By Robert Feinschreiber, Charles River Associates & Margaret Kent, Transfer Pricing Consortium
Ascribing to the rationale that each country, in seeking to improve its own tax administration, needs to enhance its neighbor’s tax administration to curtail a plethora of tax avoidance techniques, the Inter-American Center of Tax Administrations (CIAT) and the State Secretariat for Economic Affairs of the Swiss Government (SECO) are working together on tax administration issues on a number of fronts.
CIAT, headquartered in Panama, is the umbrella organization representing more than thirty countries, primarily in the Western Hemisphere. CIAT and SECO have set up a collaboration program and have been working together for four years.
SECO provides the financial resources for the project while CIAT administers the joint project and provides in-kind counterparts.
Six countries are beneficiaries of the CIAT-SECO project: Bolivia, El Salvador, Guatemala, Guyana, Honduras, and Nicaragua. These six countries are in different stages of development. As a result, these six counties have sharply different tax administration objectives.
With the assistance of the CIAT-SECO project, Bolivia has begun to address transfer pricing cases. The tax authorities have asserted adjustments and penalties. El Salvador has begun making information requests to taxpayers and from other entities and is undertaking VAT ratio analysis as a measure of economic activity.
Further, Guatemala has begun making transfer pricing audits, now reaching 34 of these audits. Guyana is developing exploration techniques and is focused on unregulated activities. Honduras has developed 46 material indicators. Nicaragua is focusing on on-site inspector activities.
– Robert Feinschreiber is with Charles River Associates, Key Biscayne, Florida.
– Margaret Kent is with Transfer Pricing Consortium, Key Biscayne, Florida.