Home Tax Grace Perez-Navarro — A Champion Of Transparency And Inclusion

Grace Perez-Navarro — A Champion Of Transparency And Inclusion

Grace Perez-Navarro — A Champion Of Transparency And Inclusion


Grace Perez-Navarro’s profession on the OECD started unexpectedly — as many life-changing occasions do — with a fast, off-the-cuff resolution she made on an in any other case routine day within the early Nineteen Nineties.

On that day, Perez-Navarro had settled into what she thought can be a long-haul profession dealing with worldwide tax issues on the IRS’s Chief Counsel workplace. She had risen via the ranks to grow to be a particular counsel, in control of negotiating tax info change agreements, overseeing litigation, and coordinating steerage to the IRS’s area workplaces.

Not solely was it work she loved, nevertheless it was work she had actively pursued. When Perez-Navarro joined the IRS early in her profession, she had hoped to deal with worldwide tax issues in Washington, D.C. However as a younger lawyer, she didn’t have a lot say and the IRS posted her to Houston, Texas. She took it in stride, ready for a possibility to switch till an opportunity assembly lastly righted her path.

Throughout a first-year coaching course, she requested the trainer a query that he couldn’t reply. “It was to not be intelligent; it was a difficulty regarding one in every of my instances, and I simply didn’t know what to do,” she mentioned. “From then, I believe he thought I used to be sensible,” she laughed.

That teacher occurred to be Mike Patton. Shortly after the coaching, the IRS tapped Patton to go a brand new worldwide tax department in Washington, and to Perez-Navarro’s fortune, Patton was searching for just a few good attorneys. He known as to ask whether or not she can be concerned about becoming a member of, and she or he fortunately seized the chance.

So on a heat day in 1992, Perez-Navarro stepped out of her Washington workplace for a uncommon lunch with a good friend, considering of nothing greater than having fun with the afternoon. She returned to IRS headquarters shocked to study that her colleagues have been frantically searching for her.

It turned out that her boss — then-Assistant Chief Counsel John Lyons — urgently wanted to talk together with her. However by the point she returned to the workplace, he was already occupied with a gathering. “OK,” she responded. “Simply inform him I’m again in my workplace.”

“My colleagues mentioned, ‘No, no, no. You have to get him out of that assembly,’” Perez-Navarro mentioned.

She rapidly did so, apprehensive that one thing had gone incorrect. As a substitute, she was shocked to see Lyons, a former U.S. Marine and Vietnam Warfare veteran — “an enormous, burly Boston Irishman,” as she described him — rush out dramatically.

He requested her proper then and there within the hallway of the IRS, “How would you wish to go to the OECD and assist them revise the switch pricing tips? In Paris?”

A chance to dwell in Paris? That’s actually thrilling for many individuals. However why the good pleasure about revising the OECD switch pricing tips?

The background is that so much was at stake. America was simply altering its switch pricing guidelines to incorporate revenue strategies, which was an enormous shift as a result of no different nation was utilizing them on the time. In the meantime, the OECD had not revised its switch pricing tips since 1979, and the U.S. shift prompted an replace, she defined to Tax Notes.

Perez-Navarro requested Lyons how a lot time she had to consider it. He advised her quarter-hour. “I instantly mentioned, ‘OK, I’ll do it.’ As a result of I assumed, ‘One minute, quarter-hour — what’s the distinction?’” That fast resolution in the end modified her life and profession as a result of practically 30 years later, she is now director of the OECD’s Centre for Tax Coverage and Administration (CTPA).

In 1993, just a few months after that hallway assembly, she went to Paris on a one-year secondment to launch the modification of the OECD tips — an enormous activity. Nevertheless, there was an excellent larger situation that she had been eyeing at that stage of her profession: financial institution secrecy.

From the Seventies via the Nineteen Nineties, regulators around the globe had their backs up in opposition to the wall as cash laundering proliferated quickly. In response, a few of the best-known anti-money-laundering legal guidelines and applications emerged. In the US, the Financial institution Secrecy Act and Monetary Crimes Enforcement Community launched throughout this period. The Monetary Motion Job Pressure (FATF), a global anti-money-laundering group, was additionally based. However as regulators tried to shut in on illicit exercise, dangerous actors advanced their methods to remain one step forward. In the meantime, so-called secrecy jurisdictions have been loath to alter their economies.

