Criminals have long operated across borders when carrying out tax crime and related crimes and are increasingly using new technology tools both to carry out their crimes and to move the proceeds of crime between jurisdictions. These new tools can allow criminals to rapidly scale up their activity, exploiting any weaknesses they find in the international architecture, and making it more difficult to track and investigate their activity. This calls for increasing the cooperation between jurisdictions, finding ways to work together more effectively and swiftly.
Standard setting for tax and crime
Many tax crimes and related crimes take place across borders and have significant and highly damaging impacts on the global economy. Setting international standards for how best to address these crimes both domestically and internationally is therefore critical for enhancing jurisdictions’ ability to combat these illegal activities. The OECD’s Task Force on Tax Crimes and other Crimes (TFTC) is the world’s only international standard-setting body specifically focused on combatting tax crime and enhancing the link between tax authorities and other law enforcement authorities.
Key messages
While often viewed as distinct crimes, tax crime and corruption are intrinsically linked, as criminals fail to report income derived from corrupt activities for tax purposes or over-report in an attempt to launder the proceeds of corruption. More broadly, where corruption is prevalent in society, this can foster tax evasion. Consequently, tax authorities must work in tandem with other law enforcement authorities (e.g police, prosecutors, anti-corruption authorities, financial crime authorities, anti-money laundering authorities etc.) to effectively prevent, detect, and enforce these crimes. The first step towards fostering co-operation is to have a strong and holistic understanding of how the different agencies work, their legal powers and their ability to cooperate.
Context
The role of international standard setting
The Ten Global Principles (TPGs) is the first comprehensive guide to fighting tax crimes. It sets out ten essential legal, institutional, and operational measures necessary for developing an efficient and effective system for identifying, investigating and prosecuting tax crimes, while respecting the rights of accused taxpayers. The second edition of the TGPs, published in 2021, addresses new challenges, such as tackling professionals who enable tax and white-collar crimes, and fostering international co-operation in the recovery of assets. Drawing on the experiences of jurisdictions in all continents, the report also highlights successful cases relating to the misuse of virtual assets, complex investigations involving joint task forces, and the use of new technology tools to fight tax crimes and other financial crimes.
Alongside the policy document are 51 country chapters, detailing jurisdictions’ domestic tax crime enforcement frameworks as well as the progress made in implementing the Ten Global Principles.
The Tax Crime Maturity Models
The OECD has developed two closely related Maturity Models designed to enhance implementation of the Ten Global Principles for Fighting Tax Crime and promote the whole-of-government approaches to fighting tax crime in practice.
The Tax Crime Investigation Maturity Model provides a practical tool for developed and developing countries alike to conduct an in-depth cross-agency assessment of their jurisdictions’ alignment with the Ten Global Principles for Fighting Tax Crime. By setting out indicators for each increasing level of maturity, the model also charts out an evolutionary path for future progress towards the most cutting-edge practices in tax crime investigation across four levels of maturity: Emerging, Progressing, Established and Aspirational.
The more recently published Pilot Inter-Agency Trust Maturity Model is a similar tool, focused more specifically on enhancing trust levels between tax authorities and other key stakeholders to foster whole-of-government approaches.
Trends and typologies in tax crime
Over the past few decades, the world has witnessed increasingly sophisticated financial crimes, which exploit any number of factors such as use of opaque arrangements, opportunities presented in different sectors or economies, or use of technology tools. Over the years the TFTC has published a range of reports to respond to these different trends and typologies in tax crimes including:
