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

2. IMF - September 20022 IMF (Organigram) Managing Director + 3 Deputies Executive Directors Major Member States Constituencies Departmental Directors Front Office Divisions Units

3. IMF - September 20023 IMF-Organization Area Departments Area Departments Functional Departments Functional Departments Service Departments Service Departments

4. IMF - September 20024 IMF (Area Departments) African African Asia and Pacific Asia and Pacific European I (Central and Western) European I (Central and Western) European II (Eastern + former SU) European II (Eastern + former SU) Middle Eastern Middle Eastern Western Hemisphere Western Hemisphere

5. IMF - September 20025 IMF (Functional Departments) Fiscal Affairs Fiscal Affairs IMF Institute IMF Institute International Capital Markets International Capital Markets Legal Legal Monetary and Exchange Affairs Monetary and Exchange Affairs Policy Development and Review Policy Development and Review Research Research

6. IMF - September 20026 Fiscal Affairs Department Immediate Office Immediate Office Expenditure Policy Expenditure Policy Fiscal Operations (I + II) Fiscal Operations (I + II) Fiscal Policy and Surveillance Fiscal Policy and Surveillance Public Expenditure Management (I + II) Public Expenditure Management (I + II) Revenue Administration (I + II) Revenue Administration (I + II) Tax Policy Tax Policy

7. IMF - September 20027 Legal Front Office Front Office Anti-Money Laundering Anti-Money Laundering Law Reform / Technical Assistance Law Reform / Technical Assistance Country (A + B) Country (A + B) Banking Banking Administrative Law Administrative Law

8. IMF - September 20028 How Do We Get TA-Requests? PRGF (poverty reduction and growth facility) by Area Department PRGF (poverty reduction and growth facility) by Area Department Government Initiative (sometimes after “Tax Policy” advise) by Fiscal Affairs Department Government Initiative (sometimes after “Tax Policy” advise) by Fiscal Affairs Department Surveillance Surveillance

9. IMF - September 20029 What Types of Missions Do We Do? Legal Drafting (80%) Legal Drafting (80%) Tax Policy (15%) Tax Policy (15%) Tax Administration (4%) Tax Administration (4%) Budget Law (1%) Budget Law (1%)

10. IMF - September 200210 What Experts Do We Use? IMF staff (USA) IMF staff (USA) Headquarter-based Expert (NLD) Headquarter-based Expert (NLD) External Experts (mostly Universities) External Experts (mostly Universities) Australians Australians USA, Canadian USA, Canadian Europeans (BEL, DUI, FRA, POR, SWE) Europeans (BEL, DUI, FRA, POR, SWE)

11. IMF - September 200211 What Tax Laws Do We Draft? Value Added Tax Value Added Tax Sales Tax Sales Tax Income Tax Income Tax Profit Tax / Corporate Income Tax Profit Tax / Corporate Income Tax Tax Administration Tax Administration Stamp Duty Stamp Duty Customs Customs

12. IMF - September 200212 What Countries Do We Work With? Industrial or Advanced Economies Industrial or Advanced Economies OECD countries OECD countries Emerging Market Economies Emerging Market Economies South-East Asian ‘Tigers’, South America, EU “wanna be’s” South-East Asian ‘Tigers’, South America, EU “wanna be’s” Transition Economies Transition Economies Former Soviet Republics Former Soviet Republics Developing Economies Developing Economies Africa, Cambodia, Vietnam, Laos Africa, Cambodia, Vietnam, Laos

13. IMF - September 200213 What Legal Systems Do We Encounter? Common Law Systems Common Law Systems British and American British and American Civil Law Systems Civil Law Systems European and South American European and South American Islamic Systems Islamic Systems Middle Eastern, Indonesia, Malaysia Middle Eastern, Indonesia, Malaysia Former Soviet Union Systems Former Soviet Union Systems

14. IMF - September 200214 Are There Any Model Tax Laws Available? Basic World Tax Code (US-based) Basic World Tax Code (US-based) Taxastan Income Tax Code (former SU countries) Taxastan Income Tax Code (former SU countries) Commonwealth of Symmetrical (common law- based) Commonwealth of Symmetrical (common law- based) République Francophone (civil law-based) République Francophone (civil law-based) Fantasia VAT Fantasia VAT Utopia (implementation Merger Directive) Utopia (implementation Merger Directive)

15. IMF - September 200215 Some Drafting Examples Implementation of EU-Directives Implementation of EU-Directives Drafting VAT + Regulations Drafting VAT + Regulations Drafting Tax Administration Code Drafting Tax Administration Code

16. IMF - September 200216 Typical Issues in Drafting Implementation Provisions for EU- Directives Parent-Subsidiary Directive CZE/LTU: credit for w/h against CIT CZE/LTU: credit for w/h against CIT EST: distribution tax ‘in lieu of’ CIT EST: distribution tax ‘in lieu of’ CIT Merger Directive Valuation issues due to FTC systems Valuation issues due to FTC systems HUN/LVA: accounting rules HUN/LVA: accounting rules

17. IMF - September 200217 Typical Issues in Drafting VAT in Developing Countries Cash Refunds as result of Imputation Credit Cash Refunds as result of Imputation Credit 6-months carry forward requirement 6-months carry forward requirement Only cash refunds for export Only cash refunds for export Threshold Threshold Equalization Tax for small businesses Equalization Tax for small businesses

18. IMF - September 200218 Typical Issues in Drafting a Tax Administration Code Self-assessment of tax liability Self-assessment of tax liability Payment procedures Payment procedures (absence of banking system) (absence of banking system) Collection & Enforcement Collection & Enforcement Penalty system Penalty system usually too high for minor violations and too low for serious violations) usually too high for minor violations and too low for serious violations) Appeal procedures Appeal procedures