ISSN 1684-9833 • Year 1 / Nº 2 / February 2010
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The Executive Secretariat Informs Cooperation prospects with GTZ of Germany and the International Tax Compact are strengthened The CIAT Executive Secretary, Márcio Verdi, and the Technical Cooperation Specialist, Socorro Velázquez, participated in two international events in Brussels, on January 25 to 27, 2010.
The Executive Secretariat Informs Cooperation prospects with GTZ of Germany and the International Tax Compact - ITC are strengthened CIAT Participated in the ECLAC XXII Tax Policy Regional Seminar Technical Assistance Prospects for Trinidad and Tobago’s Tax Administration The Tax Administrations Inform A Total of 352.022 Taxpayers have Registered in the Monotax System in Argentina The Secretariat of Federal Revenues of Brazil Presented Collection Results for 2009 Chile and USA Enter Into Agreement Against Double Taxation Tax Collection in Colombia Increased 4.9% in 2009 Costa Rica Publishes First Customs Guide State Undersecretariat of Taxation of Paraguay Seeks to Promote Tax Education Income Tax Refund via Internet in Peru IRS Debunks Frivolous Tax Arguments Training Publications ¡Were you aware that!.. ¡¿Really?!
The first one was a Workshop sponsored by the German Federal Ministry for Economic Cooperation and Development, the Spanish Ministry of Foreign Affairs and Cooperation and the European Commission. The central theme was “Joining forces to mobilize domestic revenues for development”. The occasion was appropriate for identifying specific areas of cooperation between GTZ and CIAT. The working agenda also included a second Workshop through the International Tax Compact. This initiative endeavors to strengthen international cooperation with developing countries. An evaluation was made of the way in which CIAT may exchange experience for the development of the ITC’s structure and determination of its bylaws.
CIAT Participated in the ECLAC XXII Tax Policy Regional Seminar The CIAT Tax Research Manager, Mr. Miguel Pecho Trigueros, presented a paper entitled: “Recent Evidence of the Impact of the Crisis on Collection” in the session on Tax Reforms of the XXII Tax Policy Regional Seminar, organized by the ECLAC Executive Secretariat and held in Santiago de Chile on January 26-29, 2010. In his paper Mr. Pecho noted that in 2009, the collection of taxes administered by the Central Governments of Latin America (excluding social security contributions) had experienced an average 7.6% decrease in real terms, with respect to 2008, as result of the generalized contraction in economic activity and, in some cases, the application of tax measures implemented as part of the tax incentive packages for facing the international economic crisis. Thus the tax pressure would have decreased to some 13.7% of GDP. Bearing in mind that the negative trend in collection has begun to revert as of the third and fourth quarters of 2009, and that new tax measures have entered into force, Mr. Pecho stated that CIAT anticipates for 2010, as compared to 2009, an average increase of 9.4% in real terms in the collection of taxes administered by the Central Governments of Latin America, with a tax pressure of 14.3% of GDP.
Technical assistance prospects for Trinidad and Tobago’s Tax Administration Last January 28, the CIAT Technical Assistance Manager, Engineer Raúl Zambrano, visited the Tax Administration of Trinidad and Tobago.
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On said occasion, he presented the activities which CIAT could offer the Tax Administration in such areas as training, technical assistance and studies. Following the recent implementation in the country of a new information system and the forthcoming integration of the administration of internal taxes, property taxes and customs duties, the CIAT Executive Secretariat has a special interest in providing its services, given the challenges which such merger poses. 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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The Tax Administrations Inform A Total of 352.022 Taxpayers have Registered in the Monotax System in Argentina January 29 marked the deadline for adhering, reclassifying and making the corresponding payment, within the framework of the Monotax system that expanded the taxpayer universe and established new categories. Until that date, there were 352.022 forms filed, of which 65.993 corresponded to new monotaxpayers and 286.029 to reclassifications within the Simplified System for Small Taxpayers. Among the new monotaxpayers, 58.511 are newly registered and 7.482 taxpayers were moved from the VAT, Profit, and Autonomous general system to the simplified regime. The Federal Administrator of Public Revenues, Ricardo Echegaray, noted that this reform endeavors “to include those with less taxpaying capacity in the formal economy”.
