Wednesday, June 20, 2012

Closing Remarks at TJN's Transfer Pricing Seminar in Helsinki, 15th June 2012

TJN is delighted to publish the closing remarks made by Erkki Tuomioja, Minister for Foreign Affairs of Finland, at our seminar on Transfer Pricing in Helsinki last week.
Ladies and Gentlemen,

I have learnt that the seminar proceedings and deliberations have been successful, reflecting the complex mix of issues at stake, as well as its multi-stakeholder set-up that has brought together academic experts, government representatives, tax and development practitioners and well as civil society activists from both North and South. Many important conclusions have been drawn and will be further developed while working towards publishing the results.

In fact, this public event today has on its part already reflected one of the most important conclusions that was taken in the expert seminar: the current dysfunctional tax system is not changed by experts inside conference hall, but by mobilizing the common people on the streets– the tax payers - here in the North and especially in the South, where the implications of tax evasion and loss of compensation for their natural resources is felt most severely. I find it very important that experts and activists take an active role in popularizing the consequences of tax evasion and convert the problems and its consequences into a simple but powerful message for the people to take action. I congratulate TJN and Kepa for organizing today’s event.

As for the actual expert seminar deliberations, I understand that the seminar here in Helsinki has been a very good start. It has created a solid base and gathered a network to continue addressing the problems arising from transfer pricing and its application in different countries. You have been engaged in an intensive, even sometimes - I hear - heated debate about the technicalities of tax legislation but as well about the political opportunities there exist to fix the problem everyone seems to agree with, even if disagreeing the solutions. The commonly identified objective thus being the introduction of a global tax system that would reflect the current realities of global trade and financial markets and result in transparent, equal and socially acceptable new regulations. It seems to me that the seminar has built towards global momentum to make either small or even bigger leaps towards that target.

So, what is there then to take home from here:

Firstly, we need new international guidelines to tackle transfer mispricing as it seems evident that the current rules are not sufficient and have not been developed inclusively. By the words of one seminar participant: we need to make sure that both the future standard and the standard setting process would be inclusive and democratic to all of those concerned. The imbalances of the current set-up need to be corrected.

Secondly, tax issues should be increasingly profiled on the international agenda and in the development policy. As the Millennium Development Goals come to an end in 2015, we need a new development paradigm where considerable importance is given to tax issues that allow better utilization of domestic resources for development, especially now when the nature of development financing is changing drastically.

Thirdly, the capacity of tax administrations both at home and abroad especially in developing countries needs much more attention. The seminar has given voice to our partner country representatives in the South, whom have given their approaches to tax issues, that are of utmost importance in reducing poverty and inequality. Yet, at the same time their knowledge and capacity to comprehend the complexities and consequences are weak and subject to manipulation. We should all look for possibilities to support south-south co-operation on this issue, and in finding best local solutions for each country’s problems – yet keeping global perspective.

The same applies, by the way, to our own country too, where more policy coherence at the inter-ministerial level is needed to bring the global development perspective to tax arena.

Fourthly, facts and figures are powerful messages: therefore we need more independent quality research on transfer pricing and its application on the country level as well as in different groups of industries, not to forget the financial sector MNCs. This request was coming very clearly from our Southern partners, thus we need to be ready to respond their needs.

As for Finland this has been an important event towards more active implementation of our government programme where combating tax evasion is highly emphasized. There are some future steps which my government could consider to play role:

1) Advocate EITI to encompass issues concerning transfer pricing and tax evasion during our upcoming presidency of the Nordic group in EITI. Transfer pricing issues should become part of EITI reports.

2) Joining the UN committee and giving it more profile and capacity to bring together all member states to take forward its recommendations.

3) Looking for possibilities to support studies on the consequences of transfer pricing and the gathering of reliable data and evidence on multinational companies' tax policies.

4) Pursuing automatic exchange of information between states in tax matters and developing the system more developing country friendly.

5) Positioning ourselves at the forefront in advancing the recent EU-directive on country-by-county reporting for mining and forest companies. The future legislation should extend to cover broader reporting standards and all sectors.

6) Demanding more just tax policy to become a crucial part of a company's Corporate Social Responsibility - especially for Finnish companies. Considering setting clear CSR-rules for companies as it seems voluntary guidelines might not be sufficient. CSR should be a priority especially concerning companies with government ownership.

7) Last but not least, striving for increasing corporate transparency by making sure that the public has enough information about Finnish and multinational companies and their global operations.

Finally, we would welcome further opportunities to facilitate a continued dialogue. This could take place for instance by organising a follow-up event as proposed here, in one of our partner countries in the South to address some of the key outcomes of this first Helsinki Transfer Pricing Seminar. I thank all visitors for coming to Finland and hope that you have enjoyed in the seminar and Helsinki.

15th June 2012


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