TECHNICAL CONFERENCE The Tax Administration’s Examination Function Rome, Italy, September 28th – October 1rst, 2015 About CIAT CIAT is a public, nonprofit international organization established in 1967, with the mission of providing an integral service for the modernization, strengthening and technical development of the Tax Administrations of its member countries. Its membership currently consists of 38 member and associate member countries from four continents: 31 countries from the Americas, five from Europe, and one from Africa and one from Asia. India is an associate member country. The Web site: www.ciat.org includes information of a technical and institutional nature, as well as on the various activities carried out such as international meetings, tax studies, publications, training, technical assistance and information technology. Member Countries Argentina Dominican Republic The Netherlands Aruba Ecuador Nicaragua Barbados El Salvador Panama Bermuda France Paraguay Bolivarian Republic of Venezuela Guatemala Peru Bolivia Guyana Portugal Brazil Haiti Sint Maarten Canada Honduras Spain Chile India Suriname Colombia Italy Trinidad & Tobago Costa Rica Jamaica Uruguay Cuba Kenya United States of America Curacao Mexico EXECUTIVE COUNCIL 2015- 2016 Diana Croes Aruba Jose David Cabello Bolivarian Republic of Venezuela Jorge Antonio Deher Rachid Brazil Aristóteles Nuñez Mexico Martin Rivas Nicaragua Marta González Paraguay Víctor Ramos Perú Santiago Menéndez Menéndez Spain John M. Dalrymple United States of America EXECUTIVE SECRETARIAT Executive Secretary Márcio F. Verdi Planning and Institutional Development Director Socorro Velázquez Operations and Institutional Management Director Francisco J. Beiner Technical Assistance and Information and Communication Raúl Zambrano Technology Director Training and Human Talent Development Director Alejandro Juárez Tax Studies and Research Director Miguel Pecho International Cooperation and Taxation Director Isaác Gonzalo Arias Accounting and Finance Manager Xiomara Tejada Internal Administration and Human Resources Manager Rita L. Solis Information Technology Manager Tomás Torres International Cooperation Manager Mónica Alonso REPRESENTATIVES AND CORRESPONDENTS OF CIAT Country Representative Correspondent Argentina Ricardo Echegaray María Luisa Carbonell Aruba Luenne Gomez Pieters Angeline Geerman-Griel Barbados Margaret Sivers Margaret Sivers Bermuda Lucia M. Peniston Mary Inocencio Bolivia Erik Ariñez Bazán Juana Patricia Jiménez Brazil Jorge Rachid Flávio Araújo Canada Michael Snaauw Rose Jarawan Chile Fernando Barraza Bernardita Moraga Colombia Santiago Rojas Arroyo Patricia Parada Costa Rica Carlos Vargas Durán Maribel Zúñiga C. Cuba Yolanda Álvarez de la Torre Alberto Fernández R. Curazao Jamila Isenia Yut-Ha Natalie Sint Hil Dominican Republic Guarocuya Félix Nieves Vargas Collado Ecuador Ximena V. Amoroso Iñiguez Juan M. Avilés Murillo El Salvador Alfredo Díaz Barrera Ramón Pérez Gómez France Bruno Parent Josiane Lanteri Guatemala Francisco Rivera Escobar Hugo Edgardo Roldán V. Guyana Khurshid Sattaur Janet Abbensetts Haiti Miradin Morlan Honduras Miriam Guzman Gabriel Perdomo India Rajat Bansal Deepak Garg Italy Saverio Capolupo Stefano Gesuelli Jamaica Ainley Powell Meris Haughton Kenya John Karimi Njiraini Pancrasius Nyaga Mexico Aristoteles Nuñez Adrián Guarneros Nicaragua Martin Rivas Ruíz José Francisco Reyes Panamá Publio Ricardo Cortés Marion Lorenzetti Paraguay Marta González Ayala Alba Servin Peru Víctor Ramos Rosalia Muñoz Portugal Helena Maria Borges Miguel Silva Pinto Sint Maarten María Bass Spain Santiago Menéndez Menéndez Ignacio Del Rio Angulo Surinam Cornelis A. van Dijk Priscilla Lachman The Netherlands Peter Veld Jaco Tempel Trinidad & Tobago Allison Raphael Trevor Lalai United States John M. Dalrymple Raúl Pertierra Uruguay Joaquín Serra Margarita Faral Venezuela (Bolivarian Rep.) José David Cabello Rondón Hatzen Carolina Mendoza PERMANENT TECHNICAL ASSISTANCE MISSIONS France Head of Mission: Isabelle Gaetan Spain Head of Mission: Juan Francisco Redondo Italy Head of Mission: Stefano Gesuelli GIZ-German Cooperation Head of Mission: Joerg Wisner CIAT 2015 Technical Conference Theme: “The Examination Function of the tax Administration” At the CIAT 2015 Technical Conference we will discuss “The Examination Function of the Tax Administration.” This function, sometimes referred to as “Control”, is one of the vital elements of all tax administrations. Through compliance verification in different forms, it is the unit that attempts to ensure that tax-liable entities are properly complying with the tax laws. The subject will be addressed from several aspects: current trends, resource