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Carlos Alberto Sánchez Correspondent
The Secretariat of Federal Revenues of Brazil Presented Collection Results for 2009 In early February 2010, the Secretary of Federal Revenues of Brazil (RFB), Mr. Dantas Otacílio Cartaxo, presented revenue collection results for 2009. He noted that the figures indicated a return to normality, since the amount was only 3% below expectations.
In his opinion, this good result was due to a series of operational measures adopted, whereby the loss of revenues was only 21 million Reales, although there was a reduction in tariffs of 25 million dollars. He considers that these figures reflect the efficiency of the Tax Administration. According to the RFB Secretary, the forecast for 2010 is that the recovery of federal revenues will be maintained due to improvement of the economic indicators that indicate the end of the crisis. On the other hand, fiscal indicators confirm the economic indicators. Examination by RFB placed an important role in the recovery of federal revenues, with an increase in examinations as compared to 2008.
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Likewise, measures for improving taxpayer assistance were adopted. The latest significant change was the implementation of the Web page CPF, and the CPF (Registry of individuals) issued on line. The taxpayer’s self-adjustment of his income tax return and scheduling of visits to the tax office are improving the service, thus benefitting the taxpayers and the RFB. The taxpayer return will be processed promptly, and the RFT will have important information on the quality of the return. Likewise, in the Information Technology area, improvements were made in the electronic information crosschecks systems, including applications to assist in examination. Marcos Aurelio Valadão Correspondent
Chile and USA Enter Into Agreement Against Double Taxation Last February 4, the Minister of Finance, Andrés Velasco, and the U.S. Secretary of the Treasury, Timothy Geithner, signed in Washington, D.C., an agreement to avoid double taxation affecting individuals and businesses investing or carrying out activities in the other country. This type of agreement is included within the modernization process of the Chilean tax system, with very important effects for the national economy, inasmuch as it facilitates a greater flow of capital and technologies, while also contributing to a greater development of activities dealing with the export of goods and services. Chile currently has 21 such agreement s in force. The agreement must now be ratified by Parliament in both countries. The new tax agreement with the United States will afford certainty and stability in the treatment of taxes for Chileans and Americans investing in the other country. The new agreement will allow for reductions in taxes withheld at the source, in the case of dividends paid from the United States to Chile, as well as interest and royalties. As for pension fund administrators (PFA) investing in the United States, the latter will benefit from a tax exemption for the payment of dividends and capital earnings. Likewise, there is a clause that limits benefits in order to avoid abuse of the double taxation agreement by investors from a third country. It must also be noted that this agreement is the first to include a provision on the new international standard relative to the exchange of information between the tax authorities. In the case of the United States, this is the second such agreement with a South American country. Enrique Rojas Hidalgo Correspondent
Tax Collection in Colombia Increased 4.9% in 2009 Net collection of national taxes administered by DIAN of Colombia increased 4.9% in 2009, as compared to 2008. In addition, this would be above the country’s economic growth (GDP) which is estimated at 2.5%. DIAN explained that with respect to gross collection, tax revenues increased 5.1%. Collection last year amounted to $68.9 billion, versus $65.5 billion in 2008. Net collection last year was $65.5 billion, vis-a-vis $62.4 billion collected throughout 2008. Last December was the second month of the year when the collection goal of $3.6 billion was achieved and even surpassed, since it amounted to $3.9 billion (105.9%). The increase in income tax collection was 15.9 per cent, on closing the year with $28.9 billion. Collection in the same period (January through December) 2008 was $24.9 billion. With respect to the goal set for the entire year, of $28.5 billion, compliance was 101.5%, with $433 billion collected.
