ramírez Correspondent

Peru -SUNAT estimates 5% increase in central government revenues for 2011 Tax collection will experience an estimated 5% growth the coming year, thanks to the dynamism of the economy and the various control, examination and compliance facilitation actions which SUNAT has been implementing for promoting the formalization and expansion of the tax base.

This was stated by the National Superintendent of Tax Administration, Nahil Hirsh, in her presentation before the Congress’s Budget Committee to report on tax revenue projections for the coming year.

The head of SUNAT reported that tax collection has shown a recovery, as a result of the favorable performance of the economic activity, together with actions undertaken for recovery and examination, as well as those aimed at facilitating timely compliance with tax obligations.

She noted that between January and August tax revenues had shown an actual growth of 22,6%, with a 17.3% increase in collection of the GST and 27.6% in the case of Income Tax.

Clara Loza Ramírez Correspondent

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Events Advanced Course on Economic Analysis of Public Policies October 13 to 15 Madrid, Spain

The “Advanced Course on Economic Analysis of Public Policies” will be held in Madrid, Spain, on October 13 to 15, 2010.

The course, organized by the Institute of Fiscal Studies will be conducted by professors Guillem López i Casasnovas (from Universidad Pompeu Fabra) and Beatriz Gonzalez López-Valcarcel (from Universidad de Las Palmas de Gran Canaria).

The course is intended to train students in the advanced analysis of public policies in general and, in particular, welfare policies that are considered from a new perspective. The purpose is likewise to provide students training in the instruments for evaluating public policies, in order to incorporate evaluation as a means for the continuous improvement of Public Administration.

Publications Our documents The Role of the Tax Administration in Society General Assembly Buenos Aires, Argentina, 2005

This book includes the papers that were presented at the 39th CIAT General Assembly held in Buenos Aires, Argentina on April 18-21, 2005 --- The Technical papers deal with: “The purpose of taxation and its dissemination in society”, “Integrity as fundamental value in the tax administration and the promotion of ethics” and “Effectiveness of tax collection for providing goods and services to society.

¡Were you aware that!...

Models and Manuals The Models and Manuals presented are the outcome of the work carried out by the Working Groups representing different CIAT member countries and associate member countries, and further include the gathering and systematization of CIAT’s experiences from its various activities.

The Models and Manuals serve as a reference tool for tax administrations to develop or improve specific areas or aspects.

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¡¿Really?!

History of Contributions in Mexico Prehispanic Mexico The taxes paid in Prehispanic Mexico were of two kinds: those paid by the subjected people and those which had to be paid by the Mexican inhabitants or Mexicas.

When Mexico Tenochtitlan was consolidated this gave way to the period of expansion and military supremacy of the Aztecs. They imposed tax burdens to the people they subjected by way of products which they had to deliver: cotton blankets, bird feathers, fabrics from various fibers, cigars, rubber balls for playing and also precious metals, eagles, snakes and even young men, whose hearts were pulled out to be offered to their gods.

During this period, taxes collected from the subjected people were not use to benefit the communities that contributed them. Actually they were used to satisfy the needs of the rulers and dominating people.

The Aztec society was deeply stratified: every social class had regulate the use of various qualities, colors and decorations of their clothing. However, “being Mexica” forced the sovereign to a redistribution of the goods for the benefit of the inhabitants of the Empire, which resulted in an important public work that facilitated trade and the arts.

Source: Tomado de “Historia de las Contribuciones en México”, Secretaría de Hacienda y Crédito Público, Servicio de Administración Tributaria de México