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ISSN 1684-9833 • Year 2 / No.30 /May 27, 2011

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The Executive Secretariat Informs CIAT updates its “Analysis of the legal framework for the control of transfer pricing in Latin America” report

We invite you to CIATalk, the new space provided by CIAT. Read the posts, give your opinion and actively participate. The Executive Secretariat Informs CIAT updates its “Analysis of the legal framework for the control of transfer pricing in Latin America” report CIAT/GIZ/OECD SAT of Guatemala Seminar-Workshop on Transfer Pricing and Exchange of Tax Information was Successfully Concluded CREDAF held its 27th General Assembly and 26th International Conference The Tax Administrations Inform Colombia-Control and Sanctions on Net Worth Tax Ecuador - Uruguay Cooperate to Avoid Tax Evasion Ecuador-April 27 is Tax Culture Day in Ecuador Kenya-KRA Impounds Elephant Tusks Kenya - EAC Reads $96m Budget Paraguay - University students participate in competition about taxes. “SET of questions” was implemented in Paraguay Peru - Growth of the Economy Allowed a 36% Increase in Income Tax Regularization Peru - Imports Exceeded US$3 Billion of Monthly value in April Czech Republic- The Regional Meeting of the Visegrád Six Countries in Prague Training Events!.. New in the Web!... Other documents!... Our documents

The CIAT Executive Secretariat is pleased to provide hereby the latest update of the “Analysis of the legal framework for the control of transfer pricing in Latin America” report, prepared by the International Cooperation Management Office with the valuable support of officials from the tax administrations of Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Panama, Peru, Uruguay and Venezuela. The objective of the aforementioned report is to make known, in a relatively simple and schematic manner, the provisions for the control of existing transfer prices in the Latin American countries. Accordingly, in order to simplify the analysis and comparability of the information, it is possible that all of the information included in the legal provisions is not available for certain aspects considered in the report. For this reason, the criterion adopted was to identify a series of aspects considered critical for analyzing each of the legislations, to then determine whether those aspects were totally or partially, explicitly or implicitly considered considered in the text of the regulation. The aspects dealt with in the report are the following: • Differences in corporate income tax rates in the Central American, Mercosur and Andean   Community countries. • Evolution of legislations through time for controlling the manipulation of transfer prices in Latin America • Drafts, projects and reforms in the process of elaboration or discussion in Latin America • Individuals and operations subject to the transfer pricing systems • Related party concept • Methods for determining transfer prices • Criterion for determining the hierarchy of the methods • “Safe Harbors” in Latin America • Advance Pricing Agreements in Latin America • Adoption of official reports for interpretation purposes or as a complement to legal provisions. • Information systems • Specific sanctions for formal or significant noncompliances within the framework of international operations • Structures adopted by the tax administrations of Latin America for controlling the manipulation of transfer prices or international operations. 


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CIAT/GIZ/OECD SAT of Guatemala Seminar-Workshop on Transfer Pricing and Exchange of Tax Information was Successfully Concluded CIAT is a public international organization which groups the tax administrations of 40 countries, (31 Amarican countries, 6 European countries, 2 African countries and one Asian country), for the purpose of providing an integral service for the modernization of those administrations, by promoting their evolution, social acceptance and consolidation through the exchange of knowledge, experiences and the rendering of specialized technical assistance.

