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ISSN 1684-9833 • Year 4 / No.13 /August 2, 2013
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The Executive Secretariat Informs CIAT, IEF and FIIAPP promote assistance to control the transfer pricing under the EUROsocial II framework Several Latin American countries participated on July 10 to 12, in an event for exchanging experiences on abusive transfer pricing manipulation. This event was possible thanks to the collaboration of the Federal Administration of Public Revenue (AFIP) of Argentina, which presented their experience and offered their central office facilities.
The Executive Secretariat Informs CIAT, IEF and FIIAPP promote assistance to control the transfer pricing under the EUROsocial II framework Recognition for the CIAT Executive Secretariat staff III LAC Forum about Tax Policy 6th Meeting of the Permanent Committee on Ethics and Tax Administration The International Tax Compact invited CIAT to the Regional Seminar in Asia The Executive Secretary participated in the II Latin American International Taxation Course The Tax Administrations Inform Bolivia - New Executive President of NTS Chile - More than 11,000 companies join the electronic invoicing during the first half of 2013 Colombia – Entry into force of the Agreement between the Republic of Colombia and Mexico to avoid the double taxation and to prevent tax evasion Dominican Republic - Guarocuya Felix presents the guidelines of the new Strategic Plan for bringing the DGII closer to the taxpayers Paraguay - Taxation establishes communication mechanism with taxpayers
This activity is a result of the financial and logistical support provided by the Fiscal Studies Institute of Spain (IEF), the International Foundation of Administration and Public Policies for Ibero-America (FIIAPP) and the Inter-American Center of Tax Administrations (CIAT), in the EUROsocial II framework. This activity is a first effort under the program “Voluntary Compliance with Tax Obligations” in the area of “Public Finance”,which results will motivate new activities under the different modalities offered by the program: exchange visit, meetings, specialized assessment , courses, among others. All participating countries (Colombia, Costa Rica, Ecuador, El Salvador, Guatemala and Paraguay) consider that transfer pricing is a strategic issue and therefore, at the beginning of the EUROsociAL program, they presented requests on this topic. As a result of this activity, additional requests for assistance were received, to address priorities aimed at controlling international operations between related companies. These priorities are in both normative and operational aspects, including the methodologies used for auditing, the information regimes, the use of information from different sources, the selection of comparables, among others. In the future, jointly with its program partners, the CIAT will evaluate future additional activities which will deepen the exchanges of this first event and implement the best practices learned.
Interview IBFD News Training Post of the Month New on Web Other Documents CIAT Other Documents Participants of the activity.
General view of the participants.
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Recognition for the CIAT Executive Secretariat staff The CIAT Executive Secretariat held on July 18 a recognition event for the staff members with 5, 15 and 40 years of uninterrupted service at the InterAmerican Center of Tax Administrations (CIAT). 8 officers were awarded with commemorative plaques for their loyalty and long-lasting commitment to the institution: Maria Bell – 40; Rita Solis -15; Monica Donoso -5; Maureen Perez- 5; Socorro Velasquez- 5; Julio Lopez5; Gonzalo Arias -5; and Cesar Trejos - 5.
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CIAT is a public international organization which groups the tax administrations of 39 countries, (31 Amarican countries, 5 European countries, 2 African countries and 1 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.
From left to right: Mónica Donoso, Maureen Pérez, César Trejos, Rita Solís, Gonzalo Arias, María Bell and Socorro Velázquez.
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III LAC Forum about Tax Policy The Third LAC (Latin America and Caribbean) Forum on Tax Policy was held on July 4 and 5, in Montevideo, Uruguay. This meeting was jointly organized by IDB, ECLAC, CIAT and OECD and sponsored by the Ministry of Economy and Finance and the General Directorate of Taxation of Uruguay. The Minister of Economy and Finance of Uruguay, Mr. Fernando Lorenzo, inaugurated the meeting. The purpose of the LAC initiative is to promote the dialogue on tax policy in the region, with a view to facilitating the mobilization of national resources through improvements in tax policies and public expenditure. This year the forum was focused on sharing the practical experiences of the Latin American countries in the use of taxation as a tool for reducing inequality. CIAT was represented by the Director of Tax Studies and Research, Miguel Pecho, the Statistics and Data Base Coordinator, Julio Alberto López and the Head of the Permanent Mission of Spain before CIAT, Luis Cremades, who represented the Kingdom of Spain.
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Together with the consultant Byron Vásconez, Mr. Pecho participated in the V session of the program which dealt with Taxation of small businesses and inequality, and made an advance presentation on the Measurement of Transaction Costs in Small and Medium-sized Businesses in Latin America, project developed within the framework of the Cooperation Program signed between CIAT and UN-DESA (FfDO).
