1. 1 Addressing the tax risk from use of tax haven by promoting voluntary compliance Addressing the tax risk from use of tax havens by promoting voluntary compliance Ross Robertson and Fuchun Luan Australian Taxation Office ross.robertson@ato.gov.au ross.robertson@ato.gov.au fuchun.luan@ato.gov.au fuchun.luan@ato.gov.au

2. 2 Addressing the tax risk from use of tax haven by promoting voluntary compliance

3. 3 ATO vision statements To work with the community in the fair administration and effective management of the tax system to add value to our nation.

4. 4 Addressing the tax risk from use of tax haven by promoting voluntary compliance Federal Tax System  In excess of 90% of Federal Government revenue collected by ATO  $271 bn collected in FY 07-08 with 46% coming from income tax

5. 5 Addressing the tax risk from use of tax haven by promoting voluntary compliance Issues  Financial crisis reducing revenue  Global concerns of tax haven  The OVDI projects at ATO  Analytics and compliances  Inter-agency support and international co-operation

6. 6 Addressing the tax risk from use of tax haven by promoting voluntary compliance Tax Havens – it’s a global issues for tax administration now !!!

7. 7 Addressing the tax risk from use of tax haven by promoting voluntary compliance http://www.dw-world.de/dw/article/0,,4233476,00.html

8. 8 Addressing the tax risk from use of tax haven by promoting voluntary compliance The OVDI Project In July 2007 the ATO established the Offshore Compliance Program (OCP). The active compliance component of the OCP is part of the wider Tax Haven Strategy and directly supports the Offshore Voluntary Disclosure Initiative (OVDI), which offered taxpayers the opportunity to come forward and make a voluntary disclosure of their offshore dealings through the Commissioner’s OVDI.

9. 9 Addressing the tax risk from use of tax haven by promoting voluntary compliance http://ato.gov.au/individuals/content.asp?doc=/content/87082.htm

10. 10 Addressing the tax risk from use of tax haven by promoting voluntary compliance OBJECTIVE AND STRATEGY  Objective To influence tax payers’ behaviour to increase their level of voluntary compliance in managing their interactions with the tax system and in particular the levels of lodgement and reporting compliance, as Sun Tzu put it: “to subjugate the enemy's army without doing battle is the highest of excellence ( 不战而屈人之兵，善之善者也。 ) ”.  Strategies Prompting taxpayers who fail to meet their lodgement obligations to disclose, backed up with data and facts.

11. 11 Addressing the tax risk from use of tax haven by promoting voluntary compliance Analytics Modelling: Use of AUSTRAC data for case selection  Obtain International Funds Transfer Instruction (IFTI) data from AUSTRAC for relevant population (for example, haven transactions for a financial year)  Data match with ATO Client Registration Data using 1.Name and Address detail; and/or 2.Bank Account details  Combine with ATO Income Tax Return data, conspicuous wealth/consumption data from third parties (for example, share details, real property/land, luxury cars)  Extract high/medium confidence matched Tax File Numbers (TFNs) for havens or other jurisdictions of interest

12. 12 Addressing the tax risk from use of tax haven by promoting voluntary compliance

13. 13 Addressing the tax risk from use of tax haven by promoting voluntary compliance Subjects and Data  Tax return data  Data from AUSTRAC  Conspicuous consumption related  Inter agency support  International data exchange  Others

14. 14 Addressing the tax risk from use of tax haven by promoting voluntary compliance Analytics – rules/modeles  Rules ins  OECD Tax Haven SDC  Frequency and dollar amount of IFTI  Not lodged/lodged with less FSI  etc  Rules outs  recent arrivals in Australia  Government, non profit and charitable bodies  individuals less than 18 years of age.

15. 15 Addressing the tax risk from use of tax haven by promoting voluntary compliance Treatments and outcomes  Prompt letters  Assured prompt letters  Lodgement requests  …

16. 16 Addressing the tax risk from use of tax haven by promoting voluntary compliance Results OVDI Results/Statistics up to 16/05/2009 Total Total OVDI's Rec'd5520 Total Undisclosed Income$134,421,308 Total Tax Raised$26,397,318 Total Penalty Raised$727,888 Total GIC/SIC Raised$3,885,635 Total Raised$31,010,842 No. Productive OVDI's2369 No. NFA's3034 No. Mail out letters8000

17. 17 Addressing the tax risk from use of tax haven by promoting voluntary compliance Discussion  Prompt for voluntary disclosure, backed up by arguments.  Data source and quality matching.  Data exchange, inter-agency, international.  Intelligent, analytics, modeling.

18. 18 Addressing the tax risk from use of tax haven by promoting voluntary compliance Looking into the future

19. 19 Addressing the tax risk from use of tax haven by promoting voluntary compliance Concluding Remarks Data miners and business domain experts combined efforts leading to success (1+1 > 2).

20. 20 Addressing the tax risk from use of tax haven by promoting voluntary compliance Thank you Questions