Highlights and Achievements

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1 Forum on Tax Administration Highlights and Achievements This report highlights the main developments and summarises the related activities carried out in the period May 2013 to October 2014 in relation to the Forum on Tax Administration.

2 Foreword by the Chair of the Forum on Tax Administration (FTA) Ms. Josephine Feehily, Chairman, Revenue Ireland The challenges and demands facing tax administrations, both from a domestic and international perspective, are growing. Securing the revenues due to support the work of Government and the development of society, supporting a strong voluntary tax compliance culture and taking effective action to confront non-compliance, evasion and avoidance are key deliverables for all our tax administrations. Against a background of a demanding and challenging environment, tax administrations working together can share useful and key insights, knowledge and experience in developing and enhancing models of best practice in tax administration to their mutual benefit. In that context, the work of the Forum is particularly important. Leaders of tax administrations have the opportunity to engage with and support each other in a collaborative effort to maximise the tangible and added value of respective operations and to ensure that we deliver individually and collectively good outcomes for our stakeholders. Since our last meeting in Moscow, considerable work has been undertaken in the progression of an ambitious work programme. I thank our Commissioner colleagues, member countries and Secretariat staff of the OECD for the quality of the engagement and commitment to deliver tangible outcomes that can and will contribute to the effectiveness of all tax administrations. I also wish to thank the Bureau members and in particular our Vice Chairs for the additional and sterling commitment to the work of the full Forum. Their contributions are much appreciated. Finally, as Chair of the Forum, I am particularly pleased to host the 2014 plenary meeting in Dublin Castle in a conference facility located adjacent to the headquarters of Irish Revenue. The work we will discuss and the challenges and opportunities we will consider will allow the Forum to progress its work over the medium term in the further development of tax administration, increasing levels of voluntary compliance, challenging non compliance and in the implementation of new forms of international cooperation and collaboration. FTA Chair

3 ABOUT THE FORUM ON TAX ADMINISTRATION Since its creation, the Forum on Tax Administration (FTA) has developed into a unique means of co-operation between tax administrations at Commissioner-level. With participation from 46 countries, it brings together the leaders of advanced tax administrations from around the world. Working collectively and through the sub-groups and networks they have created, they are able to identify, discuss and influence relevant global trends and develop new ideas to enhance tax administration globally. More than ever, tax administrations operate in a dynamic and challenging environment. G20 Finance Ministers and Central bank Governors support further coordination and collaboration by tax administrations. The globalised economy has multiplied the risks of cross border tax avoidance and evasion that they have to manage. Rapid technological change has created new risks and opportunities for tax administrations. Effective tax administration is also an essential part of the effort to repair the damage caused by the global financial crisis. Against this background, the Forum is the place in which the leaders of tax administrations can identify and develop the most effective strategic responses to these challenges. PARTICIPATING COUNTRIES Australia, Austria, Argentina, Belgium, Brazil, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong China, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, People s Republic of China, Poland, Portugal, Russian Federation, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States

4 HIGHLIGHTS AND ACHIEVEMENTS The Forum s work programme since the last plenary meeting held in Moscow has addressed priority issues in tax administration: 1. Tackling cross-border tax avoidance and tax evasion, whether by large corporations or individuals, remains a key issue for the G20 and for the OECD. The Forum s networks have developed a strategy for improving bilateral and multilateral cooperation and collaboration among FTA members. This will take co-operation between FTA members to a new level and help them to address cross border non-compliance in an ever more interconnected world. 2. The Forum is determined to help tax administrations support businesses that want to comply in return for greater certainty. It has followed up the recommendations of the 2013 report on Co-operative Compliance and has drawn on the experience of over 30 countries to advance discussion on tax control frameworks. It is also prioritising work to improve the practical operation of the mutual agreement procedure through its MAP Forum. 3. The SME segment is important economically and the number of businesses in the segment is large. Tax administrations are developing new ways to support these businesses to be compliant at lower cost to themselves and to government. The Forum explores exactly how developments in technology can be exploited to achieve this in the report Tax Compliance by Design. 4. The Forum continues to identify ways in which tax administration can be made more efficient and effective. Helping more taxpayers be compliant by enabling them to obtain support or information themselves, through self-service channels, can make a major contribution to that goal. The Forum has developed further guidance on how to develop self-service channels for taxpayers. Effective debt management is an equally important aspect of tax administration and the Forum has undertaken an in-depth study of best practice in this field. 5. Advanced tax administrations are placing more and more emphasis on error prevention and enabling taxpayers to get things right the first time because this delivers better outcomes for all. That is reflected in the Forum s work programme and recommendations. However, traditional metrics which focus on the yield from investigating and correcting non-compliance are not the optimum measures to demonstrate the success of prevention strategies. Recognizing this, the Forum is publishing a guide to measuring tax compliance outcomes that discusses how to achieve a more balanced picture of a tax administration s performance. 6. Field work for the next edition of the tax administrations series is close to completion and we will be publishing Tax Administration 2015 in early This edition will bring together key information about tax administration in 56 countries, the most we have ever surveyed. This is the most comprehensive and timely source of comparative information about tax administration that is available, with time series of data reaching back from 2013 up to a decade in some key areas of performance.