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As for VAT, there was also a growth in 2009 as compared to 2008. Collection last year amounted to $18.4 billion, while in 2008 it represented $17.6 billion, with a positive variation of 4.3%. Likewise, with respect to overall internal taxes, between January and December there is a 9% increase with respect to 2008. Collection in 2009 amounted to $53.1 billion, as compared to $48.7 billion in 2008, with a 99.7% compliance. Collection of external taxes in 2009 amounted to $12.3 billion, while in the period of January through December 2008 it was $13.7 billion. It should be noted that with respect to the goal internal activity showed a favorable behavior vis-à-vis external activity. On the other hand, the gross collection goal for 2010 will be $69.7 billion while the net goal will be $64.2 billion. Edgar Oswaldo Peña Salamanca Correspondent
Costa Rica Publishes First Customs Guide In order to provide users valuable information on customs procedures in force, requisites, parties intervening in the process and legal and normative references, to thus increase clarity and transparency in the necessary customs processes for efficient and effective customs operations, the General Directorate of Customs of Costa Rica, Chemonic Internacional and the USAID Regional Program have developed Costa Rica’s first customs guide. The document was based on customs legislation and other regulations in force, was submitted to review by different departments of the General Directorate of Customs to verify the certainty of the contents and it is the second one published in Central America, with the first one being published by El Salvador. The information was provided by the External Relations and Affairs Area and the Foreign Trade Promoter (PROCOMER). Each of the 23 chapters is written in simple language, describing in detail the processes according to the customs legislation and other regulations, thus being a consultation instrument with clear and reliable information on Costa Rican customs issues. Maribel Zúñiga Cambronero Correspondent
State Undersecretariat of Taxation of Paraguay Seeks to Promote Tax Education On February 5, the Ministry of Finance, through the State Undersecretariat of Taxation (SET) held a “Tax Education Meeting” to present the regional cooperation work of the European Commission, EUROsociAL Taxation, whose purpose is to influence public policies and their actions in the sphere of tax education. It endeavors to create awareness among other state authorities, top leaders of society, opinion formulators about the importance of including taxation in formal education in the country. In the inauguration of the event the Deputy Minister of Taxation, Gerónimo Bellassai, stated that without the support of all social actors, from the public as well as private spheres, efficient results cannot be achieved and therefore, he urged everyone to collaborate in this endeavor whose points of reference are SET and MEC. The Deputy Minister also said that “there are two country models: one model which is formal, organized, that is aiming at a competitive Paraguay and the other that wishes to continue with triangulation, smuggling and evasion. Going from one model to the other is difficult, slow and fundamentally calls for education. We need to talk to our youth so that they will understand the need to contribute to the common welfare.”
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The Ministry of Finance is working jointly with the Ministry of Education to create awareness of tax education. “The campaign “Request, Gather and Win” was one that allowed for developing tax consciousness in 70,000 youth. In addition, last year, SET undertook the Forming Tax Culture campaign which trained 560 teachers from the capital city and departments of the country, “Bellassai explained. Likewise, the Chargé d’Affaires of the European Commission Delegation, Mr. Eduardo Lechuga Giménez, said it was important to promote taxation as an instrument for creating a society that will allow for eradicating poverty and inequality. The Director of EUROsociAl, Mrs. Ángeles Fernández also made a presentation on the work of said entity and its actions in the sphere of tax education, while Mr. Borja Díaz Rivillas described the situation of tax education in Latin America. EUROsociAl works jointly with the Ministry of Finance, through SET, thereby contributing to strengthening taxpayer assistance services by means of the call center and human resources training. There has also been an improvement in taxpayer rights and guarantees as a result of the creation of the Claims, Complaints and Suggestions Office, as well as the implementation of a tax criteria unification system. Elizabeth Fernández de Corrales Correspondent
Income Tax Refund via Internet in Peru The National Superintendency of Tax Administration (SUNAT) has implemented a new service to simplify administrative processes in relation to procedures which the taxpayers must carry out. Through this new service, individuals with an Income Tax balance in their favor may request the refund through Internet. It is available to those who generate First Category Income (such as from real estate lease, among others) as well as those of Fourth Category (independent workers issuing receipts for fees.). This option will be available to the taxpayer provided he has filed his Annual Income Tax Return through SUNAT Online Operations (SOL) for which purpose he must have his “SOL Code” and “User Password”. Superintendency Resolution N° 014-2010/SUNAT, published in the official gazette, provides that if the taxpayer is entitled to request the refund for First Category or Fourth Category Income Taxes, requests for refund will be authorized independently. The advantage of filing the refund by Internet is that it will allow taxpayers to process it without having to visit a SUNAT office and being assisted promptly. If the taxpayer does not resort to this mechanism, he must submit the request for refund on Form N° 4949 at the SUNAT offices. Clara Loza Ramírez Correspondent
IRS Debunks Frivolous Tax Arguments The Internal Revenue Service released the 2010 version of its discussion and rebuttal of many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws. Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 80-page document,The Truth About Frivolous Tax Arguments. The document explains many of the common frivolous arguments made in recent years and it describes the legal
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responses that refute these claims. It will help taxpayers avoid wasting their time and money with frivolous arguments and incurring penalties. Congress in 2006 increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous. IRS highlighted in the document about 40 new cases adjudicated in 2009. Highlights include cases involving injunctions against preparers and promoters of Form 1099-Original Issue Discount schemes and injunctions against preparers and promoters of false fuel tax credit schemes. Source: Internal Revenue Service
Training CIAT Promotes e-Learning in the Tax Administrations The Executive Secretariat’s main objective is to afford tax administration officials from the member and associate member countries access to first level training to thus update their knowledge of taxation. From November 2009 through February 2010, the CIAT Executive Secretariat has provided continuous training to officials from 20 of our member and associate member countries in the areas of Tax Law, International Taxation, Transfer Pricing, Tax Administration and Tax Policy and Technique, having thus trained a total of 626 officials and others.