needs, and innovative approaches to enhance the examination process. Topic 1: Current situation, trends and challenges in the use of examination techniques. Change is constant in the fiscal world and so is the environment in which tax officials execute their missions. There are many factors to consider and these are interwoven with global trade and the increased challenges posed by multinational enterprises. New technology offers previously unavailable tools for the audit process but at the same time grants major opportunities for the tax cheat. In order to discover advanced methods to successfully address tax avoidance and evasion, and at the same time join hands with the universe of tax administrations facing similar tasks, international organizations have collaborated with these tax administrations in an effort to enhance compliance with their tax laws. Topic 1 will address tax examination current and novel approaches in tax examination/audit in order to ensure tax Subtopic 1.1: Development of Examination Plan; focusing on issues to be reviewed and information sources and intelligence. Key to a successful tax administration examination program is a well-executed annual plan. Among the goals to be achieved, tax administrations include specific compliance objectives. These include priority issues that will be addressed by the Examination Department; a balanced, equitable approach to ensure that a proper number of audits are completed in taxpaying sectors; mass third party reporting verification is timely completed; and, resources are adequately allotted to each area. Under Sub-topic 1.1 we will explore the key factors of a successful examination plan and the elements that need to be considered. Subtopic 1.2: The powers of the Tax Department vis-a-vis the taxpayer rights and guarantees during the examination process. For the average citizen, the tax department may be the one government entity they most frequently deal with. And possibly, the one that may cause the most concern to the taxpayer due to that agency’s authority and power. But with great powers comes great responsibilities and accountability. In most societies the taxpayer is the constituent whom through the exercise of their vote, directly or indirectly, determine their rights. Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and tax procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed on decisions about their tax accounts and to receive clear explanations of the outcomes and their recourse if not in agreement with the result of an audit. Sub-topic 1.2 will explore the powers of the state to audit a taxpayer and the rights granted the taxpayer. Subtopic 1.3. The use of presumptive methods in examination. The use of presumptive methods to assess an entity's or individual's tax liability has been around for some time. It has been employed in programs where the taxpayer is completely cooperative and in agreement with the process; and, in expeditious assessments where potential collection of the tax to be assessed is in jeopardy. The Speakers on this Subtopic will address current creative uses of this indirect method to improve compliance and enhance the efficiency of resources. Subtopic 1.4: The control of withholding agents. Through the provision of statutes withholding agents operate on the basis of trust to temporarily hold funds belonging to the state provided by a third-party, a taxpayer. The sources are various, income tax, social security, VAT, sales taxes, etc. Often those collected funds are not partially or completely transferred over to the tax administration. While some tax administrations have developed novel approaches for taxpayers to verify their withholdings and deposits, many become unaware of inappropriate use of their contributions – in particular social security contributions. This session will address and present alternatives to ensuring that the proper amounts of taxes are withheld and properly deposited in the governments coffers. The control models would be applicable to all types of taxes. Topic 2: Non-traditional sectors to be examined: Challenges and experiences. It may be an overused pun, but truly, everything changed with the advent of the Internet and the digital economy. We have experienced this in our lifetimes and on a day-to-day basis; from paid in cash to digital transfers to our bank accounts; purchases with currency we never see; and, payments of monthly bills online. In the meantime new forms of cyber-currencies were created. Business operations were set up that challenged the definition of a “permanent establishment.” Brick-and-mortar commercial operations gave way to a new form of online business operation. People are able to gamble