5 MAIN PUBLICATIONS AND OUTPUTS Measures of Tax Compliance Outcomes: a Practical Guide Traditionally tax administrations have measured their success through a narrow range of output measures, such as audit yield, in the belief that these output measures would closely reflect outcomes, such as collecting the right revenues. However, such a narrow focus is not suitable for the breadth of work and interventions that tax administrations currently undertake. This publication sets out guiding principles for the development of a set of measures that provide a more complete and balanced picture of a tax administration s performance. It shares examples of outcome measurement approaches that tax administrations have found useful and how these approaches have been adapted to the circumstances of taxpayer segments. The project was sponsored by the United Kingdom and was undertaken by a task group from Australia, Canada, Denmark, Japan, the Netherlands, New Zealand, Norway and the United Kingdom. Twenty FTA member countries provided input into the report as did the Compliance Sub-group and the Large Business Network. Tax Compliance by Design: Achieving improved SME tax compliance by adopting a system perspective The Forum s report Together for Better Outcomes recognised that the way SMEs operate is changing as they make increasing use of information technology service providers to administer the financial aspects of their businesses, including providers of cloud-based business administration and accounting services. The Forum s latest report sets out how tax administrations can exploit this trend to build tax compliance into the systems businesses use to conduct their daily transactions. This offers a realistic prospect of transforming SME tax compliance in a way that reduces the cost to business and tax administrations alike. The report includes practical example of how some tax administrations are already moving in this direction. The project was sponsored by the Netherlands and undertaken by a Dutch project team, a task team of 14 FTA member countries: Australia, Belgium, Canada, Chile, France, Ireland, Japan, Korea, the Netherlands, New Zealand, Singapore, Sweden, the United Kingdom and the United States.

6 Increasing Taxpayers Use of Self-Service Channels Previous work carried out by the Forum in 2011/12 and reported in Working smarter in revenue administration Using demand management strategies to meet service delivery goals found that tax administrations could improve their governance processes for managing service demand and use more effective methods for measuring and understanding the drivers of service demand. In 2013 the Forum published a practical guide on the governance process for managing service demand but the Forum s Bureau recognised that the increased availability of tools designed to help taxpayers self-serve was not being matched by take up. The latest report addresses this issue directly and makes practical recommendations about the design and implementation of self-service channels. The project was sponsored by Australia and undertaken by the Taxpayer Service Sub-group. Thirteen countries provided detailed information about their own programmes to assist the preparation of the report: Australia, Canada, Chile, Denmark, France, Mexico, Netherlands, Singapore, Sweden, Switzerland, Turkey and the United Kingdom. Working Smarter in Tax Debt Management Improving tax compliance is an essential part of the work of the FTA and that includes achieving the best possible rates of collection and recovery of the taxes that are due to be paid. This report describes the ways in which FTA members have modernised their tax debt collection function. It serves as a practical guide to achieving greater success in collecting the taxes that are due. There is a lot at stake - the report estimates that improved debt collection could increase receipts across the FTA membership by EUR 40 billion a year. The project was sponsored by the Netherlands and has been undertaken by a Dutch project team and a task team of 14 FTA member countries: Australia, Belgium, Canada, Chile, France, Ireland, Japan, Korea, the Netherlands, New Zealand, Singapore, Sweden, the United Kingdom and the United States.

