Large Taxpayer Units Tax Administration of Large Business 1.Introduction

1. Large Taxpayer UnitsTax Administration of Large Business1.Introduction Nairobi, 14 – 18 February 2011

2. Your presenters and helpers • Matthijs Alink ( OECD Centre for Tax Policy and Administration) • Andrew Okello (IMF) • Peter-Paul Aalbers (DTCA, the Netherlands) • John Njiraini (KRA, Kenya) • James Mburu (KRA, Kenya) • James Obell (KRA, Kenya) • ? (SARS, SA)

3. Objectives for the seminar • To increase understanding of international practices and developments in the area of Tax Administration of Large Business • To promote discussion among officials. • To identify new ideas for improving Tax Administration of Large Business • To encourage officials to consider improvements to their administration based on their assessment of international practices and Tax Administration needs. • To answer specific issues raised by participants.

4. Our approach to your interests and concerns *** During the course of the seminar, we will aim to answer any questions raised by participants. *** Language differences/ translation may complicate your understanding of what is being presented or we don’t fully cover issues of interest to you – please to ask questions!!!! *** Practices from country to country vary significantly due to political, legal, historical, cultural and economic factors.

5. Tax Administration of Large Business Seminar outline: • The OECD and its work on taxation • General introduction on Tax Administration and trends • Importance of Large Business Taxpayers • Improving taxpayers’ compliance - need for a strategic approach • General overview of the international practices for the management of Large Business • Identification and Selection of Large Business (Definition and Criteria used) • Characteristics of Large Business

6. Tax Administration of Large Business Seminar outline: • Responsibilities, mission and vision statements of Large Business Units • Risk Management practices • Developing a compliance program for Large Business • Auditing strategies and approaches • Organizational structures and work arrangements • Staffing and skills and expertise required for Large Business Units • Performance issues

7. Structure of course • Lectures • Workshops • Discussions

8. Tax Administration of Large Business 2. OECD Work on Taxation

9. OECD Work on Taxation • OECD work on taxation is directed by the Committee on Fiscal Affairs (CFA), supported by the Centre for Tax Policy and Administration (CTPA). • The CFA sets standards and exchanges views in the tax area on international and domestic policy and administration issues. • Activities to promote its standards and views include its Outreach Program delivered for non-members. • Its role is to promote an environment supporting effective fiscal sovereignty of countries over the design and implementation of tax systems, which reflect each country’s social, economic, & political preferences.

10. OECD - Our Mission To maintain our position as the organisation of first choice for countries - OECD and non-OECD – to work together to develop international tax standards and identify ways to improve the design and operation of tax systems.

11. Tax Systems Operate in a Rapidly Changing Environment • Financial liberalisation, increased regional integration and new communication technologies have enabled taxpayers to plan and operate on a global basis. • Capital, labour and consumption have become much more mobile. • Competitive pressures have encouraged enterprises to restructure their business to minimise costs, including tax costs. • Economic activity is shifting away from manufacturing to services.

12. The OECD Tax World: The Structure and Work of the Committee on Fiscal Affairs (CFA) • The focal point for the OECD’s tax work is the CFA, serviced by the Centre for Tax Policy and Administration (CTPA). • Seven Subsidiary Bodies: • Tax treaty issues and related questions • Tax policy analysis and for statistical work • Taxation of multinational enterprises • International tax evasion & avoidance, & the tax-related aspects of bribery • Consumption taxes • The Forum on Harmful Tax Practices • The Forum on Tax Administration • What does the CFA do? • Sets international tax standards for the global economy; monitor their implementation; provide mechanisms to resolve tax disputes. • Provides the analytical and statistical basis for good tax policy • Identifies best practices and relevant comparative data for revenue bodies. • Delivers large program of Outreach events.

13. OECD has proven that it is well placed to help governments respond to these challenges • Providing the analytical & statistical underpinnings for tax reforms. • Adapting international tax arrangements to the new global environment. • Counteracting the spread of tax havens. • Examining the impacts of taxes on competitiveness & growth. • Linking the Tax and Aid Development Agenda. • Providing guidance & comparative information for Tax Administrations.

14. Engaging Non-OECD Economies (NOE’s) is Central to our Mission • Extending observer ship (current observers: Argentina, China, India, Russian Federation, & South Africa). • Enlargement (accession candidate: Russia, new membership Chile, Estonia, Israel, and Slovenia) • Enhanced relationship candidates: China, Brazil, India, Indonesia, and South Africa • Developing partnerships with key countries in each region. • Creating a global network of multilateral tax centers (e.g. Ankara, Budapest, Korea, Mexico and Vienna). • Developing joint initiatives (e.g. ITD) with other international organizations.