One of the vital notorious examples throughout that interval was the collapse of the Luxembourg-registered Financial institution of Credit score and Commerce Worldwide. In 1991 it was the seventh-largest non-public financial institution on the earth, working in practically 80 international locations.

It operated a felony enterprise in plain sight, routing billions of {dollars} from drug kingpins and dictators via a community of tax havens. Ultimately the financial institution collapsed below the burden of large fraud, taking with it billions of {dollars} in illicit cash and likewise decimating financial savings of sincere depositors.

In Switzerland, on a regular basis residents have been hesitant to surrender their nation’s tradition of financial institution secrecy. In 1984 a nationwide referendum to provide tax authorities entry to financial institution information spectacularly failed, with 73% of voters opposing the thought.

So when Jeffrey Owens, then the top of the OECD Fiscal Affairs Division, requested Perez-Navarro, on the finish of her secondment, what the OECD ought to be addressing, her reply got here simply: financial institution secrecy.

“I had lots of calls from the sphere workplaces once I was working in Mike’s department: auditors saying, ‘We want info from Switzerland however can’t get it.’ And finally the auditors stopped making requests to locations like Switzerland as a result of they knew they couldn’t get the data due to the financial institution secrecy guidelines. Then, when treaty negotiators would communicate to the Swiss and say, ‘We want this info,’ the Swiss would reply: ‘Nicely, we don’t get any requests.’ However the auditors weren’t asking anymore as a result of they have been by no means getting something.”

Perez-Navarro returned to the IRS, considering little of the dialog. However Owens hadn’t forgotten her recommendation, nor had he forgotten how impressed he had been by her command of the switch pricing revisions. Three years later, he known as her out of the blue with a job proposition.

“I noticed the potential, to have any person together with her technical means who may mix that with good political judgment and with the power to get issues performed. She’s a mover,” Owens advised Tax Notes. “And I felt it will be nice to get her again.”

Throughout that decision Owens gave Perez-Navarro a suggestion that not solely set her profession in a brand new route, but additionally modified your entire trajectory of the OECD’s tax work. Would she be concerned about returning to the OECD Fiscal Affairs Division to steer the group’s work on financial institution secrecy and change of knowledge?

An Act of Tax Warfare

In 1997, the 12 months Perez-Navarro left the IRS to work with Owens, the worldwide tax system gave the impression to be careening down a harmful path. No less than it seemed to be within the eyes of G-7 finance ministers. They acknowledged that governments are free to construction their taxes as little as they need as a method to draw funding or meet different coverage targets.

However the G-7 nervous that some international locations have been taking issues too far and feared — rightly or wrongly — that tax competitors was pulling international locations right into a race to the underside.

The EU took issues into its personal fingers in 1997 when European finance ministers created a code of conduct on enterprise taxation, promising that they wouldn’t have interaction in below-the-belt tax competitors. The OECD intently adopted with a 1998 report on dangerous tax competitors laying out 4 standards of tax havens.

They included international locations which have low or zero efficient tax charges and don’t successfully change info with others. The report additionally described options of dangerous preferential regimes and measures that international locations may take to counteract dangerous tax competitors.

Lastly, it established that the OECD would have interaction with nonmember international locations adversely affected by dangerous tax practices. The G-7 favored what it heard and determined to assist the OECD’s work.

That report additionally established the OECD’s Discussion board on Dangerous Tax Practices and known as on the group to create a listing of tax havens inside one 12 months, primarily based on the 4 standards. OECD members’ underlying assumption was that tax havens wouldn’t wish to change, she defined. As such, the listing was meant to assist international locations coordinate their antiabuse measures. This was a primary for OECD members.

However based on Perez-Navarro, they deemed it vital to deal with the tax haven situation as a result of they have been involved that the dangerous tax practices they have been concentrating on would merely shift from the OECD space to different jurisdictions. This didn’t go over very properly with the tax haven jurisdictions, she mentioned.

