Bribery dodgers

OECD Bribery Awareness Handbook for Tax Examiners
OECD Observer

Tax inspectors may be an eagle-eyed lot, but in today’s global, technology-sophisticated world, their job has become extra challenging. The OECD’s 1996 Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials is designed to discourage international corruption by disallowing bribes that take the form of tax-deductible expenses, for instance.

But it is up to the tax officials in each country to ensure compliance, and to screen for illegitimate claims. The trouble is how to identify a payment that may be a bribe. Is it easy to distinguish between a fraudulent invoice and a real one, or to detect payments to fictitious employees, or illicit transfers to offshore bank accounts?

The OECD has designed its Bribery Awareness Handbook for Tax Examiners to help officials answer such questions. It describes various bribery techniques, provides indicators of bribery, suggests interviewing techniques and gives examples of bribes previously identified in tax audits. For instance, a fictitious business may be used for transferring funds, or indirect payments to public officials may be made via a law firm for ostensible legal services.

The handbook also includes a checklist and, to help facilitate the monitoring of trends and assessing risks, it provides a standardised form allowing the tax examiner to give feedback to his headquarters. And as a response to the global nature of the issue and the wide reach of OECD work, the handbook is now available in 13 languages: Chinese, English, Estonian, French, German, Italian, Japanese, Latvian, Lithuanian, Norwegian, Russian, Slovak and Spanish.

Although the existence of legislation denying the tax deductibility of bribes is a strong deterrent to bribery of foreign public officials, says the OECD, the practical implementation of such legislation should not be neglected. The deterrent effect of these legislative changes depends crucially on the measures put in place to ensure that taxpayers are complying with the law.

ISBN: 9264018093 The OECD Bribery Awareness Handbook for Tax Examiners can be downloaded at: www.oecd.org/ctp/ttb, or click here.

©OECD Observer No 257, October 2006




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