The Executive Secretary in the Press

The UN Economic and Social Council held, on 15 March 2012, a one-day special meeting to consider the question of international cooperation in tax matters, including institutional arrangements to promote such cooperation.

Mr. Márcio Verdi, Executive Secretary, Inter-American Centre of Tax Administrations (CIAT), outlined CIAT’s activities aimed at enhancing cooperation, including through exchange

of experiences and best practices among its 40 member countries, with a view to

strengthening their tax administrations. He also reported on CIAT’s cooperation with other multilateral organizations and recent joint initiatives that resulted in an eff ective coordination of eff orts. Mr. Verdi stressed that such coordination required additional efforts to optimize

the use of resources and minimize the costs. The speaker called on the UN Committee to involve, to a greater extent, regional tax organizations in its work.

see: Newsletter

Picture of the participants attending the International Tax Cooperation

This report is a compilation of the main activities carried in accordance with the CIAT Executive Secretariat’s Programs, from January through December 2011, second year of the term of office of the CIAT Executive Secretary, Mr. Márcio F. Verdi.

See: Report January - December 2011

The Executive Secretary of CIAT Mr. Márcio F. Verdi visited Kenya from 30st January to Wednesday the 1st of February. Welcoming the Executive Secretary, the Commissioner General of Kenya Revenue Authority Mr. M.G.Waweru appreciated the immense benefit Kenya has derived from its CIAT membership. Kenya is represented in CIAT’s Permanent Committee on Ethics. KRA staff have also benefited from various areas of training including transfer pricing. The Integrated Tax Management System that KRA ‘s Domestic Taxes Department adopted borrowed significantly from a similar system used in Chile. Kenya is due to host next year’s CIAT Technical Conference.

During the visit Mr.Verdi made presentations on electronic invoicing to Kenya Revenue Authority’s top management and senior Treasury officials led by the Permanent Secretary Mr. Joseph Kinyua. He said for Kenya the issue is not whether to adopt electronic invoicing but when to do so. Kenya is expected to be among the first African countries to adopt electronic invoicing. Mr. Verdi also had an informal chat with the newly appointed Minister for Finance Hon. Njeru Githae and his assistant Dr. Oburu Oginga.

The Executive Secretary also had an opportunity to visit Nairobi. He was seen off at the Times Tower by the Commissioner of Domestic Taxes-LTO Mr. John Njiraini who is also Kenya’s CIAT Correspondent.

Márcio F. Verdi, Executive Secretary of CIAT, with revenue authorities of Kenya.

The meeting of the Sub-Advisory Committee of Financial Affairs of the CIAT Executive Council was successfully completed. It took place from the 23rd to the 27th of January 2012 in the CIAT Executive Secretariat in Panama City.

Mr. David Peguero, Chief Financial Officer of the General Directorate of Internal Taxes of the Dominican Republic; Mrs. Irene Carrizo, Coordinator, Plans and Programs of the General Directorate of Revenues of the Ministry of Economy and Finance of Panama; and Mr. Galo Viteri, General Advisor of the Internal Revenue Service of Ecuador participated to the meeting.

The CIAT Executive Secretariat was represented by Mr. Socorro Velazquez, Planning and Institutional Development Director; Mrs. Xiomara Olivares de Tejada, Accounting and Finance Director; and Mrs. Julia Fontaine, Planning and Control Coordinator.

The final version of the financial statements audited as of June 30th, 2011, which were analyzed in the previous meeting, were reviewed. The 2011-2012 Budget and its execution until the month of December, 2011, were also examined. The review included the analysis of pertinent documents and their discussion with the Directors of the diverse programs.

Another important subject, the budget project revision for the period 2012-2013, was thoroughly discussed by the participants.

Sub-Advisory Committee of Financial Affairs of the CIAT Executive Council

New Delhi, India, 7 – 9 December 2011.

Addressing growing inequalities is now at the centre of the political debate and all countries are taking different actions to address it. Increasing inequality reaches far beyond economic implications, raising a number of political and ethical questions which have wide-ranging consequences for the future of all societies.