“As quickly as these jurisdictions have been contacted to see in the event that they met the factors, main political alarm bells went off, and that was not a fairly second,” she recalled.

It rapidly turned clear there was a mismatch within the dialogue between OECD members and the low-tax jurisdictions. Within the low-tax jurisdictions, the talk ascended to the best political ranges as a result of their economies trusted the forms of exercise that OECD members discovered dangerous.

In the meantime, the OECD was nonetheless participating at a technical stage. Merely put, OECD members didn’t anticipate how the jurisdictions they have been concentrating on would reply, she mentioned.

“You had technical folks taking a look at this situation and saying, ‘We don’t count on these jurisdictions to alter. So how will we shield our tax bases?’” she defined. From that perspective, the OECD didn’t see the train as naming and shaming, as others got here to accuse the group of doing, she mentioned.

Nevertheless, the OECD went to nice lengths to make the itemizing course of an goal one, she mentioned. Finally, many did specific a willingness to alter, which made the OECD alter its strategy, she mentioned.

“We essentially modified the challenge, and we introduced these jurisdictions keen to alter to the desk,” she mentioned. “We began a dialogue and offered a course of via which they may decide to implement the transparency requirements we had set and made it extra a extra cooperative, collaborative endeavor, which included participation within the International Discussion board on Taxation. So we went from calling jurisdictions ‘tax havens’ to distinguishing between ‘cooperative and uncooperative jurisdictions.’”

“That was a extremely important second, and the OECD discovered so much from it,” she mentioned.

Owens additionally mentioned it marked a important shift within the OECD’s tax work. “Through the years, notably within the Nineteen Nineties, she labored very intently with me to increase the agenda. The imaginative and prescient I believe the each of us had was that the Committee on Fiscal Affairs ought to grow to be a one-stop store for tax coverage makers and tax trade. If there’s a difficulty, whether or not it’s on tax administration, whether or not it’s on consumption taxes, whether or not it’s on tax coverage, they need to be coming to resolve this situation on the OECD,” Owens mentioned.

“It was invariably from having any person, Grace, who had a imaginative and prescient and the capability to implement that,” mentioned Owens, who shortly thereafter promoted Perez-Navarro to go the OECD’s Worldwide Cooperation and Tax Competitors Division.

We Have Swine in Our Forest

Quick ahead to April 2009 and that 12 months’s G-20 assembly in London. Then-OECD Secretary Basic Ángel Gurría directed the OECD to do one thing very sudden and really direct, at the very least by OECD requirements: It introduced a three-tiered tax haven white listing, grey listing, and blacklist.

“It was most likely one of many hardest choices that [Gurría] ever made. However he made it,” Owens mentioned. “And due to the technical work that the staff together with Grace had performed, we have been kind of able to run with that.”

Within the shadow of the 2008 monetary disaster, G-20 leaders had issued a assertion declaring open season on “non-cooperative jurisdictions,” promising to deploy sanctions in opposition to international locations whose tax regimes posed a risk to their very own economies. In that assertion, primarily based on the OECD’s lists, the G-20 famously issued a declaration and a problem: “The period of banking secrecy is over.”

Unsurprisingly, the lists didn’t go over properly with the OECD’s personal membership. Austria, Belgium, Switzerland, and Luxembourg landed on a grey listing and instantly fought again. Jean-Claude Juncker, who on the time was Luxembourg’s prime minister and finance minister, slammed the listing as a “rush job” and “incomprehensible.” And it actually didn’t go over very properly with non-OECD international locations.

“The fact was it was a painful course of, it was not very nice. However I believe at that cut-off date it was obligatory, and it labored,” Owens mentioned. “I’m not notably eager on blacklists however I believe with out that risk of blacklisting, and the grey listing or the white listing, we wouldn’t be the place we’re at present.”

“It modified the dynamics, and it in the end pressured international locations, together with the gray-listed 4 OECD member international locations, to essentially change their strategy to financial institution secrecy,” he mentioned.

It additionally modified the OECD. Up till that time, the OECD’s bread and butter tax work was principally technical and insular — switch pricing, tax treaties, and a few change of knowledge work. It was nothing that may draw worldwide headlines or counsel that the OECD had a world, wide-sweeping affect over worldwide tax coverage.

