For six years the Joint International Tax Shelter Information Centre (JITSIC) has been bridging the geographical divide between member countries, helping lift the veil on international tax avoidance and bringing the global tax community closer than ever.
But exactly how does it operate, and how successful has it been? We caught up with the ATO's JITSIC representative in London, John Box, to find out the inner workings of the centre and what the future holds.
What was the driving impetus behind JITSIC?
JITSIC was formed to curb tax avoidance through the identification and analysis of abusive tax schemes. Australia, Canada, Japan, the United Kingdom, the United States, South Korea and China are the current JITSIC member countries, with France and Germany participating as observers. Generally, the exchange of information process between two countries enables the member country to uncover new information that can verify claims made by a taxpayer. It is an effective way to tackle tax avoidance - especially when it is of a cross-border nature.
There are JITSIC offices in Washington and London. My colleague Mark Bertone is the ATO representative in Washington and I started working in our London office in October 2010.
Describe a typical day at work as a JITSIC representative
A critical aspect of our work is the building of relationships. This is pivotal in any successful workplace and is even more the case in an international environment.
A JITSIC work day is unusual when compared to working in Australia. The first difference is that I am not actually working with Australians in my typical 'day', except for my colleague in Washington, Mark, who I talk to almost daily. Secondly, the time zone means I am constantly juggling the workload from Australia that builds up overnight with the local day's interactions in the JITSIC office.
In the office there are many informal conversations going on about the latest news, what it means, exchanges of information and trying to open doors into each other's organisations. I have met many people in the HM Revenue & Customs from various work areas and found something relevant to us [the ATO] in each discussion.
In the evenings I often phone back to the ATO to speak with people about matters such as intelligence and exchanges. It makes for a long day, but it's certainly exciting and varied.
How has working in this role changed your perception on tax administration and fighting tax crime?
I am constantly amazed at how the administration issues are similar in each country even though there are vast differences in culture, law, systems and expectations. Issues such as building capability, fairness of law, openness and transparency, as well as working with taxpayers seem fairly common aspirations across the board.
In relation to the second part of the question, the role of being an ATO representative in the United Kingdom includes some aspect of dealing with criminal matters. In JITSIC we are not fighting crime as such but it can be drawn in as a consequence of working as a competent authority. In JITSIC we are trying to work in a cooperative way to bring a global tax picture together to stop people avoiding their tax obligations and ensure they pay the correct amount in the right jurisdiction.
How successful do you think JITSIC has been in curbing abusive tax avoidance transactions, arrangements and schemes? What has been the key to this success?
JITSIC is an important component in the tax avoidance intelligence cycle of each JITSIC member country.
Our success emanates from the good working relationships we build up within the JITSIC community. This helps us better understand each other's tax systems, which leads to more effective information exchanges as well as enabling discussions where the law doesn't appear to be working as intended. There are several instances where cross border 'double dips' and avoidance have been curbed through our work.
What do you see as being the future direction for JITSIC and, more broadly, the global fight against tax crime?
JITSIC will continue to become more real time in its focus. As delegates we are planning to discuss the latest tax patterns and trends coming from our jurisdictions in a much more shared way.
I also see us coordinating some compliance activity for joint audits. We have already commenced joint 'cross jurisdiction' audits and are hoping to work with other countries to do more.
Some significant achievements of JITSIC over the past six years
Deterrence - the existence of JITSIC sends a message to the tax community about our collective intention to identify and curb abusive tax arrangements on an international scale.
Exchanges of information - we have exchanged critical information on a large volume of cases over six years. Notable examples include those cases involving foreign tax credit generators, structured financing, hybrid instruments and private equity cases.
Joint audits - The ATO has commenced joint audits and we are mapping out a process that has the potential to be used more widely. JITSIC delegates lead the discussion as competent authorities.
Representing the Australian view in international forums - JITSIC delegates have presented the Australian view at some major forums in Europe and the USA on aggressive tax planning, corporate governance and transfer pricing.
Expert to expert dialogue - JITSIC often sets up discussions for each country's experts to discuss. For example, banking specialists and new law.
Building and nurturing international relationships - ATO JITSIC delegates have built relationships with other JITSIC delegates by promoting efficiency in exchanging information regarding Australian issues and views both formally (through the exchange of information process) and informally (through daily discussions and phone hook ups).