Globalisation and the sustainable growth path of many economies in transition and developed countries have produced impressive results in terms of economic growth, social development and poverty reduction. However, the benefits of stronger growth have not always been shared equally and income inequality has remained at very high levels. Achieving greater equality as a key to social cohesion remains a priority for every society.

Against this background, this conference discussed the role of taxation in reducing inequalities in income and wealth. The conference tried to identify which policies have failed and which could play a greater role in reducing inequalities in the future.

More than 400 senior tax policymakers and administrators from almost 90 countries participated at this event hosted by the Finance Ministry of India and organized by the International Tax Dialogue (ITD). The ITD is a joint initiative of various organisations working on tax issues – the IMF, the OECD, the World Bank, the European Commission, the IADB, and CIAT. The global conferences of the ITD have established a reputation of providing a unique opportunity for those engaged in making decisions about tax to discuss global issues.

In his closing remarks, Rintaro Tamaki, Deputy Secretary General of the OECD, said “As I travel around the world, a question that I get repeatedly asked is how can we deal with inequalities? What will be the impact of the crisis? How do we reconcile the fact that the behavior of banks was one of the major causes of crisis yet despite public bailouts, we see them continue to pay millions of dollars in bonuses? How can we show our citizens that the gains and the benefits of globalization are being fairly shared?

Politicians need to have good answers to these questions, and they need to have answers quickly, otherwise we risk a back lash against globalization as countries move back towards protectionism.

This conference has shown that “smart” tax policy can reconcile the need to promote sustainable growth with the need to reduce excessive inequalities, particularly at the top end of the income scale.

The ITD recognises that in order to have a real impact on what happens in your countries, there needs to follow up. This is why we are organizing a series of regional meetings in Asia, in Latin America, in the MENA region and in Africa. We will make a renewed effort to identify what has worked and what has not worked in using tax policy to reduce inequalities.”

In his closing remarks, Mr. R S Gujral, Finance and Revenue Secretary of India, noted that “Many issues were raised in the last two and a half days on how tax can help in reducing inequalities. Participants recognise there is no silver bullet. The solutions need to be adapted to the state of economic development and demographics. Only after taking into account these different factors can the appropriate tax policy response to growing inequalities be addressed.”

During a comprehensive two and a half day programme, conference participants addressed the tax issues raised by economic developments and globalisation that have affected the distribution of income, wealth, and living standards within and between countries over recent years. Income inequality between countries has diminished significantly as economic reform in many emerging economies has spurred growth, significantly reducing levels of absolute poverty globally. However, recent decades have also seen significant changes in the distribution of both wealth and incomes within countries, with notable increases in the share of income enjoyed by those at the very top of the income distribution in many countries. A rising tide has not lifted all boats.

The structural linkages between growth and inequality raise difficult issues about how best to raise taxes in a way which contributes to both growth and equitable development. The financial crisis has further impacted on the underlying trends affecting poverty and inequality globally. Sharp rises in unemployment – and therefore significant losses of income for individuals – in many countries are likely to take a long time to be reversed. The fiscal pressures to increase revenues and need to reduce debt levels in many, principally developed, countries require tough decisions on how far to increase taxes and where to make cuts in public expenditures. The impact on inequality is a crucial consideration for Finance Ministers.

The ITD and its partners believe that facilitating international dialogue on tax policy and administration is important if countries are to make the right informed decisions that reflect their own unique circumstances. We are working together to provide support to countries in developing and implementing tax administration and policy reforms.

Information: Conference Agenda

Issues Paper

ITD Global Conference‘Tax and Inequality’ Website

Mr. Márcio Verdi
CIAT Executive Secretary

The Second Edition of the International Seminar organized by the Bahia State Treasury Secretariat, the Inter-American Center of Tax Administrations - CIAT – and the National Conference of Tax Coordinators and Administrators – ENCAT took place last November 21 – 22, in the City of Salvador, Bahia, Brazil. In this opportunity the main topic was: “The Tax Administrations as Mechanisms for Social Development”.

