On 8 December 2020 the OECD’s Forum on Tax Administration (FTA) issued a report entitled Enhancing International Tax Debt Management, looking at challenges around international tax debt collection.

Problems faced in international tax debt collection include the problem of finding reliable statistics to support decision-making; problems in tracing debtors and assets; and lack of knowledge and experience of the processes for requesting assistance in tax debt recovery.

The report recommends some issues that require further study by the FTA’s Tax Debt Management Network with the aim of improving international tax debt collection.

After setting out some detail as to what constitutes international tax debt and the types of challenge faced by some tax administrations in collecting international debts, the report looks at technical and operational issues encountered by tax administrations as they look to exhaust their avenues under domestic law and request assistance in recovering tax debts.

The report sets out the legal basis for assistance in recovering international tax debts and outlines the operational issues that jurisdictions need to consider.

Recommendations

The report includes recommendations in relation to areas that could be the subject of further research by the Tax Debt Management Network.

Knowledge Sharing

More work could be done in relation to improved sharing of knowledge and best practices on assistance in recovery of tax debts and in insolvency measures. In addition to enhanced training and guidance jurisdictions could share information on successful domestic and international tax debt practice. Countries could consider specific types of tax debt collection situations and examine them on a case by case basis, assessing the costs and potential benefits in each case. Countries could produce jurisdiction-specific databases, along the lines of the information sheets produced by Belgium, to set out possibilities and requirements for mutual assistance in tax administration. A database could be produced on a multilateral basis.

Efficient exchange arrangements

The use of the common transmission system could be widened to include requests for tax assistance. Standardised e-forms could be used for requests for assistance in tax debt recovery.

Identification of Tax Debtors and Assets

More research could be done on ways to improve the identification of tax debtors and assets. Using different data sources and data analytics to match taxpayers with tax debts can help tax administrations to better manage, address and prioritise international tax debt collection cases.

Symmetries and Asymmetries in Powers

There are concerns about the lack of balance between jurisdictions in their collection frameworks and recovery powers. Further research could therefore be undertaken on the effectiveness of domestic powers in relation to international tax debt cases. A database could be created with information on the domestic debt collection powers of each jurisdiction including an assessment by each jurisdiction of the effectiveness of these powers.