Aggressive tax planning

Revenue bodies and banks move towards transparent compliance


11/10/2011 - Officials from revenue bodies, the banking sector and OECD met in Rome on 10-11 October to discuss ways to enhance the relationship between tax administrations and the banking industry and thus improve tax compliance.


Participants to the seminar “Developing the enhanced relationship in the banking sector” agreed on the need to strengthen co-operation among revenue bodies and the banking sector. Their discussions were based upon the experience of countries which have already implemented a new co-operative approach. The seminar addressed the role of banks in the current economic environment, the impact of recent regulatory changes on tax matters, and the experience of various stakeholders with co-operative compliance programmes. It also addressed issues such as those related to bank losses and how to determine the appropriate tax treatment of branches of foreign banks.

The Italian tax authorities and the national banking association announced that they will soon develop a code of tax practice for Italian banks, along the lines of that recently endorsed by the OECD Forum on Tax Administration.


The seminar was opened by Attilio Befera, General Commissioner of the Italian Revenue Agency (Agenzia delle entrate) highlighting that “it is important for tax authorities to adopt a balanced approach: zero tolerance for aggressive tax planning, but at the same time impartiality and fairness in evaluating legitimate tax planning. More in general, an approach aimed at giving certainty to taxpayers”.


Noting the importance of sharing ideas and experience, Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration, said, “ Co-operative compliance initiatives  benefit both governments and taxpayers through  fewer routine audits, increased transparency, a positive impact on compliance culture in general and of course more revenue: a win-win situation”.


Giovanni Sabatini, Director General of the Italian Banking Association (ABI), stressed the importance of introducing a Code of Conduct in Italy and underlined the willingness of ABI to work with the Italian Revenue Agency. "A code of conduct" he said "will help to achieve a right balance between the need to reduce the incentives towards aggressive tax planning and promote certainty and predictability for taxpayers".


The seminar was organised by Agenzia delle entrate (Italian Revenue Agency), in co-operation with the Italian Banking AssociationAIBE (Italian Association of Foreign Banks) and the OECD Centre for Tax Policy and Administration.


For further information, please contact: Achim Pross ([email protected]) or Raffaele Russo ([email protected]).



Mutual sharing of information between tax administrations and business representatives is of crucial importance. A number of recent reports issued by the OECD contain recommendations, for both tax administration and banks, aimed at building an enhanced and co-operative relationship. These recommendations suggest that tax administrations, the banking sector and regulatory bodies should work constructively in order to gain a shared understanding of the commercial context and the links between tax and regulatory reporting.


Following on the 2008 OECD “Study into the Role of Tax Intermediaries”, the 2009 Report “Building Transparent Tax Compliance by Banks” examines the nature of banking, the complex structured financing transactions developed by banks and how they are then used by both banks and their clients. It also explores the internal governance processes that banks use to manage tax risk and the prevention, detection and response strategies applied by different revenue bodies in responding to the challenges that banks pose. The book makes a number of recommendations for revenue bodies and identifies best practices for consideration by bank.


Among others, the report recommends revenue bodies to: improve staff capabilities and their commercial understanding of financial markets and banking, provide earlier certainty to banks, improve risk assessment and transparent tax compliance. The report also identified a number of ‘good practice’ recommendations for banks, such as the fact that the bank’s internal tax department’s decision not to proceed with a transaction should not be overridden without escalation of a decision to the CEO or board, greater degree of transparency, consider the benefits of an enhanced relationship with revenue bodies and take tax risks into account as part of their governance framework.


The OECD published two other reports on the banking sector in 2010: the “Framework for a Voluntary Code of Conduct for Revenue Bodies and Banks” which sets out the rationale behind the design and content of a framework for a voluntary code of tax practice, and “Addressing Tax Risks Involving Bank Losses” which gives an overview of the tax treatment of banks’ tax losses, describes the tax risks that arise in relation to these losses, outlines the incentives that give rise to these risks, and describes how they can be reduced.



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