***Tax collectors worldwide to co-operate in revenue-raising to offset fiscal deficits***
The Forum on Tax Administration, which brings together tax commissioners from 34 OECD and non-OECD countries, met in Paris yesterday and today, and agreed on a new cooperation plan *”to encourage tax compliance and counter tax evasion and abusive tax avoidance”*. A release from the OECD said the pact has a special focus on wealthy individuals and offshore activities.
The Tax Commissioners issued a communiqué (see below) indicating that they will focus on examining how revenue authorities, banks and wealthy individuals interact on tax issues, with a view to finding ways to improve the collection of taxes due. The meeting was chaired by Pravin Gordhan, Finance Minister of South Africa. He said, *“The world faces an unprecedented global financial and economic crisis. The challenges posed are both economic and social. Governments need to find sustainable ways to finance the cost of exiting the crisis. To achieve this will require the engagement of all stakeholders: Governments, business and civil society. Revenue bodies have a key role to play in helping governments to achieve sustainable revenues.”*
Revenue bodies reportedly were pleased at the development of more trusting relationships with large business and their advisers but also agreed to work together to increase the effectiveness of tax administration and to fight tax evasion and abusive tax avoidance, with special focus on banks, wealthy individuals and offshore tax non compliance.
They note that high net worth individuals pose significant challenges to revenue bodies and to the integrity of tax systems because of the complexity of their affairs. Though potentially big tax-payers, they are wealthy enough to engage in tax planning which may enable them to avoid significant parts of their tax obligations. Recognising the increasingly global nature of tax non compliance the Forum on Tax administration will act together at a global level to meet these challenges. *“Individuals who hide assets overseas can expect an increasing number of revenue bodies to cooperate and share information to ensure people pay their fair share to help fund governments worldwide,”* said Douglas H. Shulman, Commissioner Internal Revenue Service U.S.A.
Two reports issued at the fifth meeting of the OECD’s Forum on Tax Administration, which brings together tax commissioners from 41 OECD and non-OECD countries, set out a roadmap for future cooperation:
– **Building Transparent Tax Compliance by Banks** examines the role of banks in designing complex structured finance transactions that can be used to reduce tax payments through aggressive tax planning schemes for themselves or their clients.
– **Engaging with High Net Worth Individuals on Tax Compliance** identifies risks and complexities associated with this group of taxpayers.
Mr. Gordhan says, *“Tax plays a fundamental role in development through mobilising revenue, promoting growth, reducing inequalities and reinforcing governments’ legitimacy, as well as achieving a fair sharing of the costs and benefits of globalisation.”*