The Governor of the Bahia State, Mr. Jacques Wagner was in charge of the opening of the event, who was accompanied by important authorities such as the Bahia State Treasury Secretary, Mr. Carlos Martins; The CIAT Executive Secretary, Mr. Márcio Ferreira Verdi; The President of the Brazilian Institute for Ethics in Competition (ETCO), Mr. Roberto Abdenur; the ENCAT General Coordinator, Mr. Eudaldo Almeida de Jesus; the Regional Superintendent of the Bank of Brazil, Mr. Edson Cardozo; the President of the Bahia Regional Council of Accounting, Mrs. Maria Constança Carneiro Galvão; the Attorney General of the Bahia State, Mr. Rui Moraes Cruz; and the Regional Superintendent of the Federal Savings Bank, Mr. Aristoteles Alves de Menezes Jr.

Senior national and international officials such as the Spanish Director of the State Agency for Tax Administration, Mr. Jose Maria Meseguer; the Spanish Director of the Institute for Fiscal Studies, Mr. Jose Maria Labeaga were in charge of the presentations; the CIAT Executive Secretary, Mr. Márcio Ferreira Verdi who was in charge of the opening conference; Mr. Miguel Acosta, Director of the Fiscal Training Center of the Internal Revenue Service of Ecuador; Mr. Roberto Abdenur, President of ETCO; Mrs. Maria Fatima Cartaxo, Senior Specialist of the IADB; Mrs. Zayda Bastos Manatta, Assistant Secretary of Federal Revenues of Brazil; Claudio Trinchao - Maranhao State Treasury Secretary; and Mr. Raul Zambrano, CIAT Technical Assistance Manager. The final considerations were in charge of Mr. Isaias Coelho of the Getulio Vargas Foundation who emphasized the most outstanding aspects during the Seminar.

Also, Mrs. Maria Raquel Ayala, CIAT Studies and Training Director presented the Handbook for TAs that recently has been published by the Center along with the International Bureau of Fiscal Documentation - IBFD and the Netherlands Tax Administration.

The events main table counted with the presence of Mr. Jacques Wagner, Governor of the State of Bahia; Mr. Roberto Abdenur, the President of the Brazilian Institute for Ethics in Competition – ETCO; Mr. Eudaldo Almeida de Jesus, ENCAT General Coordinator; Mr. Marcio Verdi, CIAT Executive Secretary, and other authorities.		Participants to the II International Seminar of Tax Administrations of the Brazilian States.

CIAT Tax Administrations representatives met in Rome on October 18 to 21, 2011, to learn about the structure and processes of the Guardia di Finanza, as well as specifics aspects on how the fiscal intelligence tasks are developed.

After the successful event on fiscal intelligence carried out in the city of Brasilia during the month of September 2011 and in accordance with specific requests received by the tax administrations of CIAT member countries, the Guardia di Finanza of Italy in coordination with the CIAT Executive Secretariat has offered the possibility to know "in situ" structural and functional aspects of the Organization, as well as the way the tasks of fiscal intelligence are managed and how international transactions are controlled.

On that occasion, the CIAT Executive Secretary, Mr. Marcio Verdi and the CIAT Director of Cooperation and International Taxation, Mr. Gonzalo Arias were officially welcomed by the Army General, Nino Di Paolo, the General Michele Carbone, Colonel Rosario Massino and Colonel Stefano Gesuelli, who discussed many aspects of mutual interest, tightening the already close institutional relations.

Later, with the words of General Nino Di Paolo, General Michele Carbone and the CIAT Executive Secretary, Sr. Marcio Verdi, the activity was officially opened including not only experts from the Guardia di Finanza, but also from different areas, such as Professor Victor Ukcmar; the Prosecutor of economic and tax crimes of the Milan Prosecutors Office, Mr. Carlo Nocerino, and the Tax Administration Attaché of the French Embassy in Rome, Ms. Altizio who commented and provided different point of views and experiences on the aspects of the visit.

Among the countries present, we can highlight the very active presence and participation of senior officials of the tax administrations of Argentina, Bolivia, Colombia, Costa Rica, Haiti, Kenya, Mexico, Panama, Paraguay, Peru, Dominican Republic and Venezuela was noticeable.

While the Guardia di Finanza is an organization with unique features in the world, we have identified many areas in which it is possible to develop mutual cooperation actions, which range from aspects related to training and technical assistance, to cooperation actions aimed at the containment of harmful international tax planning and international organized crime.

