Conference 'developing a tax environment for growth and competitiveness

Author:Ioan Lazar
Position:Associated Researcher 'Andrei Radulescu' Institute for Juridical Research of the Romanian Academy; Lawyer Alba County Bar Association; Lecturer at the National Institute for the Training of Lawyers, Bucharest
Pages:1-3
 
CONTENT
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CONFERENCE “DEVELOPING A TAX ENVIRONMENT FOR
GROWTH AND COMPETITIVENESS”1)
Lecturer PhD. Ioan Lazr2)
The Institute of Austrian and International Tax Law (Vienna University of
Economics and Business) led by the well-known tax law professor Prof. Dr. Dr.
h.c. Michael Lang is among the largest research institutions in the world in the
field of the Tax Law. The teaching and research activities of the institute focus on
topics related to the field of study of international, European and Austrian tax law.
The history of the Institute dates back to 1968, when it was founded by the
former tax inspector Anton Lager, the first professor of Financial Law of the
University of Economics and Business from Vienna. The reputation of the
institute has consolidated over time and it is now a member of the EUCOTAX –
European Universities Cooperating on Taxes, alongside 12 other universities from
Europe and the United States.
Further, with the consent of Mr. Prof. Dr. Jeffrey Owens – Head of Institute
for Austrian and International Tax Law – we present in full text of this institute
official report on the conference on “Developing the Tax Environment for Growth
and Competitiveness”.
On January 18 and 19, WU’s Institute for Austrian and International
Tax Law and the Association Internationale de Droit Économique, with the
support of the European Commission, held a high-level conference on the
interface between tax policy, growth, and competitiveness. It brought
together ministers, international senior policymakers, academics, and
representatives of business and civil society. The purpose was to engage a
dialogue on the possibilities of achieving more transparency and convergence
of national tax systems and developing of common principles.
The Conference was opened by AlgirdasGediminasŠemeta (EU
Commissioner for Taxation and Customs Union, Audit and Anti-Fraud) and the
Italian Secretary of Finance and economist,VieriCeriani. Jeffrey Owens, professor
at WU’s Institute for Austrian and International Tax Law and former Director of
the OECD’s Centre for Tax Policy and Administration, and Rainer Geiger,
Member of the Board of the Association Internationale de DroitÉconomique and
1) The present paper was previously published by the author in the “Curierul Fiscal” Law
Journal no. 3/2013, with the same title.
2) Associated Researcher”Andrei Rdulescu” Institute for Juridical Research of the Romanian
Academy; Lawyer Alba County Bar Association; Lecturer at the National Institute for the Training
of Lawyers, Bucharest; E-mail: avocat_lazar@yahoo.com; Tel.: +40722 89 73 14.
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former OECD Deputy Director of Financial and Enterprise Affairs, organised the
conference.
Main conclusions and further questions
Tax policy can help pave the way out of the crisis and build a strong basis for
the expansion of productive investment and competitive enterprises. Tax systems
need to be effective in terms of revenue generation, integrated with strategies to
stimulate sustainable growth and to achieve a fair distribution of the tax burden.
Tax law hasn’t kept pace with the international business environment. The
diversity of national tax systems and the weakness of international cooperation
can lead to economic double taxation or double non taxation. The national tax
base of countries in which companies operate can be eroded through complex
schemes of transfer mispricing, abuse of tax havens and abusive tax avoidance
strategies.
Over the past decades there have been growing elements of convergence in
national tax reform strategies consisting of cutting of the top personal income tax
and corporate tax rates and broadening the tax base, the spread of VAT systems
and progress in international tax cooperation. The most encouraging fact is the
growing network of EOI agreements on information on request, within a
framework of international monitoring and peer pressure. There is also growing
movement towards automatic information. A multilateral convention on
administrative assistance has 46 members and membership is expected to expand
in the future. The challenge of creating a framework of multilateral rules
providing equality and fairness of the treatment of tax payers and protecting the
tax base of countries remains.
Tax has several objectives which need to be balanced carefully. Tax revenues
are key to budgetary stability and fiscal consolidation which are needed for
moving out of the crisis. Taxpayers also expect that their contribution is used to
enhance public investment and services necessary to prepare the ground for
sustainable growth and increased competitiveness.
Tax and expenditure policies can reduce income inequalities through a well-
balanced tax mix, progressive tax rates for high incomes, eliminating tax
privileges which benefit the higher income brackets and reforming social
contribution systems.
Developing countries are dependent on ODA, vulnerable to illicit capital
outflows and suffer from institutional deficiencies. Efforts should start by
improving governance, respecting the rule of the law and democracy. A dialogue
between governments and stakeholders is needed to explain the purpose of tax
systems and provide service functions to taxpayers.
On exchange of information, an international consensus is being achieved
through EU directives and action plans, the OECD Global Forum and the
discussions within the G20. The peer review process within the Global Forum is
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producing encouraging results in terms of availability, accessibility and exchange
of relevant information. These international efforts need to be backed up by
reforms and administrative change at the national level to make efficient use of
the information received while protecting confidentiality. Further progress is
desirable in providing a clear definition of harmful tax practices and the
cost/benefit assessment of incentive schemes.
In terms of transparency of the use of natural resource revenues and
accountability by both governments and companies the Extractive Industries
Transparency Initiative is an important step forward. The expansion of the
initiative beyond natural resources and through contract transparency and
information on the use of the payments made is under consideration.
Accountability of both Governments and companies may also be enhanced
through country-by country reporting on the activities of multinational enterprises.
Transfer pricing systems need to be reviewed and the separate entity concept
needs to be adapted to make allowance for the reality of global integration among
related entities and the fact that comparable pricing levels of independent entities
are sometimes difficult to identify.
Even if the separate entity (or arm’s length principle) is maintained, corrective
elements will need to be introduced into the system (simultaneous tax audits,
harmonisation of accounting concepts and better functioning of the system of
corresponding adjustments).
Tax avoidance schemes may erode legitimate tax interests of countries if they
are tied to artificial legal conduits without reasonable links to the substance of
transactions. In such cases; targeted or general anti avoidance rules can help.
Taxation needs to become integral part of corporate governance and
responsible business conduct where companies should comply not just with the
letter but also the spirit of the law. This is increasingly recognised in international
instruments such as the OECD Guidelines for multinational enterprises. Good tax
practice and transparent reporting should be considered a board responsibility.
Contact and further information:
Prof. Dr. Jeffrey Owens
Institute for Austrian and International Tax Law
Tel.: +43–1–31336–4280; jeffrey.owens@wu.ac.at