Frequently asked questions
- What is "Tax Inspectors Without Borders (TIWB)"?
- How does it work?
- What's new, why is it different?
- What are the benefits in terms of revenues to developing countries?
- What are the other benefits to developing countries?
- What are the benefits of TIWB to Partner Administrations?
- Why the partnership between OECD and UNDP?
- Who is involved in TIWB programmes and what are their roles?
- Where are the tax audit Experts from?
- What will be the legal position of the Experts to the Host Administration?
- What about taxpayer confidentiality?
- What about personal liability and safety risks of the Expert?
- What is the content of TIWB programmes?
- How long does a TIWB programme typically run for?
The TIWB initiative facilitates the transfer of tax audit knowledge and skills to developing country tax administrations using a practical, "learning by doing" approach. Experienced tax auditors work on current tax audits and international tax issues alongside local tax officials in assistance-requesting countries under a TIWB programme whereby they share their expertise and skills.
Host Administrations request audit assistance by initially completing an online Assistance Request form which allows the TIWB Secretariat to match an appropriate Expert from its network of Partner Administrations or the TIWB Roster of Experts.
TIWB programmes are flexible and tailored to a country's specific needs. They can include pre-audit risk assessment and case selection, investigatory techniques, audit cases involving transfer pricing issues, anti-avoidance rules, or sector-specific issues (e.g. natural resources, e-commerce, financial services or telecommunications).
It is important to note that TIWBExperts are not a substitute for local audit staff nor deployed to carry out audit work where no Host Administration personnel are involved. TIWB is about sharing expertise by working side-by-side, building skills through practical, case-based co-operation.
There is growing evidence that technical assistance, and other Official Development Assistance (ODA), financed support for tax work, has been money well spent. The International Monetary Fund, the World Bank Group and bilateral donors have been active in this field for decades. However, developing countries have indicated that there is a gap in the provision of practical audit expertise, particularly concerning the fast-moving and complex area of international taxation, including transfer pricing. There is no international initiative dedicated to this kind of hands-on approach to capacity building. TIWB is intended to fill this gap.
Practical audit assistance to develop tax audit skills and effective audit processes is an area which can improve the quality and consistency of frontline tax administrations. For Host Administrations, improvements in tax audit knowledge and skills can result in increased revenue, particularly in the area of transfer pricing and international taxation. Evidence of revenue increases gathered during TIWB's Pilot Phase involving includes:
- Transfer pricing audits in Colombia (anonymised audit files) created a significant increase in profit tax revenue (from USD 3.3 million in 2011 to USD 33.2 million in 2014);
- In Kenya, every dollar spent working with the tax authorities on cracking down on tax avoidance produced over USD 1,000 in increased revenues; and
- Senegal reported increased revenue as a result of their TIWB Programme: adjustments resulted in an additional USD 18.6 million of tax income (CFA Franc 8 billion).
Broader benefits include:
- Improved voluntary compliance. Support provided by TIWB Experts working with Host Administrations sends an important signal to all taxpayers concerning transparency and fairness in tax administration;
- Increased professional confidence in conducting audits;
- More certainty and consistency for business, as well as a more transparent investment climate;
- Enhanced state-society relations, where taxation is one of the founding elements of that relationship, which fosters engagement with (and confidence in) the taxation process;
- Fostering of international dialogue on tax matters between tax administrations in developed and developing countries;
- Possibility of transferring knowledge, as a future Partner Administration, to other tax administrations in the region, after building capacity internally through a TIWB programme.
In an era of rapidly accelerating international tax co-operation, tax administrations are engaging in more active partnerships with one another. Initiatives such as TIWB that promote a common understanding of shared problems serve everybody's interests. At an individual level, TIWB provides tax officials with a unique development opportunity, to share their knowledge in a different environment.
OECD and UNDP have joined forces to extend the global reach of the project and scale-up the number of deployments. The OECD's technical competence in tax matters and a network of tax Experts is complemented by UNDP's global network of "on the ground" expertise in developing countries around the world.
The Host Administrations of assistance requesting countries are the lead partners in TIWB Programmes, having clearly identified their needs and the scope of work.