6th Meeting of the Permanent Committee on Ethics and Tax Administration The 6th Meeting of the Permanent Committee on Ethics and Tax Administration was held in Panama City on July 4 and 5. It began with an opening statement by Mr. Socorro Velázquez, who represented the CIAT Executive Secretary, Mr. Márcio F. Verdi, and was chaired by Mrs. Kerrie Lawn; Values and Ethics Adviser of the Canada Revenue Agency. Likewise, Mrs. Lawn and Mrs. María Raquel Ayala Doval, Director of Human Talent Training and Development of the CIAT Executive Secretariat, were in charge of the technical coordination. Present in the meeting were participants from Brazil, Canada, Costa Rica, Dominican Republic, Ecuador, France, Guatemala, Kenya, Netherlands, New Zealand, Panama, Spain, Sweden and Uruguay. The topics discussed dealt with ethics and best practices developed in the tax administrations. In the 2012-2013 period this committee worked in the preparation of three basic documents relative to Risk Management, Training in Ethics for Executives and Working with Values, which will be published in the CIAT Web in the forthcoming days. On concluding the meeting the participants committed themselves to develop three new documents on Conflict of Interest, Internalization of Values in the organizations and Social Media in the Tax Administrations.
Photo: Participants of event in company of the Secretariat officials who participate in the meeting.
Participants “6th Meeting of the Permanent Committee on Ethics and Tax Administration”
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The International Tax Compact invited CIAT to the Regional Seminar in Asia The goal of the meeting with representatives of the tax administrations of six selected Asian countries, international tax experts, and ITC development partners as CIAT, was to discuss the summary report that was drawn up on the basis of the individual country studies conducted by ITC regarding the Progress and Challenges for Tax Systems in Cambodia, Indonesia, Laos, Philippines, Thailand and Vietnam. This Regional Seminar, held in Bangkok from 3 to 5 July 2013, was co-sponsored by ITC and the Revenue Department of the Kingdom of Thailand. CIAT’s presentation at the Seminar on “Networks for Regional Technical Cooperation” was conducted by Francisco J. Beiner, Director of Institutional Management & Operations. The International Tax Compact (ITC) is an initiative commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ), and implemented by GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH) to strengthen international cooperation with developing and transition countries to increase own revenue, and to fight tax evasion and avoidance.
The Executive Secretary participated in the II Latin American International Taxation Course On July 1-5, the CIAT Executive Secretary, Mr. Márcio F. Verdi, participated as guest speaker in the II Latin American International Taxation Course, organized by the School of Law of Universidad Complutense in Madrid, Spain. On this occasion, Mr. Verdi presented a paper on “Effective implementation of information exchange units”. The purpose of the event was to discuss main themes regarding international taxation, with special emphasis on Latin American issues, together with the most innovative and important ones in the international sphere. Shown in the picture, is the CIAT Executive Secretary, Mr. Márcio Verdi making his presentation.
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The Tax Administrations Inform
New Executive President of NTS - Bolivia This Tuesday, the Minister of Economy and Public Finances, Luis Alberto Arce Catacora, installed and introduced H. Erik Ariñez Bazzan as new Executive President of the National Tax Service (NTS). Ariñez Bazzan was installed by means of Supreme Resolution Nº 1048, of July 29, 2013. Until his appointment, he was Deputy Minister of Tax Policy and replaces economist Roberto Ugarte Quispaya, who resigned for health reasons. H. Erik Ariñez Bazzan, new Executive President of NTS
In the installment ceremony, Minister Arce Catacora highlighted the professional training, experience and capability of the new NTS president, as well as of the outgoing one, whom he thanked for his contribution to the institutional development of the Tax Service.
The new NTS President assured that he will continue the institutional effort to increase collection and promote a growing tax culture.
From left to right: H. Erik Ariñez Bazzan, new executive president of NTS, Sr. Luis Arce Catacora, Minister of Economy and Public Finances and Mr. Roberto Ugarte Quispaya, outgoing Director.
