The CIAT Assembly in Asuncion, Paraguay. April 24-27 April, 2017.

It is somehow a hackneyed phrase, but “if CIAT did not exist, we would have to invent it“. Showing a fully mature organization and with the excellent care of officials and colleagues of the State Taxation Under-secretariat of Paraguay, the 51st General Assembly of CIAT was held in Asuncion, and again, was able to build an open space of dialogue for more than 160 participants from different tax administrations and other institutions and organizations.

The theme of the Assembly on “Advances of the tax administrations towards greater taxpayer equity by improving effectiveness and efficiency“ was a common denominator which made possible to include the main concerns of the member countries’ tax administrations. Thus, after some first presentations about current trends in the field of taxation that emphasized the need to know – and acknowledge – the economic environment in which tax policy and tax administration operate, or the need to undertake reforms in the administration properly aligned with a tax policy that reduces inequality and allow reducing tax fraud, the representative of the Canadian Revenue Agency exposed how they are facing the challenge posed by international tax evasion with measures and “recipes” that may sound repetitive but whose effectiveness lies in a systematic and orderly planning, execution and implementation, with the support of the society as a whole.

On a more specific issue, the Receita Federal of Brazil stressed the importance of exchanges of information between tax administrations, presenting as evidence the successful program of regularization of assets abroad carried out in that country, in the framework of a process towards greater transparency and exchange of information, a process that has just begun.

The representative of Italy stated in a very direct and concrete way the necessity of relying on carefully designed plans against fraud, and institutional mechanisms that allow their development, implementation and evaluation, as it is the case of the Italian experience with the Advisory Committee for the fight against tax fraud.

The representative of Paraguay explained how the goals of a modern tax administration can be reached progressively if there is a management oriented to the fight against fraud in a firm and determined manner, catalyzing and promoting transformation and change. The experience of the Colombian DIAN in the assistance and information to taxpayers was extremely interesting, demonstrating how the opening of different channels and their segmentation of audiences favors this essential task of the tax administrations in an environment in which technology – and the growing new media and channels – is essential. In this context, the representative of Norway presented a set of innovative ideas to adjust the language used by the Administration to contact taxpayers, relying on the participation of young people and other sectors demanding information. The experience of the SUNAT in Peru also highlights how these new approaches have an immediate impact on the improvement of voluntary compliance.

The papers devoted to the new paradigms in the use of risk models offered a wide range of topics. Thus, Spain presented innovations in tools of risk analysis for the determination of wealth and assets of family groups and, above all, a true revolution in the management of the VAT which will enter into force in July of this year, consisting in a permanent updating of the VAT book-registries, directly on the website of the Spanish tax agency, and affecting more than 63,000 taxpayers who carry out 80 per cent of business activities in Spain.

The thorough presentation of the Internal Tax Service of Chile around the risk management model, implemented in this administration since 2014, highlighted the key concepts in all of this operation: the map of tax breaches, the risk classification as global or personal, specific risk map, and the matrix of risks, the treatment programs and the compliance goals indicators.

For his part, the representative of the OECD insisted on measures for strengthening the processes of control within the framework of the BEPS measures – and their inclusive framework – in its two main areas: the strengthening of internal and conventional rules and the improvement of the administrations’ capacities.

The CIAT Director of technology highlighted three elements of the environment in which e-commerce operates: the rapid transformation of the business models, the limited importance of the geographical location and the almost exponential growth of the successful companies and business models. He suggested that the responses of the tax administrations against this permanent change or transformation – withholding of payments abroad, management of low-value imports, specific taxes, and web crawlers – may be insufficient. Therefore, he encouraged to reflect on this matter, especially when the projects of technological corporations and services revolve around the Blockchain that offers profiles of “autonomy and dispersion”, which can lead to the disappearance of the “third party required to report” that constitutes the current basis of tax administrations control models.

The representative of Mexico explained with great precision the role corresponding to the e-invoice to remedy the existing shortcomings of control. For his part, the representative of Uruguay addressed in detail the improvements in selection, execution, tracking and querying systems installed in their administration. Similarly, the Canadian Revenue Agency CRA explained the model followed by this Agency to contact the defaulting taxpayers, using letters or telephone calls, reaching the conclusion that the combination of small actions can lead to great successes in improving voluntary compliance.

The General Assembly closed its session with a 6-members debate led by the Executive Secretary, which dealt with the previous issues in a more informal and participatory context. In this same final stage, the Deputy Minister of Economy and Finance of Uruguay intervened as Relator of the Assembly, charting a trajectory of the topics dealt with during these three days of presentations, concluding all the activities with the presentation of the next Assembly which will take place in Ottawa – Canada- in the spring of 2018.

The presentations mentioned here are available on the CIAT website.

I am aware that many things have been left out in this blog, but, coming back to the first lines, were the CIAT reinvented, we also should create a General Assembly in which, year after year, the tax administrations could share their experiences in an environment as favorable as this one, thanks to Paraguay and its Undersecretary of Taxation with the organization of this 51st Assembly.

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