Andrea Riccardi – Uruguay

Hi everyone!

My name is Andrea and since my last years at the university, I have been working with taxes, first at PWC Uruguay for 8 years and currently within the Uruguayan Tax Administration Office as tax advisor.

I have done postgraduate and master`s degrees in business administration and taxation. But I must confess that I do love studying, reading, writing, teaching!

So hoping one day I could dedicate myself 100% to the Academia, last year I decided to start a new project: doctoral studies! … Quite a challenge for me, as Uruguayan universities do not offer Doctoral programmes, or at least, programmes in international tax law.


It was last year, by the age of 35 that I decided to leave my comfort zone and embrace my new challenge at the University of Valencia, in Spain.

It was not an easy decision, three years writing a thesis implies compromise and full concentration, and I knew that during the process I could face some difficulties in preparing the documentation for the application process (which is a lot!), asking for financial aid (still looking for that!), travelling to another city.


But no matter what future holds, until now it has been an extraordinary experience, I have met incredible people from all over the world with whom I can share my experiences and concerns, opportunity that I find really worth it not only professionally speaking but also and most importantly from a personal point of view.

There is a world out there, and each day I confirm that I do love what I am doing.


The globalization of markets and the competition for revenue collection and capital flows (II)

In the last three decades, the expansionary globalization had the effect of deepening the model described in our previous posts.

A great growth of transnational transactions was accompanied by the rise of e-commerce. This increased exponentially the types of contracts and the possibility of concluding them between companies and people physically distant from each other. It also allowed the diversification of channels of formalization, instrumentation and ways of payment in commercial operations involving two or more jurisdictions.

To this, the consolidation and proliferation of new economic actors on the scene were added. These were multinational companies, non-governmental organizations and supranational entities with different degrees of development and delegated powers (European Union, Pacto Andino, Mercosur).

Their presence changed forever the concept of economic sovereignty as it existed so far.

The division created by the state borders was relativized and thus emerged corporations with negotiation, investment and fiscal planning capacities not seen until then.

The tax administrations needed to readjust their efforts to the volumes and territorial dispersion of the transnational companies, in order to tax these operations and to solve the increasingly frequent and significant conflicts in the application of the rules, taking into account the multiple hierarchies that were incorporated into regulation.

This complex and changing environment implied for States a deepening of the need to cooperate in the field of information exchange.

However, in return, it opened an unexpected scenario of tax competition between administrations, called harmful, as it was described by the O.E.C.D. in a document on the subject dated in 1998.

Conscious of the resulting economic benefits, some jurisdictions began to implement speculative practices by establishing certain fiscal conditions in their domestic legal systems.


This was an intend to offer certain non-resident investors – originators of very high tax rates – a jurisdiction to settle and tax, through different incentives to such establishment.

Thus, some jurisdictions declared non-adherence to international cooperation in the exchange of information for tax purposes.

They denied the provision of information on holdings in bank accounts, assets or operations of companies or individuals under their jurisdiction.

In this way, they sought to implement a policy of attraction of investments based on the strategic design of their taxation.

The measures included, as well,  a reduction in aliquots and the establishment of non-taxation benefits for investments from abroad. They also resorted to the signing of special agreements, private and reserved, between the State and large capital contributors, where special taxation conditions were agreed upon (ring-fencing).

As a result of this, there were emerging calls for attention from organisations such the O.C.D.E. and the U.E. about the consequences of an escalation of this harmful competition between States,  highlighting the effects that such measures could have on local economies and the global market.

Thus came the recommendations for the adoption of the so-called good practices of States and companies (Serrano Palacio, op cit).

Different voices were heard, for and against the discretionary state power to tax operations and the possibility of making it a competitive advantage to attract capital.

But over time, non-collaborative territorial jurisdictions were also unveiled as a haven of assets linked to the most serious issues of International Security.

In part because of this, the majority doctrine reached a new consensus on these non-collaborative jurisdictions. It was accepted that a State could decide sovereignly how much to tax the duty of contribution of its residents but it could not remain opaque in a matter of information exchange. That because the lack of transparency turned them into a refuge of assets from crimes, functional to money laundering and the perpetuation of organized crime structures and terrorist financing.

In reference to those countries that declared themselves transparent in terms of information exchange, the doctrine emphasized the effective fulfillment of the agreements.

That meant such consideration should be given to the effective, and not just the declared, commitment of the duty of collaboration between jurisdictions through the exchange of information.

This, because of certain jurisdictions that had signed agreements and did not comply, in practice, under formal pretexts or delays.

In this way, by the hand of the transformation of the market, the norms of the internal tax law of the States were modified.