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Experts and officials from 17 CIAT member tax administrations as well as from the OECD, GIZ and CIAT met in the city of Guatemala on May 2-5, 2011 to discuss transfer pricing and tax information exchange. This seminar-workshop on “Transfer Pricing and Tax Information Exchange” was successfully held within the framework of the international cooperation agreements signed between the Inter-American Center of Tax Administrations-CIAT and the Agency for International Cooperation from Germany, GIZ, as well as between CIAT and the Organization for Economic Cooperation and Development-OECD, with the sponsorship of the Superintendency of Tax Administration of Guatemala and was aimed at strengthening and modernizing the international taxation areas and the administrative structures of the tax administrations of the CIAT member countries. The activity originated from the need expressed by the SAT of Guatemala for strengthening the capabilities of its officials for controlling international operations and was aimed at disseminating through the experts of the tax administrations, the experiences of countries with varying levels of development in controlling the abusive manipulation of transfer prices and based on such experiences, discuss aspects of interest of the participating countries and explore future cooperation actions. The event was inaugurated by the Superintendent of Tax Administration of Guatemala, Mr. Rudy Villeda Vanegas, the CIAT International Cooperation Manager, Mr. Gonzalo Arias and the OECD Expert on Transfer Pricing, Mr. Wolgang Büttner.  Other distinguished speakers from eight different tax administrations of CIAT member countries were: Mrs. Dolores Gil Esnal, from of AFIP of Argentina; Mr. Roberto Caparroz de Almeida, from Brazil;

Mr. Víctor Gajardo, from the SII of Chile; Mrs. Luz Myriam Martínez Parra, from the DIAN of Colombia; Mr. Jairo Godoy, from the SRI of Ecuador; Mr. Franck Duval, from the DGFIP of France; Mr. Marcelo López, from the DGI of Uruguay; Mrs. Adriana García Martínez, from SENIAT of Venezuela; as well as Mr. Wolfgang Büttner, OECD expert and the CIAT International Cooperation Manager, Mr. Gonzalo Arias, who lectured on “Key aspects for an effective tax information exchange”. Also present were the distinguished Programs Director of the German Agency for International Cooperation, Mr. Jörg Wisner, and representatives from other nine tax administrations members of CIAT: Dominican Republic, El Salvador, Haiti, Honduras, Jamaica, Kenya, Panama and Paraguay as well as a significant number of  officials from the Superintendency of Tax Administration and Ministry of Finance of  Guatemala. It was perceived in this event that there is a certain consensus on the part of the Latin American countries in implementing, improving and effectively applying systems for controlling the abusive manipulation of transfer pricing, which was evidenced in the knowledge shown by officials on the subject, the experiences presented and the accuracy with which they posed their needs. After the Seminar-Workshop, a meeting was held in the city of Antigua, Guatemala, on May 6, wherein the expert speakers who attended the Seminar provided technical assistance to the SAT and Ministry of Finance officials in response to their specific requests. Panel of speakers


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Official Photo: Transfer Pricing and Tax Information Exchange.

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In the picture: Wolfgang Büttner, Transfer Pricing Adviser at OECD; Isaac Gonzalo Arias Esteban, by CIAT; and Mr. Jörg Wisner, Programs Director of the GIZ of Germany

CREDAF held its 27th General Assembly and 26th International Conference Oran, Algeria was the venue on May 15-19 of the 27th General Assembly of the Meeting and Studies Center of Tax Administration Directors (CREDAF), which also organized the 26th International Conference under the main theme of: “Organization of the Tax Administration and Results”. Some of the main topics discussed were: • The challenges of tax modernization; • Contractual objectives within the context of the objectives and management of change; • The tax administration’s position in a decentralized environment; • Human resources management within the context of management of change by means of the presentation of cases from France and Morocco. In addition to enriching the practical knowledge of the tax system with the presentation of Algeria’s tax system, CREDAF’s Working Group presented the results of the “Auditor’s Guide”, best practices were shared and the Algerian culture was disseminated. CIAT was represented by its Executive Secretary, Mr. Márcio F. Verdi, who expressed his appreciation for being able to participate in this important event and likewise scheduled a coordination meeting with the Secretary General of CREDAF, Mr. Gilles Berteau, to continue working on the initiative for elaborating a Joint Action Plan for identifying areas of collaboration between the two organizations, exchanging materials and holding events.