15. increase cooperation share good practice, knowledge and experience improve tax policies and administration International Tax Dialogue The International Tax Dialogue (ITD) is a collaborative arrangement involving the IDB, IMF, OECD, UN and World Bank to encourage and facilitate discussion of tax matters among national tax officials, international organisations, and a range of other key stakeholders.

16. International Tax Dialogue Activities have focussed on creating dialogue opportunities through: • Online resources • Conferences and forums • Shared technical assistance information

17. Online resources • www.itdweb.org is a free, multilingual, multinational internet site operated by the ITD. The site provides a mechanism for countries and organisations to share knowledge and experience with each other, quickly, easily and globally

18. www.itdweb.org • A broad range of both administration and policy topics are covered: • Tax policy • Personal & corporate income tax • VAT/GST & sales tax • Other taxes • Domestic tax avoidance &evasion

19. www.itdweb.org • A broad range of both administration and policy topics are covered: • Taxation of multinationals • Treaties • Other international issues • Tax procedure • Organisation and management of tax administration • Service delivery & community relationships

20. www.itdweb.org • Over 3000 documents from a range countries and organisations are currently available with more added everyday • Documents can be accessed through a tax topic structure, by keyword, country, date, language, etc • Information is available in 8 languages: English, Dutch, French, German, Japanese, Norwegian, Spanish and Russian. Online translation facilities are provided. • Other resources include: news, events calendar, extensive range of links and contact information for more than 100 countries

22. www.itdweb.org • Success lies in the knowledge and experience national tax organisations share with one another • All countriesare encouraged to share their own information using the site • Adding documents is very quick and easy and can be done from anywhere in the world

23. ITD Conferences and forums • The first global conference was held in March 2005, in Rome, on Value Added Tax (VAT) topics • 240 participants from 97 countries and organisations • The second conference was held in October 2007 in Buenos Aires considering Taxation of Small and Medium Sized Enterprises. • Around 250 participants from 73 countries and 9 organizations attended • The third global conference was held in Beijing, October 2009 on: Financial Institutions and Instruments – Tax Challenges and Solutions

24. Tax Administration: Key Areas of Work • Organisational risk management (incl. note on ‘state of the art’ compliance measurement indicators & methodologies). • Selected key issues in tax debt collection. • Approaches to large taxpayers’ compliance management, including corporate governance • VAT abuses: update on countermeasures and their impacts. • Developments with pre-filled tax return systems. • Developments with ‘joined up/whole of government’ service delivery and use of technology in service delivery. • Taxation of High Net Worth Individuals • Promoting tax compliance with banks • Comparative information series (3rd edition).

25. Comparative Information Series • A unique series of tax administration related information on 45 countries, including: • organizational design features (incl. office networks) • taxes collected and non-tax functions; • service delivery standards • tax return and payment system features; • use of tax withholding; • service delivery standards; • relative tax burden data; • audit and debt collection performance information; • staffing and relative costs of administration; • progress with electronic service delivery; • TIN system features; and • key administrative powers and sanctions.

26. Seoul Declaration September 2006 • Further developing a directory of aggressive taxplanning schemes • Examining the role of tax intermediaries in relation to non compliance • Greater attention to the linkage between tax and corporate governance • Improving the training of tax officials on international tax issues, including the secondment of staff from one administration to another

27. Cape Town Communiqué January 2008 • Follow up Seoul Declaration: Achieving an enhanced relationship • Focus on the role of tax intermediaries in aggressive tax planning has evolved by broadening its focus into a wider review of the tripartite relationship between tax administrations, taxpayers and intermediaries. • Report focused on large corporate taxpayers and those providing them with tax advice.

28. Enhanced relationshipMain conclusions report (1) • Tax intermediaries play a vital role by helping taxpayers understand and comply with their tax obligations • However some are also designers and promoters of aggressive tax planning • Taxpayers are the ones who decide whether to adopt particular planning opportunities • Risk management is an essential tool for tax administrations • Relationship between tax administrations and taxpayers would be based upon early disclosure of potential tax issues and transparency

29. Enhanced relationshipMain conclusions report (2) Tax Administrations should base their relationship with taxpayers and intermediaries upon 5 fundamental attributes: • Understanding based on commercial awareness • Impartiality • Proportionality • Openness • Responsiveness Large corporate taxpayers would then be more likely to engage in a relationship with tax administrations based on cooperation and trust

30. OECD website www.oecd.org