This implied the transition from a basically internal model to a markedly regional and then international model.

This international system is still under construction and it is experiencing a permanent change that can and should be guided by chosen scenarios, that focus on development, equal opportunity and security.

International treaties to avoid double taxation and bilateral agreements on exchange of information on tax matters (I)


In accordance with the evolution of legal doctrine and jurisprudence, the domestic law of the different countries gradually adopted principles on fundamentals, limitations and guarantees in matters of taxation.

In exercise of its sovereign power, each state legislated on the relations between subjects, facts and their territory, defining in this way, when an act was taxed and to what extent the subject had to contribute.

If the relationship had elements involving two or more state jurisdictions, States established rules that included or excluded the operation in question from their power of taxation, based on different points of connection.

However, many times, two States sought to receive a tax for the same taxable event, given that there was a concurrence of some circumstance that linked that operation to its sovereignty. To do so, they considered the territory, the nationality of one of the subjects, the location of the goods or the place of celebration of the acts.

This resulted in a double taxation on the same event, which discouraged the conclusion of cross-border transactions.

On other occasions, it happened that certain facts or acts were not reached by any tax jurisdiction, and the opposite occurred, the phenomenon of non-imposition.

This is considered harmful, from the point of view of the tax administration, because it exempts economic agents from the duty to contribute, generally in a distorting way and without justifiable cause.

These difficulties were resolved through the progressive adaptation of domestic state legislation and the conclusion of conventions to avoid double taxation.

These are international treaties, generally bilateral, where tax administrations conventionally “distribute” tax powers to mitigate the disincentives and inequities that result from double taxation. They refer either to commercial operations or certain civil acts, mainly on direct taxes, to income and wealth.

However, there was a risk that the proliferation of dissimilar agreements, called to solve the need to harmonize and articulate the different legislations, would end up generating a complex normative framework that would complicate the issue even further.

information exchange

That is why the so-called “model conventions” were born. These are typified redactions that share a common scheme of distribution of tax power and that the States can adopt with the modifications that punctually agree to the contrary.

In these model conventions, two trends were reflected, referring to the connection point used to tax the rent – whether based on the source of wealth or on the residence of the owner of the capital. This depended on whether the adopter country was, respectively, importer or exporter of capital.

The first work on a model of an agreement to avoid double taxation in terms of income and wealth, by 1921 and 1928, was carried out by the League of Nations.

Subsequently (1956) published its model treaty the Fiscal Committee of the Organization for European Economic Co-operation (O.E.E.C.) which would be later the O.C.D.E.

Finally, the United Nations Organization further up in 1979 to a model alternative agreement to that first.

The bilateral agreements to which the States acceded thanks to these models, allowed to solve successfully that first challenge in the matter.

These agreements also included, progressively, commitments on the exchange of information between tax administrations for the purposes of their application.

At that time, however, such exchange was limited to the application of those bilateral agreements and was generally conditional upon the prior request of a party and the verification of the concurrence of certain conditions concerning the type of information requested, reciprocity and subsidiarity.

The question of the effective implementation of these agreements until the beginning of the millennium, shared the incipient of the institution. In fact, it was often the case that the legal provisions of many conventions remained a dead letter of the law, without the effective responses being given in a timely manner.

This experience generated the awareness in the international tax community of the importance of moving towards multilateral information exchange agreements, planned with a total view from their original design, and oriented towards automaticity as a principle in committed data traffic ( Coronas Valle, 2015).

Not an easy road

A brief tour to the current concept of taxes as a source of funding for Citizens’ Rights.

lady godiva

Although the current political, legal and social foundation of taxes has Man as the center, this has not always been the case.

Its historical genesis is strongly associated with the financing of the war and other extraordinary expenses of the Administration in times of peace.

These forced contributions, which were not only monetary but extended to personal benefits, were imposed without limits. On the other hand, its system of validation – normative and philosophical – was very different from the current one, even though they were according to the criteria of each period about the legitimation of power and its historical context, in general, related to national defence.

That is why we say that in this matter, it has not been an easy road.

There has always been a clear correlation between the conception of the tribute and its implementation and those norms and needs of the Empire, City-state or State where they belonged, as with any other branch of Law.

Historical references on tax collection go back to the earliest government organizations in Egypt, Mesopotamia and China, about five thousand years ago.

They were applied later in Greece and after a great development in Rome, they remained in the Medieval Cities, until finally arriving at the first governments of the present countries of the world.

The task of the tax collector, because of its historical origins, has always been clearly unpopular, causing adverse manifestations, based on the lack of adequate limits, that generated manifest inequities for the citizens.

