PROTAX risk assessment methodology: Stakeholder webinar

Managing the risk of tax crimes at an EU level is a complex but vital task. The cross-border nature of tax crime, the lack of a harmonised definition and inter-jurisdictional challenges between EU Member States hinder collaboration, information-sharing and efficient countering of tax crimes. While national and regional risk assessment frameworks currently exist or are in development, such as those developed by the World Bank, OECD (The OECD ‘Maturity Model’ on tax crime investigations is yet to be published. However, discussions on its approach have taken place with a senior tax crime advisor from the OECD, who is also on the PROTAX stakeholder board. The Maturity Model is a way for countries to assess the stage at which their tax crime law enforcement environment – legally, institutionally and operationally – is ‘mature’ by international standards. However, there are other ‘maturity models’ by the OECD involving tax matters, such as the OECD, Technologies for Better Tax Administration: A Practical Guide for Revenue Bodies by OECD and Tax Compliance Burden Maturity Model by OECD) and Tax Justice Network (TJN), prior to the PROTAX project, no such risk assessment framework has existed at an EU level yet.

PROTAX has filled this gap in EU tax crime enforcement by creating such a risk methodology in conjunction with stakeholders, and has trialled its efficacy in demonstration workshops and webinars.  The PROTAX risk assessment methodology (PRORAM) aims to provide practitioners with a model of how to self-assess suspicious behaviours and warning signs indicating a tax crime, together with a practical model for tax authorities, policymakers and other stakeholders to assess the risks to controlling tax crimes in their jurisdictions and across the EU.

In this way it is two directional, focusing both on predicting and detecting tax crimes. It indicates risks that a tax crime may be committed (useful for stakeholders with reporting duties) and assesses the risk that that tax crime will then go undetected or unprosecuted (useful for policy stakeholders and national tax authorities). It can also be used as a training tool to build knowledge of threats, vulnerabilities and risks across the EU tax crime law enforcement ecosystem by bringing stakeholders together to work through the risks inherent to the EU.

Feedback on PRORAM’s use and utility has been sought from stakeholders in relation to its effectiveness as an instrument for minimising tax crime risks during co-creation workshops hosted by PROTAX. Additional efforts have been conducted online to co-create this risk assessment methodology with partners in the consortium and other stakeholders.  The final stage has been demonstrating and testing PRORAM’s use at an online webinar.

This final webinar was hosted by Trilateral Research on 16 March 2021, and involved stakeholders who has a key interest in EU tax crime enforcement and who could benefit and interact with an EU tax crime risk methodology. Participants attended from Eurojust, the Tax Justice Network, OECD, the Finnish tax administration and academics in tax law. Member States represented included Germany, Finland, France, Belgium and Portugal. The webinar also had a global reach, with our OECD participant attending from India, while one tax law professor set a very early alarm to join us from America.

Demonstrating how the risk methodology could be used in practice generated discussion amongst participants, including how the risk methodology could interact with the OECD’s ten global principles for combatting tax crime. This discussion further developed when the PROTAX coordinator presented the PROTAX toolkit for policy makers to stakeholders at the webinar, another key element of the PROTAX toolkits.

How the risk methodology could be adopted and used as a training tool on an international basis was also discussed and received positively by participants. The next stage, beyond the life of the PROTAX project, will be to ensure that this important tool is adopted by stakeholders across the EU tax crime enforcement eco-system, to be used to iron out vulnerabilities in the tax crime enforcement environment by encouraging stakeholders to identify best practice policies to lower the tax crime risks discovered by PROTAX.

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