Ever hear of Doctors Without Borders? It’s a great idea and it helps needy families and children receive life saving medical attention in poor countries. Doctors Without Borders is a great idea. Unfortunately, the United Nations and the Organization for Economic Cooperation and Development (OECD) took that idea one step too far and created Tax Inspectors Without Borders (“TIWB”).
On paper, the initiative is designed to help developing countries increase revenues by bolstering their tax audit capability. As set up, however, the initiative is pretty “hush hush” and that concerns us. Materials released by the OECD suggest that the UN and OECD can dispatch audit teams to countries that request help. The teams are able to freely cross borders during tax audit efforts.
In launching the initiative, OECD Secretary-General Angel Gurría said, “The new partnership between the OECD and UNDP on Tax Inspectors Without Borders will significantly extend the global reach of existing efforts to build audit capacity while sending a strong message of international support to developing countries.”
A central staff composed of OECD and UN personnel will be based at the OECD’s headquarters in Paris. The group claims that it is developing guidelines to protect taxpayer confidentiality and address conflicts of interest.
Privacy advocates are still howling about FATCA, the U.S. legislation that requires foreign banks to become the eyes and ears of the IRS. Many foreign nationals and offshore banks claim it is a breach of their nations sovereignty. If anything, TIWB is worse.
How an international team of auditors led by the U.N. will be received remains to be seen. I suspect it wont go well. Many people fear world government. While there is nothing in the TIWB mandate that suggests a global tax authority, having the U.N. involved in a global tax audit scheme can be a mighty slippery slope.
Cross border tax rules are complex and could use clarification. There is always room for improvement including cross border and multinational tax audits. Creating a global tax audit team beholden to the U.N., however, is not the way to go. Even if that is not the intent of the TIWB framers, it will certainly be perceived that way.
Thus far TIWB “inspectors” have performed tax audit work in Kenya, Ghana, Albania, Senegal and Columbia and appear to be staying below the radar. The initiative began two years ago and has been so low key that we didn’t even know about its existence until today.
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