Income Tax Drafting - PowerPoint by dux26118

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									Drafting Tax Laws
Prof. Dr. Geerten M.M. Michielse
 Technical Assistance Advisor, IMF
 Georgetown University Law Center
         Washington, DC
                        IMF (Organigram)

                                      Managing Director
                                        + 3 Deputies


                       Executive Directors       Departmental Directors


 Major Member States                                                Front Office


     Constituencies                                                  Divisions


                                                                          Units



IMF - September 2002                                                               2
                       IMF-Organization

   Area Departments

   Functional Departments

   Service Departments



IMF - September 2002                      3
             IMF (Area Departments)
   African
   Asia and Pacific
   European I (Central and Western)
   European II (Eastern + former SU)
   Middle Eastern
   Western Hemisphere



IMF - September 2002                    4
                     IMF
           (Functional Departments)
   Fiscal Affairs
   IMF Institute
   International Capital Markets
   Legal
   Monetary and Exchange Affairs
   Policy Development and Review
   Research

IMF - September 2002                  5
           Fiscal Affairs Department

         Immediate Office
         Expenditure Policy
         Fiscal Operations (I + II)
         Fiscal Policy and Surveillance
         Public Expenditure Management (I + II)
         Revenue Administration (I + II)
         Tax Policy
IMF - September 2002                           6
                       Legal
   Front Office
   Anti-Money Laundering
   Law Reform / Technical Assistance
   Country (A + B)
   Banking
   Administrative Law



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           How Do We Get TA-Requests?

   PRGF (poverty reduction and growth
    facility) by Area Department

   Government Initiative (sometimes after
    “Tax Policy” advise) by Fiscal Affairs
    Department

   Surveillance

IMF - September 2002                         8
    What Types of Missions Do We Do?

   Legal Drafting (80%)

   Tax Policy (15%)

   Tax Administration (4%)

   Budget Law (1%)

IMF - September 2002                   9
                 What Experts Do We Use?

   IMF staff (USA)
   Headquarter-based Expert (NLD)

   External Experts (mostly Universities)
         Australians
         USA, Canadian
         Europeans (BEL, DUI, FRA, POR, SWE)


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                       What Tax Laws Do We Draft?
   Value Added Tax
   Sales Tax
   Income Tax
   Profit Tax / Corporate Income Tax
   Tax Administration
   Stamp Duty
   Customs

IMF - September 2002                                11
            What Countries Do We Work With?


           Industrial or Advanced Economies
                OECD countries

           Emerging Market Economies
                South-East Asian „Tigers‟, South America, EU “wanna
                 be‟s”

           Transition Economies
                Former Soviet Republics

           Developing Economies
                Africa, Cambodia, Vietnam, Laos
IMF - September 2002                                                   12
                       What Legal Systems Do We
                              Encounter?
   Common Law Systems
               British and American

   Civil Law Systems
               European and South American

   Islamic Systems
               Middle Eastern, Indonesia, Malaysia

   Former Soviet Union Systems


IMF - September 2002                                  13
          Are There Any Model Tax Laws
                    Available?
   Basic World Tax Code (US-based)
   Taxastan Income Tax Code (former SU
    countries)
   Commonwealth of Symmetrical (common law-
    based)
   République Francophone (civil law-based)
   Fantasia VAT
   Utopia (implementation Merger Directive)


IMF - September 2002                           14
            Some Drafting Examples

   Implementation of EU-Directives

   Drafting VAT + Regulations

   Drafting Tax Administration Code



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           Typical Issues in Drafting
       Implementation Provisions for EU-
                   Directives

Parent-Subsidiary Directive
 CZE/LTU: credit for w/h against CIT

 EST: distribution tax „in lieu of‟ CIT



Merger Directive
 Valuation issues due to FTC systems

 HUN/LVA: accounting rules



IMF - September 2002                       16
         Typical Issues in Drafting VAT in
              Developing Countries
   Cash Refunds as result of Imputation
    Credit
             6-months carry forward requirement
             Only cash refunds for export




   Threshold

   Equalization Tax for small businesses


IMF - September 2002                               17
           Typical Issues in Drafting a Tax
                Administration Code
   Self-assessment of tax liability
   Payment procedures
               (absence of banking system)
   Collection & Enforcement
   Penalty system
               usually too high for minor violations and too low
                for serious violations)
   Appeal procedures


IMF - September 2002                                                18

								
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