Tax experts said that a competent tax administration would solve the problem of trust in taxation, at a conference organised on Tuesday 13 September by the Association of Chartered Certified Accountants (Acca), the International Federation of Accountants (IFAC) and the Pan African Federation of Accountants (Pafa), in collaboration with the OECD and the World Bank.
Joe Stead, policy analyst at the OECD, pointed out that there are areas for improvement within tax administrations. He referred to the lack of commercial expertise in capacity building work. In some countries, tax administrations do not understand business structures and value chains. He pointed out the language problem, as in many non-English speaking countries the tax administration is in difficulty, since the local official language is not always used when declaring or communicating with the tax administration.
Mr Stead also pointed to the loss of skilled personnel to the private sector. “At the same time, we see the private sector complaining about the level of training of the tax administrators that they interact with”, he explained. “So we need to make sure that the private sector is not poaching all the stuff that they say that they want in the tax administration to be able to deal with it”, he added.
Tax cooperation between countries is also an area for improvement. According to Mr Stead, most OECD members believe that international collaboration is important for a coherent and international tax system. Tax administrations in developing countries, in particular, need to be able to access the information.
Tomas Balco, senior adviser on base erosion and profit shifting (BEPS) at the OECD, says that there is a need to build confidence in developing countries and to make it clear that these international standards can be beneficial for tax revenue collection (see EUROPE 12995/21). There is in essence a trust gap between taxpayers and tax administrations, which widens when it comes to developing countries. “Some of the countries that I've worked with, such as Brazil, Kazakhstan, or Mongolia, are losing literally billions of euros every year due to these divergences.”, he said.
He therefore advised a more standardised approach to facilitate the transfer of knowledge and experience between tax administrations. Even where some of these international standards are effectively implemented, capacity is limited because some governments invest very little in the capacity of their tax administrations. (Original version in French by Anne Damiani)