Partner Administrations with capacity to share their expertise can deploy their tax officials and encourage recently retired audit experts to make themselves available to a TIWB Programme.
Governments in assistance requesting countries, through their Ministries of Finance and Development Agencies, should encourage TIWB Assistance Requests. These Host Administrations may also directly and/or indirectly provide funding to deploy Experts under TIWB Programmes, particularly by making funding available to the TIWB Fund from which Experts may be compensated.
International and regional organisations currently working in the tax and development field can promote the TIWB type of practical assistance and stimulate the exchange of Expert know-how.
Business groups may share their specific industry knowledge to complement the transfer of know-how by tax audit Experts. Civil society can promote the TIWB Initiative and share lessons.
Currently serving officials are drawn from any tax administration capable of offering tax officials with the necessary skills and experience. Recently retired experienced tax audit officials who have experience from national tax administrations are another valuable source of Experts for TIWB programmes. The UNDP-managed TIWB Roster of Experts is composed of both previously- and currently-serving tax officials.
TIWB encourages "South-South" co-operation as countries that have received Expert assistance further disseminate those skills to neighbouring countries. This has already been done by Kenya and Nigeria in other African countries and is being explored by more and more developing countries.
Recently retired tax officials may apply for admission to the TIWB Expert database by filling out the TIWB Tax Audit Expert "Expression of Interest" on the TIWB website. Recently retired tax officials often participate in TIWB programmes on a voluntary basis, with their costs of participating (e.g. travel and daily expenses) covered by the Host Administration or by a third-party sponsor such as a donor agency.
The TIWB Experts, both retired as well as currently serving tax officials, in a TIWB Programme will work with the Host Administration under a TIWB Programme Terms of Reference agreement which covers all the legal and practical safeguards and provisions. A Host Administration Starter Kit for establishing TIWB Programme Terms of Reference agreements, addressing potential issues such as confidentiality and conflicts of interest, can be found on this website. As the TIWB Experts are deployed as staff of the Host Administration, they will be led and managed by that Host Administration which sets the objectives for the Experts. The TIWB Expert integrates as much as possible into existing Host Administration teams to foster open dialogue and skills transfer.
The TIWB Experts are directly involved in the daily audit activities of the Host Administration, which in most cases require them to have access to confidential tax information relating to individual taxpayers. This position raises issues of confidentiality and conflict of interest which have to be laid down in the TIWB Programme Terms of Reference agreement. Information on how this should be managed between both parties involved in the agreement can be found here.
Options for dealing with confidentiality issues include, for example, removing taxpayer-specific identifying information from the case under examination, or through confidentiality arrangements between the Host Administration and the TIWB Expert. Conflicts of interest will be identified and managed wherever possible prior to, during and after each TIWB Programme.
TIWB Programmes may involve professional liability and liability for the workplace health and safety of the Expert when working in the Host Administration country. The Host Administration, Experts and Partner Administrations will ensure that issues of liability are considered and addressed adequately before commencing a TIWB Programme. It is equally important to ensure that protections are in place for the workplace health and safety of the Expert such as secured housing, travel arrangements and adequate access to office facilities if and when required.
TIWB Programmes are flexible and can be tailored to the specific needs of a Host Administration. In principle, they may involve all types of taxation, such as corporate income tax (profit tax), value-added tax (sales tax) and personal income tax. However, developing countries' main request for audit assistance tends to be in the field of corporate income/profit taxes and more specifically the international tax aspects of cross border transactions, including financing arrangements and licensing contracts. TIWB Programmes can also include pre-audit risk assessment and case selection, investigatory techniques, audit cases involving transfer pricing issues, anti-avoidance rules, or sector-specific issues, relating, for example, to natural resources, e-commerce, financial services or telecommunications.
TIWB programmes typically run for a period of 18 to 24 months, comprised of six to eight onsite missionss. Programmes follow the timelines of actual audits. Any particular TIWB programme allows for flexibility, depending on the stage of audit(s), number of case(s) and availability of the Experts. Different modes of assistance can also be considered for longer-term arrangements.