Tax advisers without borders - major progress
Since around 2004, TJN's director John Christensen has been mulling the idea of an organisation to be called Tax Advisers Without Borders, which would essentially involve experienced tax experts from around the world (principally rich countries) being sent to developing countries to assist their beleaguered tax administrations. (Much like the idea of Doctors without Borders, or Médecins sans Frontières.)
Just over a year ago we issued an invitation to interested parties, for the setting up of such an organisation. See the invitation here. Among other things, it explains:
"Our proposal is to make available a cadre of retired tax officials and practitioners, plus academics with relevant government experience who are prepared to forgo consulting for private parties, to provide consulting assistance to governments of developing countries in the formation of tax policies and creation and maintenance of effective tax administration agencies. Such assistance will be funded by either the governments themselves or by non-profit organizations that have committed themselves to full financial independence from governmental and business interests."We don't think that TJN should be the leader of such an organisation, however. For one thing, we don't have the resources or international network to be able to set such a thing up. We also know that we are seen by many as radicals in the area of international tax, pushing ideas that many consider unpalatable, and we don't want to frighten the horses. So we support the idea that this should become a wide, multi-organisational framework, involving a wide array of governments and international organisations, led at a very high level.
So we are (cautiously) pleased to see this reported:
Paris-based think-tank OECD has mooted the idea of sending experts to developing countries, including India, to help in issues such as transfer pricing besides various bilateral taxation-related matters. . . . The concept of 'Tax Inspectors Without Borders' would focus on boosting domestic revenues of developing countries by making their tax systems fairer and more effective.We would of course be extremely concerned if this were to become a mechanism for the OECD to assert its deeply flawed standards and foist them on developing countries, and although there may be some push in this direction, we are optimistic that this will not be the case; indeed we were told by participants at the meeting that they were talking about "Tax Officials Without Borders", and the commitment that this be governed through an independent foundation.
Indeed, the Tax Journal reports:
Stakeholders from business, civil society, developing country governments and the OECD attending last week’s meeting of the task force in South Africa welcomed the launch of ‘Tax Inspectors Without Borders’, and agreed to work together to launch an independent organisation to host a secretariat by the end of 2012, the OECD said.We are still in close discussions with various parties involved, and we look forward to more progress on this crucial initiative.
Update, May 23: We received an email from an international tax expert, whose permission we don't (yet) have to publicise, which injects a serious note of caution:
"Perhaps the plan for an oecd SWAT team could be useful, perhaps not.Given our deep mistrust on the OECD, based on its jealous guarding of its woefully inadequate and even harmful standards on a range of issues in the international arena, which we have commented on interminably (see here, here and here, for example), it is wise to take this note of caution extremely seriously.
The country needs to have laws in place that make foreign companies actually liable for tax --- or else nothing works. The SWAT team can do nothing if taxes are not legally due. In one of the fictional cases, we have transfer-price abuses. The OECD is going to solve such abuses? How, when it cannot solve them in Germany or the U.S.? What we might get is an oecd style transfer-price audit, with a negotiated settlement at 25 cents on the dollar. Something, but not a lot.
The country needs to have an anti-interest stripping law in place. If it does, does it really need an outside SWAT team? If not, what can the SWAT team do --- appeal to transfer pricing constraint? It needs an anti-royalty-stripping rule in place. And, of course, it needs to have avoided an oecd-based tax treaty that protects against domestic anti-stripping laws. Is oecd going to be helpful in this regard?"