IOTA managed to get together a broad spectrum of stakeholders for its 2nd Annual International Conference held in Budapest to discuss how data security and tax governance interacts. Over 80 participants, including senior tax officials, representatives of international organisations such as OECD, IMF, United Nations and CIAT, businesses, media and academia met on 8-9 November and held fruitful dialogue on issues such as ethics in tax administrations, how to use data more efficiently, relations between tax administrations and taxpayers, tax scams and interactions between tax administrations and media.
The conference was opened by Ms Csilla Tamásné Czinege, Director General for Taxation Issues of Hungarian Tax and Customs Administration, as the host of the event. IOTA President, Mr František Imrecze, President of Financial Administration of Slovakia in his keynote speech emphasized that all stakeholders of society operating in the tax field should be included in the discussion on how to improve tax governance and how to ensure privacy, security and data protection. This is why this conference represents an important step forward in making IOTA more visible in the international tax arena. IOTA’s President also stressed that information has no value without utilization. Tax administrations have to get ready for the incoming flows of data with appropriate legal framework and exchange mechanisms and they should concentrate on processing the data effectively. Tax administrations have to invest more in digital security and risk management in order to enhance trust with their taxpayers. This is a determinant factor to enhance good tax compliance.
An informative session was held afterwards with the moderation of Mr Peter Green, Head of the FTA Secretariat of OECD where panelists discussed the exchange of information nationally and globally. They addressed information security management and ensuring confidentiality of information and protection of taxpayer’s privacy. Panelists agreed in the importance of redesigning business processes to achieve a greater simplification, automation and reliable security; the data collected under BEPS, AEoI, CRS, FATCA, etc. can help increase compliance risk assessment. Speakers underlined that investment in data security is costly but is required to establish the reputation of tax administrations.
A session about ethics in tax administrations started with the presentation of Mr Márcio Verdi, Executive Secretary of CIAT who stated that tax administrations must be not only a good example in terms of ethics but they must be THE example as their mission is key for the society. Panelists emphasized that ethics is a “building block” for increasing compliance. Panelists also agreed that code of ethics, self-assessment procedures, reporting activities, internal audits and other set of measures are necessary to achieve ethical behavior of tax officials.
An interesting panel discussion was also held on relations between tax administrations and taxpayers. The following conclusions were made: Taxpayers are humans, therefore is it important to use psychological principles to promote compliance, not just legal considerations. Fair, simple and transparent tax systems can contribute to the increase of tax compliance. The use of blockchain technology by industry is rapidly evolving, tax administrations need to have it under the radar and explore the pros and cons of using it as well. It is crucial to make things (tax laws, tax procedures and obligations) easier for taxpayers to be compliant.
An informal and interactive session was held afterwards on a timely subject, just after Paradise Papers: the relationship of tax administrations and media. President of IOTA together with the Spokesperson of the National Revenue Agency of Bulgaria, Mr Rosen Bachvarov held an inspiring conversation with Ms Stephanie Soong Johnston, Senior Reporter of Tax Analyts, United States who joined the conversation via videoconference. All agreed that tax administrations have to be more transparent and more proactive: provide more information, hold more briefings and public events. It is also important to respond quickly and thoroughly to the media and use simple language. Panelists concluded that tax administrations have to understand how media functions and learn how to communicate the right messages.
Fight against tax scams was also subject of a panel discussion where speakers concluded the following: Information security is an on-going process, it is essential to know who is who in the cyberspace. Tax administrations need to manage balance between simplification (for registration) and security (abuses of tax identity). Possible solutions are fast reaction and domestic and international cooperation in combatting tax crimes.
Tax and development was the focus of a panel of representatives of international organisations and businesses; IMF, United Nations, International Tax Compact and Vertex, from the United States. International organisations are mobilising resources to support developing countries to improve their tax administrations’ capacity for tax collection (including human resources and technology). Regional tax organisations are involved as key partners in that process. Improving tax administrations contribute significantly for the achievement of the sustainable development goals.
In the closing session Mr Miguel Silva Pinto, IOTA's Executive Secteratry presented the main findings of the conference: In the digital era, where more data is being channeled to the tax administrations, data security must be a concern because more data means also more risks. The expectations of taxpayers are higher as they are expected to contribute more but in exchange they expect better services. They demand fair, simple and transparent tax systems. Good data governance helps to create trustable relations between tax administrations and taxpayers, hence contributing to increase tax compliance. Tax administrations must be able to move with the changes and use the media to send out the right messages. Reputation of tax administrations is key to influence good behaviour on the part of taxpayers.