Fortunately, much has evolved – ever since – that power of the state. The first advance was given by the requirement of the principle of legality, which establishes that the taxes must have legal basis – generally of a Parliamentary type – that can not be delegated. They must be in accordance with the constitutional principles of the State, which will help to delineate it (O. E. A.,  1998).

Thus, in its political face, the tax becomes a public power to impose, as a regulated obligation to manage the application of tax laws.

Due to the later developments of the doctrine on the acts of government, the tributes become founded: they have as purpose to ensure the sustainability of the management of the common good, according to certain principles, limits and obligations of the parties.

Subsequently, other more complex developments emerged, such as the principle of proportionality (Fernández González, 2000).

This principle consists of assessing the facts demonstrating the contributory capacity of those obligated to pay, that is, the quantum of the obligation to give and proportionately, increase the correlative obligation to contribute.

Other principles were added later, such as equality, which requires equal treatment in equivalent circumstances (Bonell Colmenero, 2005) and the non-confiscation of income principle, as a limit to the measure of state power of taxation (Naveira de Casanova, 1996).

The consideration of progressivity in the application of aliquots was also introduced as a way of redistributing income, adjusting the contribution to the exact scale of the taxpayer’s economy (Barberán Lahuerta, 2006).

It was opportunely stated that the correct application of justice demanded equity in the tax, taking into account special situations or vulnerable sectors that merited a different treatment (Gherardi and Rodríguez Enriquez, 2008) regarding the general rules and principles of taxes.

Finally today, topics such as the admissibility of extra tax purposes in taxation are discussed, that is, what activities should be taxed and why. And there is also controversy over the possibility of taxing unlawful acts, among other issues.

The current view thus departs from the historical paradigm by relying on two key ideas that, with a greater or lesser degree of implementation to date in the different current tax systems, constitute a common aspiration of the same: the sense of tax and the responsibility of the Parts of the obligation.

In relation to the first item, the faculty of taxation is not conceived as a public power of the coercive type, unilateral and based on the supremacy of the State over the individual.

On the contrary, it is understood as a means by supranational States or entities to secure certain economic resources that allow them to properly perform the functions and competences that correspond to them and to which they are bound.

The purpose of the tax is to make it possible to exercise the rights of citizens.

But in addition, it is a bilateral relationship of Public Law, where it is fundamental to understand, on both sides, the importance of its existence and the sense of its magnitude: the State must attend and respond to the needs and opinions of the citizens.

Its nature is that of public service, and as such, it recognizes limits and guarantees that must be respected in its implementation and enforceability.

In turn, the faculty-duty that constitutes its exercise includes diligent and objective (transparent) action, effective, according to the resources it consumes and efficient, in terms of the results to be obtained.

Likewise, it is important to advance the commitment of taxpayers and companies to adopt responsible and ethical practices on tax matters.

These should be based on commitments to the public administration that should be in accordance with their values, as individuals and as corporations.

A current conception of the link between parts, has to aim for a mature relationship, with new spaces for institutions that will generate benefits for both parties – such as self-control, proper introduction of incentives, facilitation of compliance – where voluntary compliance rules and the exception is informality and fraud.

This kind of need is of strategic type, more and more as time passes. Its achievement will have an essential role for the sustainability of administrations in the medium and long term, due to economic, demographic, technological impact in the labor market, urbanization and climate change.

This step will require that the administration can not disengage from the results to which the product of the effort required to the taxpayer should be destined.

On the contrary, in a public service relationship, the State must be accountable for the proceeds and justify the investment and return for the benefit of society, in accordance with the principle of responsibility for government actions.

The tendency today has thus, great differences with the architecture of the thought of the past historical experiences.

We said above that in principle, tribute is conceived as a means for supranational States or entities to secure certain economic resources that enable them to create an environment in which it is possible to adequately guarantee the exercise of citizens’ rights. This is its contributory aspect, the obligation to contribute to the common support of the state apparatus. The management of the public is not possible without sufficient resources. For this reason, the beneficiaries or users of the state structures should contribute to its maintenance.

They must do so to the extent of their ability to contribute or other variables that the laws take into account when measuring and defining a taxable event.

However, other taxes are required on the basis of principles of law that do not finance the operation of the State but serve to other valuable purposes whose fulfillment is in charge of the State: security, defence, equity, the creation of a system with proper incentives,  the preservation of strategic assets, etc.

This is a consequence of the fact that the state function is one. All policies and efforts in cross-cutting issues should be aligned, creating well-planned synergies, so as to be able to effectively fulfill public responsibilities.

We refer to topics such as security, education, health, energy, economic and social development, justice, ecology and culture, science and technology.