7 SUB-GROUP AND NETWORK ACTIVITIES SME Compliance Sub-group The SME Compliance Sub-group, currently chaired by the Netherlands, provides a forum for members to share experiences and knowledge of contemporary approaches to the management of compliance in the SME sector. Through discussions and presentations at its annual meetings (some involving external speakers), along with related surveys, phone conference discussions and studies it has proved to be a valuable means for keeping tax administrations abreast of emerging issues and country developments, and to promote new approaches to compliance management. At its May 2014 meeting, the main topics addressed included: 1) Issues arising in the draft study report Tax Compliance by Design and Measures of Tax Compliance Outcomes: a Practical Guide; 2) Globalisation impacts on SME taxpayers; and 3) Selected country experiences with new compliance roles and capabilities. Over the years, the Sub-group has produced a series of guidance and study reports on important compliance-related topics (e.g. the compliance risk management cycle) to assist tax administrations. These reports, including the new study report Tax Compliance by Design being released this month, can be found on the Forum s website. Taxpayer Services Sub-group The Taxpayer Services Sub-group, currently chaired by Australia, exists to provide a forum for members to share experiences and knowledge of approaches to taxpayer service delivery, in particular through the use of modern technology. The Sub-group uses discussions and presentations at its annual meetings (often involving external experts), surveys, studies and reports that serve to provide a valuable means to keep tax administrations abreast of emerging issues. This includes how countries are making more effective use of modern technology for service delivery. At its September 2014 meeting, which was attended by 26 countries, the main topics addressed were: 1) Some important implications of emerging technologies an external perspective; 2) Findings and recommendations of the draft FTA study report Increasing Taxpayers Use of Self-Service Channels; 3) Research findings on digital usage by taxpayers in selected countries; 4) Selected country developments in managing service demand; and 5) Selected developments and experiences with cross-government service delivery programs.

8 Over the years, the Subgroup has produced a series of guidance notes and study reports on important service-related topics (e.g. the use of social media in tax administration, demand management approaches) to assist tax administrations. These materials, including the new study report Increasing Taxpayers Use of Self-Service Channels being released this month, can be found on the Forum s website. Networks The Forum established networks of experts in four key areas. These are designed to maintain dialogue on important issues, with a clear focus on practical ideas and improvements, rather than extensive research and report writing. The work of the networks and the practical guides they have produced are available to all participants on their dedicated secure websites. The four networks are: Offshore Compliance Network The Offshore Compliance Network (OCN) was created to enable the Forum to build on the achievements of individual countries and use the power of coordinated action and multilateral collaboration to improve the ability of tax administrations to deter, detect and deal with offshore tax evasion. It is led by the United States and France. This network, comprised of over 30 members, has been sharing ideas, tools and techniques for tackling offshore tax evasion. In the past 18 months the network has been focusing on a work programme based on the interests and needs of delegates. Conference calls, generally involving subject matter experts from at least one participating country, were used to share experiences and explore the following topics: nudging potential evaders, web crawlers, freeports, digital currency such as bitcoin, and offshore merchant accounts. In addition to regular conference call discussions, two task teams were created to enable more detailed discussions on communication and promoters two topics that were identified to be of great interest to the majority of network members. The task team, focusing on communication in the realm of offshore compliance, considered communications undertaken by member countries to deter offshore evasion.

9 Comparative Information. The task team captured comparative information on communication initiatives - the final product is available to all network members on ClearSpace. Success Stories. A document was compiled reflecting qualitative and quantitative successes in the realm of offshore compliance by member countries. This product has received very positive feedback as a short snap-shot of operational advances in offshore compliance. Expert Group. Recognising that communications plays an increasingly important role in the fight against offshore evasion, an expert task team has been established to delve further into this topic by bringing together communication experts from OCN member countries. The task team on tackling promoters of offshore schemes focused on (i)systematic Collection of Information and Intelligence on Promoters, (ii) Intelligent Use of the Internet, and (iii)taking Compliance Action. Comparative information. The task team collected comparative information on how member countries tackle offshore promoters it is shared with all network members on ClearSpace. Promoter Key Words. A one-page visual aid was created to assist with internet searches related to promoters of offshore schemes. It is based on the experience of several countries. Lastly, the topic of voluntary disclosure regimes continued to be of interest to OCN members. Building on its previous efforts, the network published a Voluntary Disclosure Programmes Decision Tree to help guide those designing such programmes through the key strategic choices they will face. The decision tree was the basis for a dedicated section in the updated version of the OECD Working Party No. 10 on Exchange of Information and Tax Compliance publication Voluntary Disclosure Programmes. Large Business Network This network, led by Canada, brings together the leaders of large business units. It maintains dialogue on important issues such as the current climate, risk, transparency, certainty and efficiency in general. The network has continued to focus on co-operative compliance and the management of international tax risks, including those highlighted by the BEPS report. The network underlines the importance of exchanging materials on approaches, techniques, on practical ideas and improvements.