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.
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.
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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.
Publications New in the Web Tax Collection Observatory (No. 4, preview) This issue is a preview of the Tax Collection Observatory No. 4, which includes only the Latin American countries (except for Cuba and Venezuela). Also included is the paper presented by Mr. Miguel Pecho, CIAT Tax Research Manager at the XXII Regional Tax Policy Seminar, organized by ECLAC’s Executive Secretariat and dealing with the “Impact of the Crisis on Collection”
Our documents Tax Observatory In this third issue of the “Tax Observatory “, CIAT considers relevant events occurring in 2009 in the international sphere, in relation to tax policy and administration issues. On this same basis, some prospects are proposed for 2010.
¡Were you aware that!.. CIAT Manual for the Implementation of Tax Information Exchange The CIAT Manual for the Implementation of Tax Information Exchange was developed in 2006. The Manual offers an overview on the enforcement of information exchange provisions, especially regarding those in the CIAT Model Agreement on the Exchange of Tax Information
CIAT Thematic Bibliography In its No. 1 edition of April 2009, the CIAT Thematic Bibliography dealt with Tax Evasion. The material gathered includes studies and papers prepared by technical officials for pre¬sentation either at the General Assemblies or Technical Conferences, essays, research scholarships and articles published in the tax administration review, among others.
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¡¿Really?! Aztec Tax System The first manifestations of taxation in Mexico, appeared in the Aztec manuscripts, where it was stated that the king of Azcapotzalco, requested the Aztecs as tax, a raft with flowers and fruits, in addition to a heron incubating its eggs and at the time of receiving it, the latter should be pecking on the eggshell, and in exchange they would receive benefits for their community. Likewise, the “tequiámatl” (tax papers or records), was a sort of those manuscripts, related to public administration within the Mexica Empire. The verb “to pay” acquired such importance that the Aztecs organized themselves to facilitate Collection and then they appointed the “Calpixquis”, as first collectors, and who identified themselves by carrying a pole on one hand and a fan in the other. Collection in those villages required “officials” that would keep a detailed record of the tax villages and cities, as well as counting and evaluating the wealth received. The Tax register is one of the most important documents of the manuscripts devoted to administration and Public Finance. There were several types of taxes, depending on the occasion: there were war, religious, time taxes, etc. The taxes that had to be paid by the villages subjected to the Aztecs were of two types: 1) In-kind or goods (tax according to province, its population, wealth and industry); 2) Taxes by way of special services which the residents of the subjected villages were obliged to provide. When Hernán Cortés arrived in Mexico, he was surprised at the beauty and organization of the Aztec people. However, he disagreed with the manner in which they collected taxes. Hernán Cortés became the head of the Aztec people and taxes paid with flowers and animals remained behind; now taxes consisted of food, stones and jewelry. On “rescuing” the lands on behalf of the King of Spain, one fifth of the properties then corresponded to the Spanish monarchy: the Royal Fifth. The first step taken by Cortés was to prepare an account (first tax document), where he appointed a Minister, a Treasurer and several Accountants in charge of Collection and the custody of the Royal Fifth.