On behalf of its member countries, the CIAT Executive Secretariat wishes to express his high feelings of gratitude to the authorities of the Guardia Di Finanza that enabled this activity and emphasize the excellent service with which to the present delegations were treated.

The Executive Council at its meeting on October 23, 2011, approved the organizational proposal of the Executive Secretariat, which will become effective on January 1, 2012.

This new structure seeks to improve efficiency and quality in services offered to member countries and associate member countries to provide support for improving their tax systems.

See: Internal Resolution No.017 -2011

Exmo. Mr. Secretário dos Asuntos Fiscais Dr. Paulo Núncio, inaugurated this morning the 2011 CIAT Technical Conference being held in Lisbon, from October 24 through 27, organized by the General Directorate of Taxes of Portugal and whose theme is: “ADMINISTRATIVE COLLECTION PROCESS AS EFFECTIVE MECHANISM FOR INCREASING REVENUES” .

Participants in this international tax event, the most important CIAT annual meeting held in Europe includes tax administration delegates from over 30 CIAT member countries in four continents, 10 guest countries and over 20 international organizations and other institutions with which CIAT maintains close working and cooperation relationships.

The Director of the IMF’s Fiscal Affairs Department, Mr. Carlo Cottarelli, delivered the keynote speech entitled: “Addressing Fiscal Challenges to Reduce Economic Risks”.

Papers from the CIAT Technical Conference 2011

Program CIAT Technical Conference, 2011

The CIAT Secretary called the Tax Authority to deepen data search

The initiative of the General Tax Directorate (DGI in Spanish) to demand information from taxpayers' expenditures to schools and other educational and sport institutions, not only is in line with the practices performed in the region and in developed countries, but it should also be used by the Uruguayan Tax authority. The only secret which should limit the administrations is the tax secrecy.

So it was stated by Mr. Márcio Verdi, Executive Secretary of the Inter-American Center of Tax Administrations (CIAT), a public international organization that brings together 40 countries around the world.

On a visit to Uruguay for the IV Tax Sessions organized by the DGI at the Faculty of Economics in the University of the Republic, the expert spoke with “El Observador” about instruments which the tax authorities may use to fight against tax evasion.

For Verdi, the "worst tax for society is the one which is paid by one taxpayer and not by others". In that sense, "everyone should support the tax authority to have the necessary tools to verify if everyone is paying what corresponds" he said.

The Tax expert and advisor to four government administrations in Brazil, said that those tax authorities that only use the information provided by taxpayers and their historical databases to carry out the tax collection control, "will never reach their full development and nor will they be able to verify that people pay what they should pay. "

The Regulatory and Control of Personal Data Unit issued last week a favorable view about expanding the power of the DGI to demand from educational and sports institutions information on people who pay tuition and fees.

However, some private-sector experts point out that the mechanisms used by the local administration in order to obtain tax information infringe the right to privacy.

In the region as well as in Europe and North America, "all tax authorities have full access to the information. “That is not breaking anyone’s privacy", categorically said Verdi.

The authorities should go beyond with the use of data provided by third parties, he said. “The Tax authority now has the absolute necessity of using information from financial transactions, credit cards, notary records," he pointed out by way of example.

The creative use of databases which can be accessed by the DGI and the use of the latest technological instrumental are a worldwide trend and is being adopted also in Uruguay, explained the expert.

In fact, the DGI has already completed a data crossing between the luxury cars sales and the tax returns of their buyers, as well as real estate property transfers.

However, Verdi points out that there must be a clear counterpart from the DGI. The Tax Administration should ensure the confidentiality of the data. "The Tax authority should have access to all information, which should be treated confidentially, only for purposes of calculation and verification," he explained.

For Mr. Verdi, the Uruguayan administration, together with Ecuador and Dominican Republic were the ones which registered the most progressed in terms of professionalization during the last decade at the regional level.

Personalized VAT

During the TAX Sessions, a group of researchers from the DGI Economic Advisory presented a series of research papers. One of them simulates the implementation of a personalized VAT, where each taxpayer pays a different rate, according to the position they hold in the distribution of income.

