Building stronger partnerships to fight tax-related illicit financial flows – under this theme, the Network of Tax Organisations (NTO) hosted its 1st Technical Conference from 19th to 21st of October. IOTA is an NTO member and acted as a partner in the organisation of the virtual event, which brought together experts, practitioners, and decision-makers from around the world. More than 500 participants from over 100 countries analysed current best practices on the global, regional and national level and identified opportunities for cooperation between tax administrations and various other stakeholders.
Financial crimes, including tax crimes, money laundering, and terrorism financing, undermine the political and economic interests of all countries. However, for developing countries, financial crimes are a particularly serious threat, as they strip them of scarce resources available for sustainable development. According to the United Nations Conference on Trade and Development (UNCTAD) ‘Trade and Development Report 2020’ revenue losses caused by tax-related illicit financial flows are between $49 and $193 billion annually. NTO adopts a broad definition of illicit financial flows: This includes international movements of illegally earned, transferred, and/or utilised money or capital, but also the socially unpalatable activities, detrimental to sustainable development in many countries, such as aggressive tax planning by multinationals, also known as tax avoidance.
The conference provided a platform for broad-based discussions on the latest international developments in tackling tax crime, the changing nature of tax-related illicit financial flows, practical challenges, and ways forward. The focus was on revenue administrations and their needs. An interactive, fully virtual environment allowed for an in-depth exchange of experiences and best practices. The perspectives of various stakeholders added value to the conference.
At the opening of the conference, the moderator Melinda Crane, and the head of the NTO Council Márcio Ferreira Verdi, Executive Secretary of the Inter-American Center of Tax Administrations (CIAT), welcomed participants from over 100 countries. Focusing on current international developments and existing challenges, the opening panel gave an overview of the tax administrations’ approaches and needs in their fight against illicit financial flows. In break-out sessions, participants addressed the role of beneficial ownership in combating tax crimes as well as effective responses from tax administrations to fight against the financing of terrorism, money laundering and tax evasion.
The second day of the conference was dedicated to the identification and analysis of best practices of inter-institutional cooperation and digital tools used in the fight against illicit financial flows. Several examples of best practices from IOTA member tax administrations have been presented during this day. Mr. Hans Petter Tetmo, Senior Adviser for Tax Crimes from the Norwegian Tax Administration informed about the Nordic Cooperation on Fighting Tax Crimes. Mr. Simon Lowndes, Assistant Director at the Risk & Intelligence Service from Her Majesty’s Revenue and Customs in the UK , shared experience of using the Financial Crime Investigation Network (FCI NET), a decentralised computer system enabling tax authorities and law enforcement agencies fighting financial economic crime to search for data on their suspects in a privacy friendly way. Furthermore, Mr. Massimo Morarelli, International Taxation Expert of IOTA, moderated a breakout session ‘Enforcement of tax compliance in the digital space’.
During this Session, the IOTA Report on “How to detect, prevent and combat new VAT fraud schemes facilitated by the digital platforms in selling goods” was presented, focusing on new VAT fraud schemes in which digital platforms are somehow involved or simply make those fraudulent schemes possible in the sale of goods.
Insightful experience was also offered by Mr. Fernando Barraza, the Commissioner of the Chilean tax administration on the recent success in the implementation of the Simplified Registration and Compliance Regime concerning the collection of VAT for taxable services rendered by service suppliers no-resident in Chile.
‘Lessons learnt and way forward’ was the theme on the third conference day. Participants identified critical areas in the current methods of combating economic and financial crimes and focused on international development efforts in ensuring developing countries’ access to global tax initiatives.
Conference Fair operated through the interactive NTO Conference platform allowing NTO members and affiliated tax administrations to present their work and achievements. The virtual booth of IOTA showcased a wide range of the Organisation’s events, publications and deliverables from the joint initiatives with partner organisations (ADB, CIAT, IMF, OECD) as well as the special section dedicated to the 25th Anniversary of IOTA.
A summary document containing key take-aways, interviews with keynote speakers and core content from the panels is available on the NTO website.