Tax crimes, money laundering and other financial crimes can threaten the strategic, political and economic interests of both developed and developing countries. They also undermine citizens’ confidence in their governments’ ability to get taxpayers to pay their taxes and may deprive governments of revenues needed for sustainable development.
These activities all thrive in a climate of secrecy, inadequate legal frameworks, lax regulation, poor enforcement, and weak inter-agency co-operation. Conduct involving money laundering, corruption or other economic crimes typically also constitutes a tax crime. Countering these activities requires greater transparency, more strategic intelligence gathering and improved efforts to harness the capacity of different government agencies to work together to detect, deter and prosecute these crimes (a whole of government approach).
Tax crime and Money laundering
There are substantial similarities between the techniques used to launder the proceeds of crimes and to commit tax crimes. In May 1998 the G7 Finance Ministers encouraged international action to enhance the capacity of anti-money laundering systems to deal effectively with tax related crimes. The G7 considered that international action in this area would strengthen existing anti-money laundering systems and increase the effectiveness of tax information exchange arrangements. In this regard the OECD's Committee on Fiscal Affairs has established a dialogue with the Financial Action Task Force and continues to examine ways of improving co-operation between tax and anti-money laundering authorities. Joint workshops with tax and anti-money laundering officials have been held allowing experts to share experiences on some of the practices that are common to both tax evasion and money laundering. OECD work on tax crime and money laundering is designed to complement that carried out by FATF. In 2010 the OECD adopted a new OECD Recommendation to facilitate cooperation between tax and other law enforcement authorities to combat serious crimes. In 2012 the FATF revised its recommendations to include tax crimes in the list of predicate offenses to money laundering.
Tax and Corruption
Corruption threatens good governance, sustainable development, democratic process, and fair business practices. The OECD is a global leader in the fight against corruption via the Anti-Bribery Convention, taxation, governance, export credits and development aid.
The first milestone in the OECD effort against international bribery was the 1994 Recommendation for countries to take effective measures to deter, prevent and combat the bribery of foreign public officials in connection with international business transactions.
In 1996, the Council recommended that Member countries that allow the tax deductibility of bribes to foreign public officials re-examine this treatment with a view to denying the tax deductibility of such bribes. This recommendation has met with particular success as Parties to the OECD Anti-Bribery Convention now prohibit generally the deductibility of bribes to foreign public officials. In many cases, countries have gone one step further and have prohibited the deductibility of all bribes.
The broad implementation of this recommendation has sent clear messages to the business community: bribery will no longer be treated as an ordinary or necessary business expense and bribery of foreign public officials is a criminal offence subject to serious penalties.
In 2009, the OECD has adopted a new Recommendation on Tax Measures for Combating Bribery of Foreign Public Officials in International Business Transactions to further strengthen the role of tax authorities in the combat against bribery.
Also to ensure effective detection of bribery, the OECD issued a Bribery Awareness Handbook for Tax Examiners, updated in 2009, which is now available in 18 languages. The handbook helps tax authorities identify suspicious payments likely to be bribes so that the denial of deductibility can be enforced and so that bribe payments can be detected and reported to law enforcement authorities. It also serves as a guide for countries wishing to develop internal guidelines on bribery awareness.
The Launch of the "Oslo Dialogue"
Issues related to greater inter-agency cooperation were discussed by more than 150 delegates from 54 delegations who participated in the first tax and crime forum on 21-23 March 2011 in Oslo hosted by the Norwegian government. The conference brought together representatives from a range of OECD and non-OECD governmental agencies, including Tax Administrations, Finance and Justice Ministries, Financial Intelligence Units, Central Banks, FATF, International Organisations, as well as business and NGOs.