10 February 2014 Workshop. Network delegates and interested FTA members met with external parties at a workshop hosted by the Netherlands in February 2014 where they discussed Tax Control Frameworks, performance measurement and improving multilateral cooperation. Delegates and external participants discussed essential features of a Tax Control Framework and how tax administrations should decide whether a particular Tax Control Framework is both sound in principle and being applied in practice. They also considered what indicators can be used to measure performance in a Cooperative Compliance environment. The outcomes of the 2014 meeting are documented in a final report. The discussion on improving and making multilateral cooperation more systematic led to the creation of the FTA Strategy for Improved Bilateral and Multilateral Cooperation and Collaboration among FTA members which is being presented to Commissioners for endorsement in Dublin. Since the February workshop, network membership has risen to over 30 countries. High Net Worth Individuals Network The High Net Worth Individuals Network (HNWIN) is a network of the heads of divisions with responsibility for the compliance of HNWIs in their tax administrations and is currently led by the United Kingdom. Over the last 18 months, the network has been actively focusing on encouraging increased cooperation and collaboration on specific cases in line with the FTA Strategy for Improved Bilateral and Multilateral Co-operation and Collaboration between FTA members. The network has made significant advances in developing a framework and guidance material to put the strategy in action. The network has also focused on the identification of common risks that countries are encountering in this taxpayer segment. Several countries shared their HNWI risk analysis in hopes of generating general discussions that could lead to specific Competent Authority cases being generated outside of the FTA. Country specific risk analysis documents are shared on ClearSpace. Analytics Network The Bureau decided to create a fourth network in 2013 to bring together experts in the field of Advanced Analytics, this network will become active shortly. Mutual Agreement Procedures Forum The FTA Mutual Agreement Procedures Forum (MAP), led by the United States, is made up of Competent Authorities involved in MAP cases who recognise that the purpose of the mutual agreement procedures is to ensure that the principles embodied in the global network of tax conventions are properly applied. The forum first met in 2013 and produced a multilateral strategic plan to collectively improve the effectiveness of mutual agreement procedures in order to meet the needs of both government and taxpayers and to assure the critical role of those procedures in the global tax environment. The strategic plan was discussed during the FTA Bureau meeting in January 2014 and is being presented to all Commissioners for endorsement in Dublin.

11 HOW WE WORK Meetings of Forum Commissioners are held every months and typically focus on the most challenging issues confronting tax administrations. Details of past Forum meetings can be found at The work programme of the Forum is overseen by a Bureau comprised of Commissioners from a number of participating tax administrations; the current members of the Bureau are Commissioners from Australia, Canada, France, India, Ireland, Japan, Korea, the Netherlands, Norway, the Russian Federation,, the United Kingdom, the United States and China as the host of the 2016 meeting. The architecture of the FTA is being reviewed; currently the Forum is supported by two sub-groups, four specialist networks, the Tax Administration Series team, the MAP Forum, and Priority Project teams. Each group is either chaired or sponsored by a member country or the Secretariat. Participation is open to all Forum member tax administrations. Sub-group meetings are held annually and typically include delegates from member countries and as the need arises, external speakers. Smaller task group meetings are held as required to advance specific work projects. The networks meet only when warranted. Sub-Groups and network groups meet regularly via telephone conference, and each have access to the dedicated and secure websites that enable electronic information sharing and collaboration on current projects. This working method allows the work of the forum to be progressed in a way that secures maximum engagement from member countries at minimum cost. The Forum Secretariat provides support for the work of the Forum in terms of co-ordinating and facilitating meetings of the Sub-groups and Networks, and contributing auxiliary work to complement those working parties. Costs incurred by the Forum in conducting its activities The Forum is funded by members voluntary contributions (currently set at EUR per year). The Forum receives a grant from the Committee on Fiscal Affairs each year. Norway, Denmark and Iceland made significant additional contributions to fund a full-time post in the Secretariat, this arrangement ends in In 2013 direct costs incurred by the Secretariat in support of the Forum s work were as follows: Cost (EUR) Salaries Communication Other operating costs, including travel Translation & Printing Total

12 In addition to the support the Forum receives in cash terms, several countries make significant contributions in kind. Canada seconds staff to support the work of the networks, which continues to be a significant workload. Turkey also seconds a member of staff to the Secretariat; he was very involved in the production of the latest edition of the Comparative Information Series. Since the beginning of 2013 the Secretariat has been further strengthened by a secondee from the Netherlands and by a secondee from Norway since the end of The Secretariat has also received advice on specific issues from a senior member of the Australian tax administration. We are also very dependent on the generosity of countries that host the Forum s meetings. In addition to the plenary meetings, the following meetings have been hosted by countries in : Taxpayer Services Sub-group 2013 (Finland) Large Business Network workshop (Netherlands) SME Compliance Sub-group 2014 (Germany) SME Compliance Sub-group workshop 2014 (Sweden) Taxpayer Services Sub-group 2014 (Norway) For more information, please contact us at:

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