Tax Day 2013: Towards responsible taxation?

Towards responsible taxation?

The role of policymakers – tax administrations – tax advisors – taxpayers

Date: Wednesday 2 October 2013

Venue: Royal Museum of Art and History, Parc du Cinquantenaire, Brussels

On 2 October 2013, FEE hosted its third “Tax Day”. The conference brought together over 150 representatives from the policymakers, business, civil society and tax profession communities. The conference started with an opening statement from the FEE’s President André Kilesse, which was followed by a video keynote address of Commissioner Algirdas Šemeta and opening remarks from philosopher, Richard Baron, setting the scene for a fruitful and thought-provoking exchange of views. Stakeholders engaged in lively debates on the tensions between economic globalisation and national tax law making and on cooperation and compliance in times of fiscal consolidation. They included a contribution from the Council Presidency, Mr Rimantas Šadžius, and a concluding panel debate aimed at developing a vision to transform ideas into action.

Opening and welcome by the President

André Kilesse, FEE President, opened FEE Tax Day 2013 and highlighted that today, citizens and stakeholders are asking more from business and their advisors, from taxpayers, from governments and tax administrations. All these players have to ask themselves what is a socially responsible attitude towards taxation, and FEE takes a proactive role in fostering this debate.

Keynote video address

Commissioner Algirdas Šemeta for Taxation, Customs, Statistics, Audit and Anti-Fraud gave a video address to participants highlighting the need for responsible taxation amongst Member States.

Prologue

Philosopher and tax advisor Richard Baron engaged in a discussion with FEE CEO Olivier Boutellis-Taft on various philosophical concepts pertaining to taxation, such as:

• Why does one pay taxes?

• What is fair taxation?

• How to address the tax advisor’s dilemma? How should the tax advisor understand and meet the duty imposed by Courts to minimise businesses’ tax bills while comply with tax law? How should he strike a balance between reducing the client’s tax bill (shareholders’ interests) and working out a sustainable plan, taking the ‘high road’ and advising businesses on their Corporate Social Responsibility (spirit of the law)?

• How can policymakers strike the balance between fiscal consolidation, competitiveness of national business, and global competition to attract foreign investments?

Session 1: Policy – Economic globalisation but national tax law – a contradiction?

Opening the session, Professor van den Hurk,  Professor at the University of Maastricht in the Netherlands introduced the speakers and asked them to reflect upon the contradiction raised by the theme of the session.

Giuseppe van der Helm, President of Tax Justice Netherlands, stressed that businesses have a strong role to play in ensuring that the fair amount of taxes was duly paid to Member States. He noted that base erosion and profit shifting were particularly detrimental to emerging economies, as they increased these countries’ tax gap.

Rolf Diemer, European Commission, DG Taxation and Customs Union, Unit C2 Other indirect taxes than VAT, explained that national tax systems are increasingly difficult to design, implement and enforce in a world that is globalised and where new technologies and practices but also mobility make national borders de facto increasingly meaningless. Moreover, he expressed his strong belief that the work on the financial transaction tax (FTT) would further progress, despite current criticism.

Filipa Correia, International Tax Attorney at Valente Associati GEB Partners, stated that it was not correct to blame Multinationals as the cause for fiscal deficit, as they were merely taking advantage of the existing asymmetries, gaps and loopholes created by the interaction of national tax systems. She also stressed the considerable pressure that is being put on tax advisors. Instead of confrontation, she called for greater cooperation amongst all stakeholders.

Session II: Practice – Cooperation and compliance in times of fiscal consolidation

Guy A. Kersch, Managing Director at GK International Tax Consulting S.A.R.L. in Luxembourg, introduced the speakers and asked them to share their views on cooperation and compliance in times of fiscal consolidation.

Farkas Barsony, Senior Tax Manager, GE Energy Management EMEA, highlighted the necessity for businesses to understand and be proactive in regards to the ever-changing regulatory environment, and called for improved cooperation and discussion between businesses and tax administrations.

Cristina Hij, Tax Auditor, General Directorate for Large Taxpayers, National Agency for Fiscal Administration, Romania, identified several tools which can enhance best practice amongst European tax administrations, such as FISCALIS, a European cooperation programme enabling national tax administrations to create and exchange information and expertise and TIN (tax identification numbers) in Europe, a practical instrument to improve administrations cooperation in the area of direct taxation. She alluded to the idea that in practice lower tax rates may increase fiscal revenues and diminish tax avoidance.

