CIAT Enhances International Transfer Pricing Expertise

The Inter-American Center of Tax Administrations (CIAT) is working on the upgrade of a document that proposes alternatives for an efficient and effective control of transfer pricing of Multi-National Enterprises (MNE). CIAT itself comprises 42 member countries, mainly from the Americas. Carlos Perez, the head of Mexico’s transfer pricing taxing authority, and Enrique Bolado at Mexico’s “Secretariat of Finance and Public Credit” (SHCP) initiated this upgrade process together with Isaac Gonzalo Arias Esteban from CIAT.

CIAT coordinates an International Tax Network, which at its last meeting included participants from tax administrations, universities, the OECD, other transnational organizations, such as TJN, LATINDADD, IDB, and the World Bank Group. The Network’s meeting will be held on October 8-10 in the city of Antigua, Guatemala, sponsored by EUROsociAL+ and Spanish Cooperation. One of the purposes of this analysis is to examine and discuss CIAT’s proposals in relation to transfer pricing. CIAT plans to disclose said recommendations next February.

Much like the OECD, CIAT is a non-profit international public organization. Its goal is to facilitate MNCs tax information shared among tax administrations. CIAT provides specialized cross-border technical assistance to its member countries. Its overall goal is to strengthen its member tax administrations.

Thirty two CIAT member countries are from the Americas. There are also five countries from Europe (Spain, Portugal, France, Italy, and the Netherlands), one Asian country (India), and four African countries (Nigeria, Kenya, Angola, and Morocco).

CIAT formulated its international tax administration focus 10 years ago under the leadership of Isaac Gonzalo Arias Esteban. CurrentIy, it is in the process of enhancing BEPS-related transfer pricing and audit-related administration issues.  These methods include advanced BEPS tax administration audit techniques which may be applicable by a member country. Likewise, this analysis provides tax administrations advanced transfer pricing audit and international tax resolution techniques.

Several years ago, Isaac Gonzalo Arias Esteban recognized the importance of training transfer pricing experts for CIAT’s expansion in this very relevant sphere. Earlier this year, he established a twenty-five-member transfer pricing expert group comprising 500 years of transfer pricing expertise to evaluate CIAT’s recommendations. This twenty five expert group averages twenty years or more of transfer pricing experience which includes practical and legal aspects of transfer pricing.

The experts are well-known consultants from major advisory firms, transfer pricing academics and experienced tax administration officials. They frequently contribute to the highest-level publications in the transfer pricing field.

Said experts are from 15 countries. There are five CIAT countries that have two members each: Argentina, Chile, Panama, Mexico, and the United States. Other experts are from Germany, Italy, The Netherlands, Ecuador, Colombia, Uruguay and Honduras.  The U.S. transfer pricing expert members are Robert Feinschreiber from Charles River Associates and Margaret Kent from TransferPricingConsortium.com. The role of CIAT’s expert transfer pricing group is to interface with the highest-level tax administrators.

Forty years ago, in the movie “Grease,” Olivia Newton-John warned that, “you’d better shape up.” This mystic invocation formula could very well be a warning to MNEs potentially subject to multinational transfer pricing audits. MNEs may quite soon be subject to the upgraded transfer pricing tax regime. The Inter-American Center of Tax Administrations (CIAT) is improving its strategy. It is now in the process of strongly combatting a myriad of tax evasion schemes, both within and outside the BEPS regime.

CIAT itself is a fully-integrated transnational government organization, interfacing seamlessly with the OECD and the UN. These two external trans-governmental sources are making a valued impact to CIAT. The International Center for Taxation and Development (CIFD), sponsored by both Norway and the United Kingdom, originally undertook African-based transfer pricing studies. Then the CIFD focused on CIAT operations. More recently, the German Agency of International Cooperation has been a contributor to the CIAT process. Norway, the United Kingdom and Germany are not CIAT members.

CIAT’s leader in this sphere of action, Isaac Gonzalo Arias Esteban, has fostered and monitored a significant number of divergent transnational studies. Most recently, in August 2018, CIAT published a comprehensive 100-page study, “Information Sources of Tax Administrations in Latin America. Experiences of Argentina, Brazil, Chile, Mexico and Peru / 2018”. The information sources study addresses tax database issues in Argentina, Brazil, Chile, Mexico and Peru. We expect that the CIAT information sources analysis will impact the comprehensive transfer pricing study now under way. In 2018 CIAT issued a Data base on transfer pricing rules and practices covering legal and administrative aspects of Latin American and Caribbean countries.

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Disclaimer. Readers are informed that the views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group the author might be associated with, nor to the Executive Secretariat of CIAT. The author is also responsible for the precision and accuracy of data and sources.

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