For a More Efficient Tax Audit Profession
On April 16, Paraguay launched a new undertaking supported by the Organization for Economic Cooperation and Development (OECD) and the United Nations Development Program (UNDP). This undertaking carried out through the IFSF (Inspectores Fiscales sin Fronteras – Borderless Tax Inspectors) program aims to provide technical assistance to the DNIT (Dirección Nacional de Ingresos Tributarios – National Directorate of Tax Revenue) for the SII (Servicio de Impuestos Internos – Internal Revenue Service) of Chile, which has followed the OECD guidelines for over a decade, to improve its tax inspection skills and techniques through collaboration between tax audit experts and officials from both tax administrations. This program mainly aims to increase tax collection and enable improvements within the Paraguayan context, both organizational and legislative, regarding international tax cooperation and Transfer Pricing.
The IFSF Program and Transfer Pricing
It is worth mentioning that, the IFSF program started in 2015. According to the Annual Report of Tax Inspectors without Borders 2024, the global influence of IFSF is not only limited to increasing tax revenues at the international level, since, when implemented within developing countries, it ensures that bilateral agreements do not generate spaces conducive to tax evasion and avoidance practices. Regarding Transfer Pricing, it is mentioned that the program allows confronting Base Erosion and Profit Shifting (BEPS). In addition, it emphasizes the need to strengthen auditing skills with a deeper knowledge of various sectors, in order to conduct effective audits of Multinational Companies.
Implementation and Application of the IFSF Program
The DNIT has an optimistic view of implementing the IFSF program within its territory due to the possibility of working in parallel with Chile, thus achieving greater efficiency and effectiveness in tax inspections. It should also be noted that the program represents a tool against challenges arising within globalization, transcending borders and coordinating actions between countries for the population’s benefit. The IFSF application has reported positive results in several Latin American countries, such as Ecuador, which received technical support in tax matters from the UK tax administration.
Likewise, in late 2023, a pilot project on Country by Country Report (CbC) was launched in Peru with technical assistance from the UK and Mexican tax administrations to use the information provided in the CbC Report.
Conclusion
We consider that taxpayers should be increasingly prepared to comply with their tax obligations promptly and with adequate support on the information reported, as the collaboration between the tax administrations of the countries in the region will allow a more thorough and effective review to protect their tax collection and detect evasion practices.