Official Photo of participants at the 27th General Assembly of the CREDAF- May 2011

Photo of the participants


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 The Tax Administrations Inform Colombia-Control and Sanctions on Net Worth Tax The Directorate of National Taxes and Customs, DIAN, reiterates that in relation to the net worth tax referred to in Article 292-1, in addition to the acts mentioned in Article 647 of the Tax Statute, accounting and/or fiscal adjustments that do not correspond to effective or real operations and which may imply a decrease in the net worth, constitute an inaccuracy that may be subject to sanction according therewith. Patricia Parada Castro Correspondent

Ecuador - Uruguay Cooperate to Avoid Tax Evasion Representatives of the Governments of Ecuador and Uruguay held the First Round of Negotiations of the Agreement to avoid double taxation. The Ministry of Foreign Relations of Ecuador reported that the Ecuadorian delegation consisted of representatives from the Internal Revenue Service, Ministry of Finance, Ministry of Production, Employment and Competitiveness Coordination, Central Bank of Ecuador, Senplades and the Mnistry of Foreign Relations. Mauro Andino Correspondent

Ecuador-April 27 is Tax Culture Day in Ecuador The “National Tax Culture Day”, established through Ministerial Agreement No. 387 of October 19, 2007 by the Ministry of Education was commemorated in Ecuador on April 27. The purpose for establishing this commemorative date was to make the student population and citizens in general, aware of the fact that the payment of taxes is one of the most important responsibilities of citizens and that it is a source of revenue for the State to carry out national development projects. Mauro Andino Correspondent

Kenya-KRA Impounds Elephant Tusks Kenya Revenue Authority in conjunction with other state agencies including recently impounded 115 elephant tusks weighing 1.5 tones at Jomo Kenyatta International Airport Nairobi. Kenya is among the countries which prohibit trade in elephant tusks and ivory products to discourage poaching and protect the endangered elephant population. John Karimi Nijiraini Correspondent

Kenya - EAC Reads $96m Budget The Chairperson of the Council of Ministers and Burundi Minister for East African Community Affairs, Ms Hafsa Mossi, is expected to present the budgetary estimates amounting to $95,967,160 for the financial year 2011/12 to the East African Legislative Assembly (EALA) this week.


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The budgetary estimates to be presented on Thursday will be debated by the Assembly six days later, according to a statement issued by the assembly spokesman Bobi Odiko last week. Source: Web Site - KRA John Karimi Nijiraini Correspondent

Paraguay - University students participate in competition about taxes. “SET of questions” was implemented in Paraguay The first program of the second cycle of the question and answer contest “Knowledge goes with you” conducted by the journalist, Humberto Rubín, was held on May 15. University students participated in the “SET of questions” section. Its purpose is to encourage the youth to learn about taxes, within the framework of institutionalization of a tax culture in Paraguay. Elizabeth Fernández de Corrales Correspondent

Peru - Growth of the Economy Allowed a 36% Increase in Income Tax Regularization Between January and April revenues from Income Tax Regularization for 2010 amounted to S/. 3 858 million, which represented a 36% increase –directly related to the growth of the national economy- as compared to S/.2 757 million resulting from the previous period. Patricia Jiménez Mayor Correspondent

Peru - Imports Exceeded US$3 Billion of Monthly value in April In April, the value of CIF imports amounted to US$ 3.097 billion, (one US billion is equivalent to one thousand million in other countries), amount which represented a 35% increase with respect to the same month in the previous year; thereby exceeding for the first time the US $ 3 billion of monthly value and establishing a new record, SUNAT reported. Patricia Jiménez Mayor Correspondent

Czech Republic- The Regional Meeting of the Visegrád Six Countries in Prague The regional meeting of the Austrian, Czech, Hungarian, Polish, Slovak and Slovenian Tax Administration was held in Prague on 17 – 19 May 2011. The main topic of discussion was focused on the exchange of experience in the area of tax evasions and carousel frauds on VAT, especially in fuel trading. Source: Web Site Bronislav Mikel Correspondent


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United States - IRS Officials Describe Offshore and Global High Wealth Push James C. Fee Jr., senior legal counsel to the IRS Large Business and International Division’s GHW unit, said the division’s GHW industry group exists to look at sophisticated individuals with high net worth. The term “global” is somewhat misleading, he said, because the group is not just focused on international compliance; instead, it seeks a holistic approach to examination. Raúl Pertierra Correspondent

Training Register now for the Tax Ethics Course, 1st ed. Officials from the tax administration and the public in general are invited to participate in the Tax Ethics Course, 1st edition.