Ralph Korf, Lawyer and tax advisor, Germany, Chair of the FEE Indirect Tax Working Party argued that tax advisors had a legal responsibility to apply tax law. For the sake of legal security, tax advisors must obey the law in its letter and not in its vague “spirit”.

Ine Lejeune, Partner, Indirect Taxes, PricewaterhouseCoopers, Belgium explained that the use of technology can reduce the burden for both taxpayer and tax administration, and may increase the collection of revenues. The appropriate use of technology can create a win-win situation for all stakeholders, and the profession must inform and involve businesses to participate in the process of change and implementation. She highlighted that governments needed to do their share in order to collect taxes efficiently through technological means.

Keynote video address

Rimantas Šadžius, Minister of Finance of Lithuania ’supported the Tax Days theme and highlighted that responsible taxation is being tackled in various arenas; OECD, the EU and in the domestic political dialogue.

Session III: Vision – Transforming ideas into actions: Next steps

Stephen Bill, Director of Tax Policy at EY EMEA Tax Center and former Head of Cabinet of Commissioner László Kovács, asked the panellists what type of responsible taxation system could be seen emerging in Europe’s future.

Manfred Bergmann, European Commission, Director Indirect Taxation and Tax Administration, explained that taxation needs to be fair, proportionate, effective and sustainable. At a European level, this translates into harmonisation, simplification, voluntary compliance and the fight against information asymmetry.

Grace Perez-Navarro, OECD, Deputy Director of the Centre for Tax Policy and Administration highlighted that a responsible tax system must facilitate compliance by providing clear and simple rules, which is why the OECD advocates having a broad base and low rate. The tax system must also be seen to be fair in order to encourage voluntary compliance and must be administrable. The OECD consults business and other stakeholders when crafting policy.

Sjoerd Douma, Assistant Professor Leiden University, Senior Tax Manager, PricewaterhouseCoopers, Netherlands explained that the European Union’s role in the concept of responsible taxation is increasing, in particular through fiscal surveillance measures in the euro area. The EU has also adopted more political approaches to responsible taxation through the six-pack and the two-pack.

Friedrich Rödler, Chair of Supervisory Board, Erste Group Bank AG, Austria, Chair of the FEE Direct Tax Working Party developed a series of proposed measures which could improve greater responsible taxation within Europe, such as higher coordination between Member States’ tax law and its application.

Closing

Olivier Boutellis-Taft thanked all participants and panellists for a very lively and dynamic Tax Day. He called for all stakeholders to stop the blame game and to engage into an efficient cooperation process.

For more information on the previous FEE Tax Day events in 2009 and 2011, please refer to the relevant links.

Related files:

 Programme

 News Release

 Opening speech by André Kilesse, FEE President

 Presentation by Barsony Farkas, Senior Tax Manager, GE Energy Management EMEA, Hungary

 Presentation by Filipa Correia, International Tax Attorney, Valente Associati GEB Partners

 Presentation by Cristina Hij, Tax Auditor, General Directorate for Large Taxpayers, National Agency for Fiscal Administration, Romania

 Presentation by Ine Lejeune, Partner, Indirect Taxes, PriceWaterhouseCoopers, Belgium

 Presentation by Ralph Korf, Lawyer and Tax Advisor, Germany, Chair of the FEE Indirect Tax Working Party

 Closing remarks by Olivier Boutellis-Taft, FEE CEO

 Europolitics interview with Olivier Boutellis-Taft, CEO of FEE, Taxation: “Europe has to move away from scapegoat approach”  by Tanguy Verhoosel, October 2013

 See photo gallery

Related links:

Algirdas Šemeta, EU Commissioner, Taxation, Customs, Statistics, Audit and Anti-Fraud: Keynote video address
http://c14005-o.l.core.cdn.streamfarm.net/findmedia/12/081832/LR_I081832EN1W.mp4

Rimantas Šadžius, Minister of Finance, Lithuania: Keynote video address
http://www.finmin.lt/liet/Sadzius20131002.mp4