Published On: Mon, Jul 2nd, 2012

Tax Inspectors Without Borders

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In recent days, the Organization for Economic Co-operation and Development (OECD) has lunched a new initiative to help developing countries bolster their domestic revenues by making their tax systems fairer and more effective through a foundation named Tax Inspectors without Borders.

The idea to create an organization that can help countries to fight against global tax evasion and avoidance is quite interesting, especially in developing countries, where the gap between rich and poor is wide. Many of those wealthy individuals freely practice tax avoidance and corruption.

The initiative will provide international auditing expertise and advice to help developing countries in order to better address tax base erosion, including tax evasion and avoidance.

According to Angel Gurría, OECD Secretary-General, “The idea is quite simple. Tax Inspectors Without Borders will match ‘demand’ from developing countries wanting outside help with complex international tax audits with the ‘supply’, of international experts, drawn mainly from cadres of tax inspectors serving in other tax administrations. Joint teams will operate under the local leadership in each country, based on the learning by doing approach”.

The initiative seems to have the best intentions to improve the mechanisms to fight tax avoidance and provide audit assistance for developing countries. However this measure should also include the developing countries of which also have high levels of tax avoidance.

One of the causes of the financial crisis in Greece is due to tax avoidance. In January 2012, the Greek government published a list of 4,152 evaders who are believed to owe the state a total of €14.877 billion.

In England, the BBC has found that 2,000 civil servants are being paid through their own limited companies. This allows them to split their income with others, reducing their income tax bill, gives them the ability to pay dividends to avoid a national insurance bill and claim expenses an employee could not offset.

In Spain, Spaniards Tax authorities estimated that in 2007 tax evasion in the property sector alone totalled €8.6 billion.

In this context, the Tax Inspectors Without Borders initiative, which will launch by the end of 2013, can be applicable for the entire world, using exchange of information, employing the best experts in the field, and also lunching campaigns of awareness in all levels of society worldwide.

From developed to developing countries, there continues to be a problem with culture and social values regarding tax avoidance, which consider it as a minor problem without according the real importance of the matter. Social consequences, increasing levels of inequality, reducing resources for public education, health, and contributing to high levels of delinquency, are problems which affect all of us. Not only have the poor suffered the consequences of tax evasion, but also the rich. The wealthy continue to experience problems such as kidnapping, robbery, physical attacks and verbal abuse.

Tax avoidance is not and never will be a sign of a healthy society in any country regardless of their levels of industrial development.

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