For a few years, the OECD’s was the one voice pushing in opposition to financial institution secrecy, Perez-Navarro mentioned, and it attracted few associates. It appeared like everybody had an issue with the work, beginning proper at floor zero inside the OECD membership.

“I bear in mind one assembly the place we have been attempting to make progress on the difficulty, however we had international locations inside the OECD membership with very strict financial institution secrecy who weren’t concerned about altering,” she mentioned. The dialogue reached an deadlock, irritating some members, she recalled.

“At one level one of many delegates mentioned one thing like, ‘Nicely, we all know we’ve got swine in our personal forest.’ Diplomacy was out the door,” she mentioned.

Monetary establishments weren’t very diplomatic concerning the concept both. Neither was civil society, however for various causes. When civil society determined to marketing campaign in opposition to financial institution secrecy, Perez-Navarro mentioned she was excited to have one other voice that would counteract most of the criticisms the OECD was listening to on the time.

“‘It’s too burdensome; the data shall be misused to kidnap folks, to extort them.’ We heard this from the monetary sector and conservative teams on a regular basis,” she mentioned.

“So it was good that we had this different voice supporting our efforts though they didn’t suppose we have been going far sufficient,” she mentioned. “They wished international locations to mechanically change banking info from the outset however we’d by no means have gotten settlement on that amongst OECD members in 2000, once we produced the primary financial institution secrecy report, and even after the Liechtenstein scandal of 2008, which revealed the extent of tax evasion via secret accounts, or on the time of the monetary disaster in 2009,” she mentioned.

“The worldwide monetary disaster introduced political consideration on the difficulty of financial institution secrecy,” she mentioned. “That basically modified the entire ballgame.”

When the G-20 threw down its gauntlet, it made it clear that the OECD can be an integral associate. A lot of the preparatory work that Perez-Navarro and her staff had performed on financial institution secrecy and change of knowledge out of the blue got here into play in an actual manner, Owens mentioned.

“It was all about having the best concepts on the proper time,” he mentioned.

However within the speedy second, the larger query was, how would the OECD, now with the complete political will of the G-20, flip that preparation into substance and eradicate financial institution secrecy?

A New Regular

Only a few months later, the OECD supplied an answer. It could broaden an current transparency group — the International Discussion board on Taxation — from a discussion board of OECD members and cooperative jurisdictions into a real world and inclusive discussion board open to all international locations, who would take part on an equal footing.

This new International Discussion board on Transparency and Change of Info for Tax Functions can be a separate, OECD-hosted physique open to any international locations and jurisdictions that dedicated to implement worldwide requirements on tax transparency and change of knowledge. Members would peer evaluation one another on these requirements.

Opening the International Discussion board to non-OECD international locations, notably creating international locations, and doing so on an equal footing was a particularly large shift, one thing that hadn’t actually been performed within the OECD earlier than, Perez-Navarro mentioned.

It’s a job to which Owens gave her lots of credit score, noting that it was personally vital to Perez-Navarro, given her household’s roots in Latin America.

By that point Perez-Navarro had been promoted once more, to deputy director of the CTPA, and she or he collected information to make her case, chatting with different divisions of the OECD and the FATF that already did peer evaluations to determine what it took, as a result of the CTPA had by no means performed that earlier than.

“However then, I needed to promote this to our members. I bear in mind we had a bureau assembly, and I defined to the group what I had performed to calculate what the finances can be, and it was excessive. They usually mentioned, ‘We see what you’re saying, we perceive. However politically we can not have a finances greater than the FATF’s.’”

Why? As a result of cash laundering is perceived as the next precedence than tax evasion, they advised her.

“The largest problem has at all times been that we’ve got far more work to do than sources. We function, it appears, on this strategy of ‘construct it and they’re going to come.’ So we’re at all times simply so maxed out when it comes to what we’re attempting to do,” she mentioned. “However the one factor I used to be very eager on once we revamped the International Discussion board, which is individually funded by its members, was that this might be a completely funded program.”