The research, which is in its final phase, shows that within a banking context, where access to financial instruments would be generalized to the families, through credit and debit cards – as well as companies – the possibility to perform operation with the plastic cards - the system is not only viable but it would allow to reduce the Gini index by 2.83 points, which measures inequality.

Sources from the Ministry of Economy (MEF) told “El Observador” that it is not only an academic exercise conducted by the researchers: It is a medium-and long-term goal for the administration to develop tools that individualize the tax burden and allow to deepen into the distributive policies.

Currently, VAT is a regressive tax. This means that once the tax is paid, the Uruguayans available income distribution becomes 1.03 points more unequal on the Gini index.

However, the study conducted by the technicians Gustavo González, Marcelo Montero, Leticia Olmos and Fernando Peláez determines that, once a personalized VAT is implemented, the tax would positively contribute to redistribution.

According to the researchers, the previous requirement for the application is universal access to financial services, because it would be implemented only on credit card and debit card purchases.

Mr. Márcio F. Verdi, CIAT Executive Secretary and Mr. Paul Ferreri of the DGI, in the Seminar Tax Conference.		DGI experts in a panel of the Fourth Tax Conference

The 32th Annual Conference of CATA (Commonwealth Association of Tax Administrators) has taken place in Colombo, Sri Lanka, from September 18 to 23. Assistance to taxpayers, Tax education, and Transfer pricing were the challenging tax administration topics that have been discussed.

This important meeting had the objective of presenting major and successful experiences of CATA member countries in the aforementioned topics, as well as the main challenges that they have yet to overcome in these areas.

CIAT Executive Secretary, Mr. Márcio F. Verdi was invited by CATA to offer a lecture about CIATs work in the field of Ethics and Assistance to Taxpayers. His presentation provided key concepts and challenges for the CATA Tax Administrations.

The CATA conference gathered more than 40 countries, representatives from international organizations, tax experts and tax researchers.

In Photos: Exhibitors and delegates at the 32nd Annual CATA Conference

The 2nd. CIAT Meeting of Network on Study Areas and Tax Research was held last September 13 - 15, 2011 in Bogota, Colombia which had the theme: "Reform Possibilities in the Design and Management of Personal Income Tax (IRPFs) in Latin America."

The meeting gathered delegates from 16 regional countries as well as delegates from Spain and Italy. It was also attended by ECLAC, IMF, ICEFI, IEF and OECD representatives.

In the block dedicated to the IRPFs design, presentations about specific aspects of these countries taxes were offered, highlighting the recent undertaken reforms in order to improve productivity. Also, analysis on the progressive, redistributive capacity and flexibility of these taxes were presented. In the section dedicated to management, best practices, challenges and limitations that tax administrations face to achieve a proper control in IRPFs were exposed and a discussion about the statistics quality and tax evasion measurement was promoted.

This important event was made possible thanks to GIZ generous sponsorship and the invaluable support of the DIAN and the IDB.

The meeting also served to strengthen the CIAT Network on Study Areas and Tax Research activities agenda for 2011-2012, which undoubtedly will contribute to strengthening the support from the Executive Secretariat to the member countries.

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The Ad Hoc Working Group endorses the strategic importance of the exchange of tax information and the need to promote multilateral exchange of information.

On September 5 - 6, 2011, in Panama City, the Ad Hoc Working Group on the Exchange of Tax Information held a meeting whose main objective was to review the promotion and implementation of a multilateral exchange instrument that will be useful for CIAT member countries, as well as, the possible actions CIAT can take to support the effective implementation of tax information exchange.

The Ad Hoc Working Group participants were tax administration senior officials from Argentina, Bolivia, Ecuador, Spain, India, Kenya and Uruguay, the heads of the Permanent Missions of France and Spain at the CIAT Executive Secretariat, the Deputy Director of the Center for Tax Policy and Administration of the OECD, the CIAT Executive Secretary, the CIAT Director of Assistance and International Cooperation, the CIAT Manager of International Cooperation and other members of the permanent staff of the CIAT Executive Secretariat.

