On 23 July 2018 the OECD released a report on approaches to improving tax certainty, prepared for the G20 Finance Ministers who met on 19 and 20 July 2018.

The report focuses first on developments in the OECD and G20 countries such as the implementation of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. Also covered are developments in dispute resolution, such as mutual agreement procedures (MAP) and arbitration. New initiatives are outlined such as the proposal to mitigate uncertainty in tax treaties; developments in the treaty relief and compliance enhancement (TRACE) project; and the Forum on Tax Administration (FTA) initiative to improve risk assessment and audit processes. The report also mentions exchange of information, country-by-country reporting and the OECD International VAT/GST Guidelines.

The TRACE project aims to standardize the system for claiming withholding tax relief at source on portfolio investments by the use of a set of agreements and forms in any country that agrees to implement the authorised intermediary system. This reduces administrative barriers and compliance costs for portfolio investors.

The IMF has begun an initiative to address international taxation issues in its country surveillance process. These are the comprehensive consultations with member countries under Article IV of the IMF’s Articles of Agreement. Greater prominence is being given to international tax issues in the Article IV reports, including attention to tax certainty.

The OECD report also outlines developments on tax certainty in relation to developing countries as follows:

Consultative workshops

Two consultative workshops on tax certainty were held in the past year, one in Tanzania with the African Tax Administration Forum (ATAF) and the Gesellschaft für Internationale Zusammenarbeit (GIZ) and the other in March 2018 in Singapore.

Toolkits Issued by the Platform for Collaboration on Tax

The Platform for Collaboration on Tax (PCT) is an initiative by the OECD, IMF, UN and World Bank Group to provide capacity building support for developing countries. In 2015 the PCT issued a toolkit on designing and implementing tax incentives for investment and in 2017 a toolkit was issued on addressing difficulties in accessing comparable data for transfer pricing analyses. The PCT is planning to issue six more toolkits including two in 2018, on indirect offshore transfers of interests and on implementing effective transfer pricing documentation. Further toolkits will be issued later on treaty negotiation, base eroding payments, supply chain restructures and BEPS risk assessment.

Medium Term Revenue Strategies

A proposal to formulate and implement medium term revenue strategies (MTRS) was made by the Platform for Collaboration on Tax and endorsed by the G20. This approach sets out a high level road map for reform of the tax system in a country including tax policy, administration and legal frameworks covering a four to six year period. This can mobilize revenue and increase tax certainty by the government commitment to the reform agenda. In 2017 the IMF has piloted the development of an MTRS in Uganda, Papua New Guinea and Indonesia.

IMF Technical Assistance

The IMF provides technical assistance and training in important areas of the tax system such as tax policy, revenue administration and legal design and drafting of tax legislation, including in the taxation of natural resources.

Tax Administration Diagnostic Assessment Tool (TADAT)

TADAT is designed to assess the key components of a country’s system of tax administration. The focus is on nine performance outcome areas (POAs) covering tax administration functions. Trained assessors apply the methodology guided by approved terms of reference. Sixty TADAT assessments conducted up to end-April 2018 (56 national and 4 at subnational level) have identified tax administration strengths and weaknesses. Areas of weakness have included poor data quality; inaccuracies in the taxpayer registration database; risk management strategies (compliance and institutional); poor debt management; late filing of tax returns and late payment of tax; long dispute resolution at times; and inefficient revenue accounting systems.

Tax Inspectors Without Borders (TIWB)

This joint OECD and UNDP initiative was launched in July 2015 to facilitate targeted tax audit assistance programs in developing countries. The aim is effective mobilisation of domestic resources in line with the Sustainable Development Goals.

Business Engaged in Technical Assistance

Where possible the OECD integrates industry expertise into its technical assistance, for example a diamond industry expert was incorporated into the TIWB program in Botswana. Developing country administrations can acquire an increased understanding of the taxpayer’s industry, allowing a more collaborative relationship with the taxpayer.