The OECD’s place because the world’s main multilateral tax policymaker is so entrenched that it’s generally straightforward to neglect that this standing is comparatively younger. The OECD made this transformation simply 13 years in the past, and it began with the restructured and expanded International Discussion board. From there, it has expanded into work on base erosion and revenue shifting and different points.

Perez-Navarro was integral to that enlargement, a lot of which occurred below the management of Pascal Saint-Amans, who was director of the CTPA from February 2012 till October 2022.

“Grace and I actually shared all duties throughout my tenure as a director. We labored very intently, each day, to advance the initiatives, recruit the staff, and lift funds,” he advised Tax Notes.

“Now it’s grow to be a part of the brand new regular,” Perez-Navarro mentioned. “We created the inclusive framework on BEPS, and it wasn’t an enormous deal; our members perceive the significance of inclusivity. Proper now, we’re establishing the inclusive discussion board on carbon mitigation approaches.”

The International Discussion board is the world’s largest multilateral tax physique, with 165 members, and the inclusive framework on BEPS intently follows with 141 members. Though the sizes are related, some scrutinize the inclusive framework’s inclusivity in methods that aren’t utilized to the International Discussion board. When requested about that, Perez-Navarro mused that perceptions of the 2 teams could differ due to their underlying targets.

“The International Discussion board is about serving to tax administrations administer their home tax legal guidelines. That’s of relevance to everyone. The inclusive framework on BEPS is concentrated on the taxation of multinational corporations, which can not have the identical precedence for all international locations, together with the least developed, which can produce other extra urgent tax points. However the inclusive framework is open to all,” she mentioned.

Then once more, the International Discussion board has endured its personal pressures over time, from those that initially rejected widespread automated change of knowledge as an unrealistic pipe dream to those that argued the International Discussion board wasn’t transferring quick sufficient.

“Again within the day when civil society mentioned we would have liked to do extra on financial institution secrecy, they have been proper concerning the significance of automated change of knowledge,” Perez-Navarro mentioned. “But when we hadn’t began with change of knowledge on request, we by no means would have gotten to automated change. And the truth is you want each.”

“With automated change, you’re getting one piece of knowledge, however then it’s essential look additional. If that info got here from overseas, the opposite info you want will even be overseas, and you may make that request,” she mentioned.

Reflecting on Missed Possibilities

Within the background of this work on financial institution secrecy and dangerous tax practices, Perez-Navarro was intently monitoring one other situation: the taxation of digital commerce.

In 1998 the OECD noticed the route the financial winds have been blowing, they usually have been blowing towards the digital financial system. In response, the OECD launched a serious cross-border e-commerce tax reform challenge and devised a set of guiding tax rules to use to e-commerce — the Ottawa Taxation Framework Circumstances.

Though that work was useful, Perez-Navarro thinks the OECD missed a possibility to do extra at the moment.

“I believe we have been too fast to just accept the view that the present guidelines nonetheless labored. We should always have began to suppose again then about how the web, e-commerce, digitalization may change the worldwide financial system and what that may imply for tax,” she mentioned.

By the point the BEPS challenge launched in 2013, digitalization, the web, and e-commerce had dramatically modified the world, however tax guidelines had not saved apace and there was rising frustration amongst some international locations concerning the outcomes.

“In case you can cope with a difficulty earlier than it turns into a severe, pervasive one, you could possibly have a greater dialog with international locations about learn how to remedy it, earlier than they get caught of their positions,” she mentioned.

“Relatively, we work on the problems of the day,” she mentioned.

A Second Probability at Digital Reform

This takes us to the OECD’s present worldwide tax reform challenge and pillars 1 and a pair of.

Perez-Navarro, who turned director of the CTPA in November, mentioned her foremost precedence is finalizing pillars 1 and a pair of. She advised Tax Notes that the US is absolutely engaged in negotiations and dealing onerous to attempt to attain an settlement with the opposite inclusive framework members.

“An settlement is required with the U.S. on board to ship pillar 1 as a result of most of the multinationals involved are headquartered within the U.S. If it doesn’t take part, then international locations will take into consideration what they’re going to do,” she mentioned. Nations have been ready for an answer for practically 10 years, she famous, they usually could not be capable of wait for much longer.