Chile - More than 11,000 companies join the electronic invoicing during the first half of 2013 During 2013, 11,239 new businesses have become users of electronic bill, representing an increase of 22% over the same period last year. Of the new businesses, 91% are micro and small businesses which registered to use the free e-invoicing application available on www.sii.cl. To the date, a total of 67,881 companies in all the country are electronic invoicing users and approximately 20 million of electronic tax documents are issued per month. Bernardita Moraga Correspondent
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Colombia – Entry into force of the Agreement between the Republic of Colombia and Mexico to avoid the double taxation and to prevent tax evasion The National Direction of Taxes and Customs, DIAN, and the Ministry of Finance and Public Credit informed that the “Agreement between the Republic of Colombia and the United States of Mexico to avoid the double taxation and to prevent tax evasion in relation to income and property tax and the Protocol of the Agreement between the Republic of Colombia and United States of Mexico to avoid the double taxation and to prevent tax evasion in relation to the income and property taxes” (altogether “the Agreement”), signed Bogota on August 13, 2009, became effective on July 11 of this year. Patricia Parada Castro Correspondent
Dominican Republic - Guarocuya Felix presents the guidelines of the new Strategic Plan for bringing the DGII closer to the taxpayers The General Director of Internal Taxes, Guarocuya Felix, presented the guidelines of the new Strategic Plan that will guide the actions of the tax administration during the 2014-2017 term, based on actions to bring the DGII closer to the taxpayer. The official presided this Monday an encounter with economic journalists in a restaurant of the capital within the framework of the celebration of the sixteenth anniversary of the foundation of the DGII, in which he outlined the four great strategic axes for the construction of a DGII more modern, effective, efficient and closer to the taxpayer. Nieves Vargas Collado Corresponsal
Paraguay - Taxation establishes communication mechanism with taxpayers The State Sub-secretary of Taxation (SETH) of the Finance Ministry established the standards to communicate the different tax topics or administrative acts to the taxpayers by means of the recently issued General Resolution Nº 102. In that sense, the Tax Administration established that the general communications will be made through massive media while communication with individual taxpayers will take place via telephone, electronic mail or letters. Elizabeth Fernández de Corrales Correspondent
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Interview Interview with Mr Márcio F. Verdi, General Secretary of CIAT International Tax Compact - ITC June 2013 ITC: At the moment tax evasion and tax avoidance are grabbing the headlines in Europe. How is the situation in Latin America? Verdi: Latin America is a region with great diversity, particularly economically. However, high levels of poverty and unacceptable levels of tax evasion exist in all countries in the region. So, to talk about tax evasion in Latin America is to talk about one of the main problems we have in the region. Here, the public debate is focused more on the quality of public expenditure and public services, because corrup¬tion affects all countries in the region. ITC: How can these problems be addressed, what are the possible ways forward? Verdi: Our goal is to support our member countries’ tax administrations in the hope that this will reduce inequalities in the region and improve the quality of life. Therefore, we need to improve public services which also means upping the quality of our tax administrations and tax systems. To achieve this, a sound human resource strategy is crucial. We have to provide civil servants work¬ing in tax administrations with attractive remuneration and career prospects; otherwise we’ll be preparing people for the private sector. However, improving public services is costly. In many Latin American countries the tax/GDP ratio is low, at around 12%. So you can’t expect much public interest in taxation. In the mid-term, the tax/ GDP ratio needs to be improved. Improving how we communicate is another important issue. We have to explain to citizens why taxation is necessary for providing better public services and creating more equal societies. Taxation plays a crucial role in reducing poverty. People need to know what they get in return for paying taxes. It is necessary to make the richer parts of society better understand why people who pay more in absolute terms can’t get something back in equal measure. At the end of the day, taxes allow the govern¬ment to create better societies, meaning rich taxpayers benefit indirectly. ITC: The international community already emphasises the importance of fair and efficient tax systems. How is the international tax and development agenda, which is often highly aggregated, applied in the regional and national context? Verdi: The recommendations from international meetings offer good guidance, so we know the direction we must take. That said, the distance between these high-level recommendations and ‘the ground’ is great. In some countries, it is simply not possible to translate these recommendations directly on the ground. ITC: Can you give us an example? Verdi: For example, the G20’s most recent recommen ¬dation to improve the automatic exchange of information is very important and is the path we need to follow.
