2012 OECD Advisory Group Meeting

(2012. 4.11 ~ 12, Kuala Lumpur, Malaysia)

□ Mr. Kim, Jung Hong, Director of the Tax Programme, OECD Korea Policy Centre    participated in the 2012 OECD Advisory Group Meeting for two days from April 11 (Wed.)    to 12(Thur.), 2012 in Kuala Lumpur, Malaysia. The meeting was organized by the OECD    CTPA and the Inland Revenue Board of Malaysia.

□ Around 40 participants including administrators in charge of Global Relations Programme    at the OECD Secretariat, representatives from Multilateral Tax Centers, and relevant    officials from 20 countries such as Asia and Africa participated the meeting.

Main Contents

□ The main topics which were discussed during the meeting are as follows:

ㅇUpdate on the Tax and Development Project and Tax Incetives

ㅇNew Developments in Transfer Pricing

ㅇTax and Inequality

ㅇExchange of Information

ㅇTaxes and Preventing Illicit Financial Flows

ㅇUnleashing the Potential of the Global Relations Programme

Discussed Topics in Detail

□  Tax and Development and Tax Incentives   o The Secretariat introduced recent trends of Tax and Development project (four working sub-groups      including state building, transfer pricing, prevention of tax evasion through tax havens and financial      report of multinational companies) and explained about transparency guidelines of tax incentive      systems related to state building in detail.   o In panel discussion, issues of tax incentives especially the usefulness of tax incentives for the      economic development of developing countries were discussed. And many participants agreed that it      is important to strengthen the transparency of tax incentives related to investments and the OECD      will take it into consideration when carrying out projects in the future.

□  New Developments in Transfer Pricing   o The Secretariat introduced about the OECD Tax and Development project including transfer pricing      manual and training projects for developing countries (Vietnam etc.) and about UN’s capacity      building project on transfer pricing for developing countries.   o In panel discussion, developing countries paid attention to various systems* which allow developing      countries, tax authorities and companies to apply transfer pricing guidelines in a simple manner.      * revision of safe harbor, bilateral agreements, simplified requirements of paper submission, APA,        and others      - Some participants made a request for the OECD to draw up a law for developing countries related        to taxation on thin capitalization.

□  Tax and Inequality   o The Secretariat reported that there is an increasing interest in issues of tax and inequality after the      ITD which was held in India, 2011. And in panel discussion, various opinions were suggested      including carrying out researches on effectiveness of imposing taxes to the haves, securing equity      and reviewing ways to impose taxes to homeless income.

□  Exchange of Information   o The Secretariat explained that the prevention of tax evasion through exchange of information      including successful settlement of Global Forum, and expansion of Multilateral Convention members      has attracted worldwide attention.   o In panel discussion, many participants emphasized the need of assistance and support for      establishing and implementing exchange of information laws and pointed out that multilateral      conventions which include cooperation between tax authorities can be a practical means of tax      cooperation.

□  Tax and Preventing Illicit Financial Flows   o The Secretariat introduced about Tax and Crime Conference which was held in March, 2011, Oslo for      promoting cooperation between tax and judicial authorities and asked to pay more attention to the      2nd Tax and Crime Conference which is scheduled to be held in June, 2012, Rome.      Malaysia introduced its cooperative cases between tax and judicial authorities in the fields of tax and      crime and mentioned the possibility of their cases becoming a cooperative model at the      governmental level.

□  Unleashing the Potential of the Global Relations Programme   o The Secretariat introduced about 2012 Global Relations Programme and some opinions about the      future directions of Global Relations Programme which were proposed by participating countries are      as follows:     - In order to disseminate OECD’s advanced policies and experience, continuous talks between       developing countries and usage of networks and know-how of regional tax centers are very       important.     - Many countries agreed that it is necessary to provide e-learning environments to non member       countries in order to disseminate OECD’s knowledge and it is also important for them to study       through e-learning tools before attending a seminar.     - It is necessary to reflect performances of OECD WPs to Global Relations Programme rapidly.     - It is important to provide an OECD Model to developing countries for them to make tax laws.