The road traveled has led the faculty of taxation to a place that – fortunately – has little to do with its historical background.

This identity has not yet been consolidated, due to the permanent changes resulting from globalization and the evolution of thinking about the interrelationship between International Taxation and Global Development.

In the next article we will see why.

Enhancing citizens’quality of life and promoting global development. The fight against organized crime and tax fraud.


   The new technologies available will play a large role in solving complex social problems faced by administrations and organizations on the globe.  They will not only enable disruptive changes in the analysis of these problems but also in obtaining the necessary knowledge to make the right decisions to overcome them.

     From how to measure key indicators on poverty, violence or energy-related conflicts to how to develop creative solutions to the problems of the future, there is much that can be done.

     The mathematical models, techniques and theorems that are being used in artificial intelligence will also have a determining role in the proper implementation of the policies that are designed. This will make public actions gain in efficiency and effectiveness, as they will be based on data.

     However, the management of the public interests must be concerned not only with leading the proactive actions of development and enhancing the quality of life but also with controlling those factors that impede development and improvements.

     In this sense, the new technological tools will be of undeniable utility for dealing with international organized crime and, in particular, economic crimes and tax fraud.

     Without effective control of these illicit acts, it is not possible for states to successfully implement initiatives that result in the well-being of society.

     To understand this, it is necessary to adequately point out the connection between crimes that weaken state structures and certain problems facing the population.

     This vision corresponds to a current conception of the concept of International Security in wich its object is not limited to the protection of citizens against acts of violence.  On the contrary, it recognizes the importance of addressing all those conflicts in the system that threaten a diversity of interests of individuals, States and other non-state actors.

     Indeed, over time the object of International Security has expanded, the response to what is sought to protect from political organizations, encompassing a greater number of interests whose protection must be recognized. (Laborie Iglesias, 2016)

     Based on a clear demand from society, the most paradigmatic change that can be recognized in the matter has to do with moving from protecting “the interests of States” to protecting “the interests of individuals”.

     Thus, the new challenges for International Security also include issues of the daily life of citizens.

     Now, the first complexity we encounter is given by the fact that this phenomenon coexists with the increasing widening of inequality. There is a gap between developed and developing countries and, moreover, there is also a gap within several countries.

     In this way, people with access to a certain level of quality of life coexist with those deprived of first order needs.

     Therefore, while it may be said that more interests and rights are recognized in the timeline, this does not mean that those who were recognized in the first place are properly guaranteed to all subjects. Quite the contrary, while broadening the recognition of the legitimacy of new interests, widens the spectrum of neglected demands.

     The interests that were object of recognition of rights range from protection against hunger, wars, political persecution and violence, through access to safe drinking water, prevention of disease and full guarantee of the exercise of individual freedoms to even protection against sudden and painful alterations of the daily modus vivendi at the family, work or community level.

     The right to a cultural identity, the development of certain intellectual or artistic concerns, the conservation of biological diversity and those rights relating to the environment are contemplated (Allena, 2014);  as well as all kinds of diffuse interests and even non-current interests of future generations.

      As for the subjects to whom a legitimate interest in security is recognized, a variety of actors is allowed in the new global scenario.

       The most important decisions are no longer taken only by representatives of States.

     International negotiating forums, even formal ones, currently convene on an equal footing individuals, non-governmental organizations, large corporations, political leaders and supranational or regional organizations, as well as state leaders.

     Technological progress has also impacted on the diversity of means and modes under which the participation of the subjects takes place, the expression of social demands and, inevitably, the externalization of threats to international security (Innerarty and Solana, 2014).

     These phenomena occur in the framework of a process of re-signification of the concept of state sovereignty that we are going through. First, because it can not be affirmed according to reality since the world does not function like the traditional map that is used to represent it. Technology, the cheapness of transport and the media, as well as other social and cultural facts, blurred some borders and created others.

     This has undressed the impotence of the state – considered in isolation – to cope per se with the new threats. Nothing is possible today for any state administration without concerted action with other states and with other supra and international organizations (Serrano Palacio and García-Villanova Ruiz, 2007).

     On the contrary, terrorism and international organized crime are interrelated. They both have structures that support them and are functional in all countries.

     An adequate evaluation of these phenomena requires that States extend their level of action to a multiplicity of causes that support them and that form a network across countries, regardless of frontiers.

     In terms of perception, terrorism has been identified as the main threat to national security by the United States, Europe and virtually all international organizations, beginning with the United Nations itself.

     However, what would happen if the effects of organized crime on the quality of life and the safety of people could be objectively measured?  How far do they affect the development of social, political and economic structures?