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However, it would be difficult to translate the recommen¬dation directly as we have to take into account the very different conditions existing in the different countries of the region. In some countries, there is currently a great deal that needs to be done to effect the basic exchange of information. For these countries, the automatic ex ¬change of information is not the most pressing issue. From this perspective, signing agreements is just a first step. You also need to create the appropriate working structures. Costa Rica is a good example of where political and practical aspects in the area of international taxation were developed hand in hand. ITC: According to your organisation’s experience in the region, what are the main benefits of cooperation in tax matters? Verdi: We need to work together – it’s the only way – as it multiplies our achievements in one specific country or area. Through cooperation, we can jump up to another level of development. So when we share good practice and knowledge, we enable our countries to jump forward rather than just move forward. And this is critical for saving these countries’ time and improving their tax administrations. Five years ago, for example, electronic invoicing in Latin America was only a reality in Chile and Brazil. Now other countries have also introduced it. As the process unfolded, we at CIAT were able to observe one country learning from another country and then this country again sharing these new insights and skills with yet another country. It’s this multiplying effect that has driven forward the establishment of electronic invoicing in the region. If the weaker countries in the region don’t improve, it is also a problem for the economically stronger countries. Economic gaps between neighbouring countries are dangerous for the world economy. Without addressing these gaps, aggressive tax planning will continue to increase in the future. ITC: Taking into account your long experience in international cooperation, what needs to be improved in international tax cooperation? Verdi: Unfortunately, cooperation is not a synonym of coordination. We have many international organisations cooperating with each other because we somehow belong to the same family. But, often, we set bad examples with regard to efficiency and effectiveness. We talk to countries about being efficient and reducing costs but, in many cases, inter ¬national organisations duplicate reforms, repeat actions and carry out similar exercises. To increase the impact of our work and to maximise our resources, we need to make a concerted effort towards better coordination – for example, by promoting greater joint action and reducing parallel agendas in the future. ITC: Mr. Verdi, thank you very much for this interview. Márcio F. Verdi, General Secretary of the Inter-American Center of Tax Administrations (CIAT) On 1 January 2010, Márcio F. Verdi took office as CIAT’s Executive Secretary. Mr Verdi is an economist who has worked for many years in the Brazilian government and for 12 years as a tax auditor in the Secretaria da Receita Federal do Brasil (Brazilian Federal Revenue Office). itc newsletter – june 2013 7
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IBFD News International Bureau of Fiscal Documentation (IBFD) Cooperation-CIAT - IBFD
Esta sección presenta una selección de noticias de IBFD, sobre aspectos de política y administración tributaria, esta información está disponible en el sitio web del CIAT y en el alerta de noticias tributarias de los días viernes.
Training Announcement of Course Given the importance we attribute to continued training in order that tax professionals may be fully updated on tax administration, customs and human resources issues we are announcing the following course: •
Tax Audit Fundamentals, 3rd Edition
To Know more about them you must click here if you are interested in participating, please fill out the registration form.
Post of the Month 12 July 2013
From the Intranet to the Digital Workspace By: Raúl Zambrano A question I have often heard by skeptical users of electronic services within organizations was: “What is the use of Intranet?”.
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New on Web CIAT/AEAT/IEF Tax Administration Review No. 35, June 2013
This issue of the Tax Administration Review shows the diversity of the tasks that all the CIAT member countries are carrying out. This time we have classified the articles in sections; Taxpayer Service, Methodologies, International Taxation, Legal Framework. We hope, in future editions, to include sections on Tax Policy, Strategy and Institutional Development. This edition of the Review includes articles on the use of information technology to improve the taxpayer assistance and the evaluation of services provided by customs authorities; the development of methodologies for the monitoring and institutional decision making; the state of the debate regarding double taxation and exchange of information; the necessary conditions to have specialized international taxation units; and the regional legal framework on environmental taxation.
Other Documents CIAT Bibliographic News July, 2013
This document provides for reference purposes, the most recent documents produced by CIAT and other editorials in the month of July; either articles or other periodic publications, research works and studies of interest.
Other Documents News and Developments International Tax Compact (ITC) June 2013
With cases of tax avoidance and tax evasion continuing to grab the headlines on a daily basis and civil society’s demand for more transparency and tax reform, the media spotlight is now firmly focused on whether corporations and individuals are paying their fair share of taxes. The following articles provide a concise overview of the latest developments in international tax cooperation.
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“Política tributaria en América Latina: agenda para una segunda generación de reformas” Tax Policy in Latin America: An aAenda for a sScond Generation of Reforms Juan Carlos Gómez Sabaíni and Dalmiro Morán Macroeconomics of Development No. 133 ECLAC
In the last years, Latin American countries have been introducing a series of reforms designed to strengthen and modernize their tax systems. While tax reforms are an ongoing process that has already been observed in previous periods, this time the objectives show a renewed emphasis on distributional issues related to taxation, in stark contrast to the spirit of the tax reforms implemented in the region during the eighties and nineties ( available in spanish).
Volume 17: Fiscal Policy and Macroeconomic Performance Edited by: Luis Felipe Céspedes and Jordi Galí 2103
In ten contributions written by economists with a recognized expertise in the field, this book shed light on the key questions at the aftermath of crises: How effective is fiscal policy at stimulating the economy? What is the best design for a fiscal stimulus package? Should it put most of its weight on government spending increases or on tax reductions.