Events!... IV Citizen Culture Festival “Together We Can Do More” The Superintendency of Tax Administration – SAT of Guatemala May 26 – June 03, 2011

The Superintendency of Tax Administration – SAT of Guatemala is holding the IV Citizen Culture Festival “Together We Can Do More” from May 26 through June 3. It is organized and coordinated with other entities through its permanent Tax Culture program. The inaugural lecture will be presented by Mr. Eduardo Ibarrola, Ambassador of Mexico to Guatemala and the topic is: “Tax Compliance: by coercion or by conviction”. The purpose of the IV Citizen Culture Festival is to educate the new Guatemalan generations in different spheres of citizen life, with emphasis on the principles and values that serve as basis for social coexistence in democracy and peace.

The Concentration of Collection on the Estimate “Antonio Uckmar” Foundation” San Remo, 3-4 june. 2011

The Conference will examine the scope of the new type of estimate dealt with in Decree-Law N. 78/2010 of Law N. 122/2010, which tends to absorb the various operations and concentrate collection on the same estimate. The purpose of the meeting, in view of the forthcoming entry into force of the new Law, is precisely to consider in depth all these new innovations and their consequences, by gathering the most recognized authorities on the subject so that they may contribute their ideas and encourage adequate arguments in relation to this important evolutionary stage of Italian fiscal law.

New in the Web!... “Ibero-American Fiscal Forum” Newsletter

Red de Antiguos Alumnos de la Maestría Internacional en Administración Tributaria y Hacienda Pública. Network of Former Students of the International Master’s Program in Tax Administration and Public Finance. Agencia Tributaria de España, Centro Interamericano de Administraciones Tributarias Fundación CEDDET, Instituto de Estudios Fiscales, UNED.


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This biannual publication has the recognition of the tax community of Latin America and Spain. The purpose of its members is to generate and reflect currents of opinion on aspects considered important as far as taxation and tax administration are concerned. Thus, the main themes considered in each issue of this review are agreed by consensus among the FMSN members.

CIAT Thematic Tax Series May, 2011 . No.11

This thematic series includes Tax Administration / Management Control in its No. 11 edition. The material gathered includes studies and papers prepared by technical officials for presentation either at the General Assemblies or Technical Conferences.

Other documents!... Case Studies in Merging the Administrations of Social Security Contribution and Taxation. Effrosyni Bakirtzi, Paul Schoukens and Danny Pieters IBM Center for the Business of Government Collaborating Across Boundaries Series 2011

This report studies the collection systems of five different European countries and gives an overview of the lessons learned from the different practices adopted in this field. These conclusions may help trigger awareness in this particular area of collecting social security contributions. The report may also give an insight for further changes in the national collecting systems of other countries.

Fiscal policy and debt dynamics in developing countries Ethan ILzetzki The World Bank Development Research Group Macroeconomics and Growth Team Policy Research Working Paper 5666 mayo 2011

Using a new tax database for 28 countries and a variety of econometric methods, this paper contributes to the debate on the effects of fiscal policy on economic activity in a number of ways. The analysis finds that tax cuts have a stimulative effect on economic growth in developing countriesel.

Our documents Bibliographic New May, 2011

This document provides for reference purposes, the most recent documents produced by CIAT and other editorials in the month of May; either articles or other periodic publications, research works and studies of interest.


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