Frequently Asked Questions (FAQs)
- 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?
- How does TIWB continue its mandate given the current travel restrictions?
- How does the Secretariat ensure secure data transfer and maintain confidentiality?
- How is a virtual mission able to replace an on-site mission, given the hands-on nature of TIWB work?
- When travel restrictions are lifted, will TIWB return to face-to-face only operations?
- What are the main lessons learned from remote work?
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 real tax audit casess and international tax issues alongside local tax officials in assistance-requesting countries under a TIWB programme whereby they share their expertise and skills.
The initiative underpins the OECD/G20 BEPS actions as part of a broad international effort to strengthen developing countries' ability to effectively tax multinational enterprises.
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, hands-on assistance.
There is 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 had not previously been an international initiative dedicated to this kind of hands-on approach to capacity building. TIWB fills this gap.
Practical audit assistance to develop tax audit skills and effective audit processes is an area that 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 international taxation (e.g. transfer pricing). TIWB audit assistance, including anonymised casework conducted during ATAF/OECD/WBG workshops since 2012, has led to increased tax revenues collected of more than USD 537 million as of December 2020.
The revenue increases generated during the initiative's Pilot Phase include:
- 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.
Host Administrations which have developed capacities through TIWB programme(s) may be able to participate as a Partner Administration, sharing knowledge and skills with another developing country in the same region.
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 retired audit experts to make themselves available to implement 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 UNDP TIWB Project 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. Retired 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 whereby countries or jurisdictions that have received Expert assistance further disseminate those skills to neighbouring tax administrations in the same region. As of December 2020, a total of 15 South-South programmes were completed or underway.
Recently retired tax officials may signal their interest to the Secretariat by filling out a TIWB Tax Audit Expert "Expression of Interest" on the TIWB website. Retired tax officials may choose to 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 and currently serving tax officials, work with the Host Administration under a TIWB programme Terms of Reference agreement that covers all 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. Generally, TIWB Experts are conferred "special advisor" status by Host Administrations. The TIWB Expert does his or her best to integrate into existing Host Administration teams to foster open dialogue and skills transfer.
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 taxpayers. This raises issues of confidentiality and conflict of interest that must 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 are 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 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.
In addition to tax audit assistance, the TIWB Governing Board supported the extension of the TIWB niche approach into new technical areas in 2020. Criminal tax investigation and effective use of automatic exchange of information are new priorities that strike at stemming illicit financial flows. Work is also proposed to explore pilot programme opportunities in tax and natural resource contracts, and environmentally related taxation.
TIWB programmes typically run for a period of 18 to 24 months, comprised of six to eight onsite missions and remote assistance. 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.
The Secretariat is very pleased that all partners and stakeholders have made enormous efforts to sustain operations in very challenging circumstances. TIWB has developed “virtual missions” (short working sessions between TIWB experts and host administration auditors) to replace the previous week-long onsite missions. Virtual communication (i.e., email exchanges and videoconferences) have replaced face-to-face interactions, with initial results showing that our stakeholders enthusiastically support this new way of working.
Confidentiality and data security remain of utmost importance to the TIWB at all times. To this end, guidance on supporting the secure transmission of confidential information (e.g., encrypting documents, securing information stored on a USB device and creating encrypted archives) has been systematically provided. TIWB has also developed recommendations on maintaining confidentiality (e.g., using anonymised taxpayer information when discussing cases on video calls). Experience to date suggests that TIWB stakeholders are using secure file transfer methods during remote work.
Since March 2020, 29 of TIWB's 40 ongoing programmes have held virtual missions. A variety of virtual communication tools has kept TIWB experts in close contact with Host Administrations. This has led to facilitating the delivery of 48 virtual missions between March and October 2020 with 80% of the time spent on providing hands-on support on audit cases.
The initiative will maintain a flexible approach to address the priorities of tax administrations in developing countries, offering a blend of on-site and remote assistance during the TIWB programmes. This blended approach will help the host administrations gain greater and more timely access to experts, as well as save resources and reduce their carbon footprint by avoiding travel.
The main lessons include the following:
- Host Administrations confirm that frequent virtual engagements with TIWB experts allow casework to progress more quickly and keeps momentum through focussed support.
- Expert availability for TIWB programmes has increased. Providing support remotely does not require the same time commitment as travelling for onsite missions.
- Some Host Administrations have requested programme extensions of at least six months in order to compensate for reduced capacity in the first half of 2020.
- Virtual skills transfer remains difficult to ascertain and may be less conducive than onsite “learning by doing.” Remote working has required all stakeholders to adapt to new methods of collaboration.
- Without onsite missions, trust building facilitated by face-to-face interaction, is reduced and may affect fluidity of communications between Host Administration officials and TIWB experts. This is particularly relevant in the case of programmes launched in countries or jurisdictions new to the TIWB initiative.
- Some Host Administrations are unable to share relevant audit information via email due to confidentiality restrictions and size of documents. Moreover, host administrations sometime receive hard copies of documents, which are difficult to transmit.
- In some cases, anonymised discussions of casework through video conferences has been reported as being less effective for support on audits.
- A few Host Administrations have found it challenging to connect remotely due to lack of access to internet connectivity, lockdowns because of the pandemic and changes in Governments’ priorities, thus resulting in delays and suspensions of programme deployment.