In this context, the main models and multilateral instruments for information exchange and international cooperation, regional and global, which are available to CIAT member countries, were evaluated. One of the Group´s major conclusions was reaching consensus to support the integration of CIAT member countries to the Convention on Mutual Administrative Assistance in Tax Matters developed by the Council of Europe and OECD, which is now open to all countries worldwide by means of the protocol approved several months ago.

The group stressed the importance that CIAT continue to maintain an active role in the area of exchange of information and provide programs to promote and facilitate to its member countries the effective implementation of the exchange of tax information through the dissemination of documents and tools, training, creation of workshops, coordination of short-term assistance and field study visits, among other possible forms.

In conclusion, the referenced Group developed recommendations that will be addressed at the next CIAT Executive Council meeting and submitted to the General Assembly for consideration. Given the diversity of countries integrating the Group, this document is of great value in order to highlight the importance that this practice has for CIAT member countries, and in turn to clearly define future actions that CIAT must undertake to meet in the best way possible the demands of its members.

Official photo of the Working Group Ad-Hoc

On August 29th, 2011, the CIAT Executive Secretary, Mr. Márcio F. Verdi welcomed senior officials of the African Tax Administration Forum (ATAF).

The purpose of the visit was to present the experience of the CIAT Executive Secretariat in its 45 year of history, especially those related to its organization, programs, projects, and strategic and operational plans, among others.

In developing the agenda held from August 29th to 31st, the staff of the CIAT Executive Secretariat coordinated by its Executive Secretary has held productive working sessions with Mr. Logan Wort (ATAF Executive Secretary), Lincoln A. Marais and Sthembiso Chavalala.

Finally, both organizations expressed interest in developing closer and stronger ties through mutual cooperation.

Official Picture of the visit of the Members of ATAF at CIAT headquarters		Interview to Logan Wort ATAF Executive Secretary

From the 21rst. through the 24th. of August, the Inter-American Centre of Tax Administrations - CIAT, the Brazilian Federal Revenue and the School of Management-Esaf- held a seminar on "Key Issues related to Planning and Implementing Practical Intelligence to Detect and Fight Tax Fraud."

The seminar was held at the Esaf headquarters, in Brasilia. The seminar analyzed the experiences of CIATs member countries on the legal, structural, and human resources procedures, with the purpose of modernizing procedures for detecting and fighting tax evasion.

In addition to the presentation of the Brazilian Federal Revenue authority, also the tax administrations of France, Italy, Spain and Canada addressed different aspects of the subject. Thirteen countries sent their representatives and from the Brazilian tax authorities, 29 states were present at the debates.

The event is to update the CIAT Handbook on Tax intelligence

CIAT Executive Secretary, Marcio Verdi, who is one of the RFB cadre, coordinated a discussion panel on updating the "CIATs Handbook on Intelligence Tax." It’s about a reference document in which the best experiences in promoting tax intelligence activities were considered for its preparation. Its legitimacy lies in the fact that it was fully built based on suggestions from CIATs member countries.

The link to the themes in the picture

Official photo of the Event

In keeping with the Cooperation Agreement signed by CIAT-IOTA at the CIAT General Assembly held in Brazil in 2006, the CIAT Executive Secretary, Mr. Márcio F. Verdi, in response to an invitation from the Intra-European Organization of Tax Administrations (IOTA), participated in its 15th General Assembly held on July 7 and 8, in the city of Nice, France, whose main theme was “Achieving More with Less”.

IOTA consists of 44 European member countries, of which 6 are also CIAT members, namely: Portugal, Spain, France, Italy, Netherlands and Czech Republic. The participants in this event included heads of tax administrations, representatives of international organizations and tax experts and researchers.

In line with the theme: “Achieving More with Less” the countries made presentations on new mechanisms dealing with collection and the increase of voluntary compliance, which may in turn result in increased efficiency and cost reduction.

Some of the mechanisms presented involved E-Governance, as well as techniques and application of information technology in the tax administrations. Also considered were benchmarking cases being implemented by IOTA itself, as well as the experiences of France, Azerbaijan and the United Kingdom.

Pictured participants of the Fifteenth General Assembly of IOTA