     Transnational organized crime – without political pretensions as a structuring element, without massive diffusion of its power and activities, but, on the contrary, in an effort to remain unnoticed and operate from the shadow it is currently one of the most profitable activities on a world scale.

     Moreover, it is present in all the confines of the Earth and operates side by side with the licit structures with which we live daily, covering unsuspected reaches and endless material expressions that obstruct access to justice, education, health, the growth of the economy and the equitable distribution of wealth.

     The ways of perpetrating it are dynamic, as they modified, disappeared and reinvented with the evolution of global movements, advances in communications and technological development.

  This is why we understand that the efforts of the international community on cooperation between States and other non-State organizations in order to combat transnational organized crime should be considered a priority.

     The extension of its existence is a threat both to individuals and to the social, economic and political stability of democratic institutions.

    Like expressions of international organized crime, we find economic crimes and in particular, tax fraud.

    These crimes are committed against tax administrations and are carried out by corporations with a large contributory capacity – hence their power to characterise the crime – that evade the payment of taxes.

      To do this, they artificially direct their taxable profits to opaque jurisdictions in terms of collaboration for the exchange of information, the so-called tax havens.

   The decrease in the economic contribution they generate has a strong impact on the availability of resources from the affected state economies and recent O.C.D.E. research shows that it has an impact on savings, investment and indebtedness (O.C.D.E., 2015).

     In turn, the tax havens to which these funds are destined (Serrano Palacio and García-Villanova Ruiz, 2007) are territories with a clear functional role to the laundering of assets from other figures of organized crime and the financing of terrorism.

     Thus, although it may be an end not sought by its authors, practices aimed at evading tax payments at the reference scales, while weakening state and productive structures (World Bank, 2002),  dangerously articulate with threats to international security and other crimes with global impact, such as corruption and trafficking.

     Because of the aforementioned inefficiency of States to solve these complex conflicts in isolation, international cooperation is indispensable for the controller of compliance with the obligation to contribute to the maintenance of common political structures.

     This is why we are interested in knowing the initiatives in international cooperation to combat tax fraud and increase transparency and we ask whether and to what extent certain techniques and methods that can be successfully applied (Díaz Fernández, 2013) in the design of key actions for the sector.

Advanced analytics



What is it, what is it for and why is it important.

The huge quantity of information globally produced during the last years, and an increasing volume of posts, emails, purchases through the internet and others online transactions, having place minute by minute, has generated a disruptive change.

What has been modified is the conceptual framework for information management and data analysis.

In the same way as the rest of the information users from different disciplines, the current challenge for tax administrations has come to be finding relevant and meaningful information in the sea of available data.

However, technological advancement has done its part, bringing us lower costs and increased possibilities for data storage and information processing.

Nowadays advanced statistical tools and automatic learning techniques – just like other methods for the exploration and the discovery of knowledge in the data, like data mining- generates that our problems related to the data are different from the ones of yesterday.

A more accessible software and hardware are available, making possible to store large volumes of data and to process it in a more effective way, avoiding many of the delays and network congestion of the past.

There was also a transition from a static way of inspecting the information to one based on a continuous flow, which allows operating with updated data, almost in real time. This availability is not required in all types of data analysis, but it is a possibility very useful in same cases.

Advanced analytics are a collection of tools and techniques to manage, clean and cluster data and to discover patterns between them, in order to find specific results, make predictions, establish unknown associations between parts and generate recommendations based on risks and probabilities.

They are computational developments that apply statistical and mathematical models and can be used for a wide range of applications from health or business to anti-fraud initiatives.

Tax administrations are using this kind of tools to optimise custom service, being more effective and efficient and to discover tax fraud operations.

However, this phenomenon requires structural and cultural changes that the new technologies demand to effectively articulate those advances with the organisation’s needs and possibilities in the tax administrations.

In order to effectively manage advanced analytics projects in each administration, it is necessary to manage uncertainty and manage change, to design new models of governance and project management, and to implement a host of structural modifications.

These new approaches are essential in a global economy and are strategic in developing countries because they are key to prioritise actions in order to choose the effective intervention with the existing limited human resources.

The incorporation of analytics and statistics tools to predict and infer facts, from information about taxpayers and operations, both influence how to organise the work and arrive at the necessary results.

The meeting between these technologies and the adaptability of the human thought to the tools they impose will allow improving customer service and to give qualitative and quantitative leaps in the processes.

The importance of these new tools is to make it possible to implement a scheme of greater equity for people, through providing greater transparency on compliance control and also, through an optimisation of the return that those tax contributions will generate to improve the quality of life of our citizens.