1. Role of International Organizations Center for Taxation and Public Governance Prof. Dr. Geerten M.M. Michielse Prof. Dr. Geerten M.M. Michielse Tax Reforms in Developing and Transition Economies

2. 01-07-20052 International Organizations International Monetary Fund (IMF)International Monetary Fund (IMF) World BankWorld Bank UN Expert CommitteeUN Expert Committee Organization for Economic Cooperation and Development (OECD)Organization for Economic Cooperation and Development (OECD) World Trade Organization (WTO)World Trade Organization (WTO) World Customs Organization (WCO)World Customs Organization (WCO) European Union (EU)European Union (EU)

3. 01-07-20053 International Organizations (based on co-operation) Inter-American Development BankInter-American Development Bank Asian Development BankAsian Development Bank Bilateral Donors (e.g. USAID, DFID, Danida, SIDA)Bilateral Donors (e.g. USAID, DFID, Danida, SIDA) Regional Co-operations between Tax Administrations (e.g. CIAT, IOTA, CREDAF)Regional Co-operations between Tax Administrations (e.g. CIAT, IOTA, CREDAF)

4. 01-07-20054 International Monetary Fund Policy makerPolicy maker –Driven by macro-economic stability Technical AssistanceTechnical Assistance –Tax policy –Legal drafting –Revenue administration Tax administration Customs administration

5. 01-07-20055 Tax Policy Assistance Assessment of tax systemsAssessment of tax systems Providing alternative tax policy solutionsProviding alternative tax policy solutions Providing quantitative impacts of these solutions on macro-economic environmentProviding quantitative impacts of these solutions on macro-economic environment Formulates best tax practicesFormulates best tax practices

6. 01-07-20056 Revenue Administration Assistance Support the revenue mobilization component of IMF-supported programsSupport the revenue mobilization component of IMF-supported programs Improving the effectiveness of tax administrationsImproving the effectiveness of tax administrations Increase of taxpayer complianceIncrease of taxpayer compliance Development (and monitoring the implementation) of reform strategies for tax and customs administrationsDevelopment (and monitoring the implementation) of reform strategies for tax and customs administrations Establishment of “Large Taxpayer Units”Establishment of “Large Taxpayer Units”

7. 01-07-20057 Legal Drafting Assistance Transformation of formulated tax policy and revenue administration policies into legal documents –Laws –Regulations –Explanatory memoranda

8. 01-07-20058 Tax Policy “Package” Single-rate broad-based VATSingle-rate broad-based VAT Broad-based income tax with minimum tax incentivesBroad-based income tax with minimum tax incentives Streamlining of excise dutiesStreamlining of excise duties Reduction (elimination) of import tariffsReduction (elimination) of import tariffs

9. 01-07-20059 Single-rate broad-based VAT Important sectors (e.g. services) are still left outImportant sectors (e.g. services) are still left out Restrictive (or absence of) refund mechanismRestrictive (or absence of) refund mechanism Multiple rate structureMultiple rate structure

10. 01-07-200510 Broad-based income tax with minimum tax incentives Business incomeBusiness income Multiple (branch depended) ratesMultiple (branch depended) rates Incoherent depreciation schedulesIncoherent depreciation schedules –Too many asset categories –Excessively low depreciation rates Investment incentivesInvestment incentives –Tax holidays –Capital recovery incentives

11. 01-07-200511 Legal Drafting Principles “Tailor-made” assistance“Tailor-made” assistance Simple and clear languageSimple and clear language Consistency with local drafting styleConsistency with local drafting style Caveat: often seen as last prerogative of sovereignty (especially if related to IMF-funded program)Caveat: often seen as last prerogative of sovereignty (especially if related to IMF-funded program)

12. 01-07-200512 Influence of IMF Conditionality (LOI):Conditionality (LOI): Performance criteria (quantitative or structural)Performance criteria (quantitative or structural) –Formal conditions of obtaining IMF finance; considered critical to achievement of program goals Structural benchmarksStructural benchmarks –Points of reference against which progress may be monitored

13. 01-07-200513 Influence of OECD OECD:OECD: –Harmful Tax Competition Low effective tax rate Exchange of Information –Anti Money Laundering / Terrorist Financing

14. 01-07-200514 Influence of EU/WTO (conditions for membership) European Union:European Union: –Implementation of Directives –Compliance with: “four freedoms” Code of Conduct World Trade Organization:World Trade Organization: –Protection against export subsidies –Introduction of transfer pricing rules

15. 01-07-200515 Influence of (Traditional) Technical Assistance IMFIMF –Legal drafting World BankWorld Bank –Implementation of administration policies (including training) Bilateral or Regional donorsBilateral or Regional donors –Implementation on a day-to-day basis (providing long- term experts) “Twinning” of tax administrations“Twinning” of tax administrations –Practical possibility to draw on partner’s experience