Speech

IMF Deputy Managing Director Mitsuhiro Furusawa

Tokyo, Japan

 

It is my great pleasure to welcome you to the 9th IMF-Japan High-Level Tax Conference for Asian Countries. I would like to thank our co-host, the Ministry of Finance, for its generous support to the conference. The IMF is highly appreciative of Japan’s contribution to our technical assistance activities including this conference through the Japan Subaccount (JSA). I would also like to thank my colleagues in the IMF Fiscal Affairs Department and in the Regional Office for Asia and the Pacific for making this conference possible. It is gratifying to see representatives from so many governments around the region here to share their experiences, along friends from the Asian Development Bank, and OECD. 

We meet at a moment in which global economic activity continues to strengthen, led by investment and trade. Capital flows to emerging economies have remained resilient, and US tax reform is expected to temporarily raise growth. 

The current upswing provides an ideal opportunity for reforms to boost potential output, build resilience, and ensure that the benefits of growth are shared more widely. This will require strategies to ensure fiscal sustainability and financial resilience.

The IMF has been supporting countries in their efforts to strengthen revenue mobilization for many years. Many of you here already know this work first hand.  Events like this are an important way to help our members strengthen their revenue mobilization work. We are also keen to collaborate with other international and regional organizations. 

As part of this effort, the IMF, OECD, United Nations and World Bank have  joined to form the Platform for Collaboration on Tax. The Platform held its first global conference, on ‘Taxation and the Sustainable Development Goals,’ at UN headquarters in February. A prominent theme was the potential value of developing “Medium-Term Revenue Strategies” a concept developed by the Platform and one of topics in this conference. 

I would like to  highlight two issues on our agenda: international taxation, and digitalization and taxation. Both are of immediate interest, and in some respects very controversial.

International taxation

First, international taxation. This has been a focus of policy debates at the G20 and elsewhere since the global financial crisis. It is an area where there has been both significant progress and dramatic developments.

Many countries are committed to and have begun to implement the outcomes of two initiatives: the BEPS, Base Erosion and Profit Shifting project and Automatic Exchange of Information. Complying with internationally agreed principles is critical in addressing international taxation. But each country will have its own priorities in strengthening revenue mobilization efforts. 

Recent developments in international corporate taxation include the continuing debate over the tax treatment of ”digital companies” and the landmark U.S. tax reform legislation. This conference will take stock of the policy discussions related to these developments, as well as tax development efforts across the Asia-Pacific region. We will also examine measures to improve tax certainty, as well as best practices and challenges in building the capacity for resolving international tax disputes.  And we will focus on the question of how countries can most benefit from the progress made in tax transparency, such as the “Automatic Exchange of Information” and country-by-country reporting. 

Taxation and digitalization

The second theme I would like to highlight is taxation and digitalization, which is transforming our lives. It is revolutionizing the way in which governments collect, process and act on information. It is reshaping the design and implementation of tax, spending and macro-fiscal policies. It has the potential to reduce tax compliance costs and increase the efficiency of income-support programs. It can enable us to prove how to improve our work. For example, the automatic exchange of information would not have been technically possible just a few years ago. And it may let us do fundamentally new things: more effective congestion pricing in mega-cities, for instance, is now becoming reality. 

At the same time, however, digitalization can create opportunities for fraud and increase government vulnerabilities. For example, automated VAT refund systems could be abused for fraud refund claims. There are also privacy concerns about the collection of detailed individual and corporate information. 

New business models are also creating challenges for tax design and collection. Many countries are struggling with how to tax the emerging peer-to-peer (P2P) economy. And we are seeing the challenges that digitalization can pose for the international tax system. The Fiscal Affairs Department published a book last year on ”Digital Revolutions in Public Finance” that covers a wide range of related issues. The April 2018 Fiscal Monitor, which will be issued next week, also discusses opportunities and risks of digital government. 

Let me conclude. 

Today we welcome 48 participants from 18 countries and jurisdictions. This is the largest group we have ever had in the Tax Conference in Tokyo. And each year, the issues you discuss seem to become more and more topical, a more and more urgent. This year is no exception. I suspect you will not be able to resolve all of them! But I do wish you all productive discussions to address these challenges over the next two days. 

Lastly, the IMF-World Bank Annual Meetings will take place in Bali, Indonesia in October. I thank the Government of Indonesia for hosting the Annual Meetings and look forward to seeing participants again in Bali.

Thank you!