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06/07/2024

Introduction to IOTA – Enhancing Collaboration in Tax Administration

Intriguing Developments

A novel player in the realm of European tax administration emerges: IOTA – the Intra-European Organization of Tax Administrations. This organization, though not yet widely recognized, holds relevance for Taiwanese businesses seeking insight into its operations.

There is a reason why IOTA is not yet “widely recognized”: It is another more half-hearted try to foster tax cooperation within the EU. The truth is that members states will never give up serious competencies regarding tax law. It is the tax revenue they live from. Governments will never transfer such vital competencies to other states. Governments only do this when they lose wars – that is, when that are forced to give up such competencies.

This is a lie we Europeans have been told again and again since the humble beginnings of the EU in November 1993. This endeavor will never work because it acts against nature of man. We have seen this so many times, you may just think back to the American Revolutionary War. Without armed conflict, there would not be the United States of America. Does this make “war” as a legitimate means in modern policy? Of course, no! But being honest does not mean waging war on members of the EU. Maybe there are other structures that could work better, nowadays. Even if there is no unified Europe, the likelihood of a war between the former members of the EU is very low, as people are so connected nowadays.

So, what is it about IOTA, and why should you as a Taiwanese corporate group should have some basic knowledge about how it works

IOTA, founded in 1996 by seven Central and Eastern European tax administrations, stands as a non-profit intergovernmental organization fostering collaboration among its 43 member tax administrations. Situated in Budapest, Hungary, IOTA facilitates the exchange of experiences and best practices through workshops, forums, and practical publications. Noteworthy partners include CIAT, the European Commission, the IMF, and OECD, emphasizing the organization’s commitment to global cooperation.

You certainly see immediately that this cannot work: Such a broad scope (43 member states), situated in Hungary. Just for your background: As a German lawyer, I do not conduct business in Hungary, although it is not far away. Why? Because it is in vain! Governmental structures (post-soviet!) simply do not work. There is a high level of corruption in Budapest. Our law firm has nearly ceased any engagement in Budapest because it does not lead to the results professional entrepreneurs need.

So, you may now ask how a “fake authority” with nearly no power could “flourish” in such an environment. Well, not at all. We recommend our Asian clients to not act at all if they get mail from the IOTA! Give the paper to your legal advisor. Usually, they just cease contacting you after a few unsuccessful tries.

As a matter of fact, we know that a lot of Chinese companies use Hungary as their bridgehead in Europe. We usually do not advice this. There are great state subsidies, of course, but you never know how the government sees you “next week”. There is a lot of instability in Hungary. We often guide our clients to the Netherlands to send up first structures, as we have sound circumstances there and the tax regime is relatively balanced.

IOTA’s Endeavors

The organization pursues yearly work programs designed to fortify members’ abilities in tax revenue collection, ensuring taxpayer compliance, and delivering high-quality services. The General Assembly, held annually, elects key statutory bodies, including the President and Executive Council members, responsible for steering IOTA’s course. The Secretariat, situated in Budapest, manages the day-to-day implementation of decisions and work programs.

Primary Objectives

IOTA’s key objectives encompass promoting strengthened cooperation among its members, supporting the implementation of development programs, identifying and encouraging best practices, and serving as a professional regional organization in tandem with other international bodies.

A Closer Look at IOTA’s Operations

IOTA serves as a collaborative platform, offering information exchange and professional knowledge on practical tax administrative issues. Technical events, annual conferences, projects, technical assistance, and various publications contribute to its members’ professional growth. Currently, IOTA boasts 44 member states.

Key Areas of Focus

1. Enhancing the effectiveness and efficiency of tax administrations.

2. Fostering regional and international partnerships and cooperation.

3. Providing a forum for exchange and technical assistance.

Structural Dynamics

The General Assembly, comprising heads of member tax administrations, serves as the supreme decision-making body. The Executive Council, led by the President, oversees activities, executes budgets, and supervises the Secretariat. Funding sources include annual membership contributions, observer fees, voluntary contributions, and service fees.

Mission and Governance Overview:

Founded in 1996, headquartered in Budapest, Hungary, IOTA’s mission is to contribute to the progress of member tax administrations by delivering practical solutions, fostering collaboration, and facilitating the sharing of experiences. Governance involves the Secretariat, Executive Council, and General Assembly, each playing distinct roles in steering the organization.

In summary, IOTA’s emergence signifies a unique collaborative force in the European tax administration landscape, presenting opportunities for those looking to understand its operations more comprehensively.

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