“Loads of international locations have mentioned they’re getting stress from their parliaments to enact unilateral measures as a result of that is taking so lengthy they usually see different international locations have them,” Perez-Navarro mentioned. She cited, for example, Colombia, which not too long ago included a major financial presence provision in a wide-sweeping tax reform package deal.

“From the Colombians’ perspective, they noticed this as insurance coverage in case the U.S. doesn’t undertake pillar 1 — then they at the very least have one thing of their legal guidelines. You possibly can’t do tax reform each 5 minutes, so that they positioned it there now as a security internet,” Perez-Navarro mentioned.

“I believe the choice state of affairs is fairly straightforward to see. If there is no such thing as a settlement on pillar 1, we shall be again to the chaos that uncoordinated unilateral measures will create,” she added. “In order that’s the place the U.S., like different inclusive framework members, should weigh the professionals and cons of pillar 1 versus unilateral measures.”

Additionally, the worldwide neighborhood is clamoring for extra income info on each pillars. They wish to know: If they will implement these advanced provisions, simply how a lot income can they count on to achieve? The OECD launched an aggregated financial influence evaluation in October 2020, and it’ll situation an up to date evaluation in mid-January.

Perez-Navarro’s different precedence as director is launching the inclusive discussion board on carbon mitigation approaches, which could have its first assembly in February 2023. Perez-Navarro famous that the OECD is attempting to enhance the efforts of the U.N., which is main world local weather change coverage with issues just like the Paris Settlement and COP27.

“The aim of this initiative is principally an evidence-gathering train and a manner to supply a discussion board for discussing totally different approaches to decreasing greenhouse gasoline emissions, together with each pricing and non-pricing mechanisms, and their effectiveness,” she mentioned. “What we’re attempting to do is to assist the world’s general goal to cut back greenhouse gasoline, to get to net-zero emissions.”

The Highway Forward

This can be a notably woman-forward period for the CTPA, with Perez-Navarro on the group’s head, and her colleague Zayda Manatta on the head of the International Discussion board secretariat. Each co-chairs of the inclusive discussion board on BEPS are ladies: Fabrizia Lapecorella and Marlene Nembhard-Parker.

It’s actually not the OECD that Perez-Navarro walked into in 1993 when she was one in every of perhaps two or three skilled ladies in your entire fiscal affairs division and a male colleague from one other division screamed at her for the horrible, unforgivable offense of allegedly utilizing the incorrect printer.

“I’m certain he wouldn’t have yelled at me if he’d thought I used to be one thing extra than simply an assistant,” she mentioned. “I went again and I advised Jeff that my authorities is paying lot of cash for me to be right here, and I can’t be handled this fashion.”

Gender inclusion, particularly the intersection of tax and gender coverage, is an space Perez-Navarro has lengthy championed. The OECD has been devoting elevated consideration to this as properly, and Perez-Navarro hopes that the OECD will be capable of push extra sources in that route within the coming years. Saint-Amans recommended her for making a basis for that tax and gender work.

“Pitching it and making it a G-20 deliverable was her personal initiative and her personal success,” he mentioned.

On the final subject of inclusivity, the OECD’s work has proven that large-scale tax multilateralism is attainable, though it is perhaps strained or challenged at occasions. However it has its critics, and Perez-Navarro chafed at ongoing public criticism that the OECD will not be an inclusive tax physique.

“I really feel like we’re without end innovating on this area to ensure all international locations can take part successfully,” she mentioned. “As a result of the work on the pillars is transferring so quick, we’ve established regional digital conferences to elucidate what’s happening to permit international locations in smaller teams to ask the questions they wish to ask in a secure area with their friends, their regional friends. We additionally present bilateral assist and pre-meetings for creating international locations.”

“We additionally associate with regional teams just like the African Tax Administration Discussion board and are working very intently with them to know their members’ considerations, determine how we are able to reply to them, and do all the pieces we are able to to assist these international locations take part in a significant manner,” Perez-Navarro added.

When requested how she thinks the OECD can proceed its multilateral momentum, Perez-Navarro mentioned that the processes are already in place, they usually simply must maintain working.

“One of many vital features of all of that is supporting international locations, notably creating international locations, of their understanding of what’s at stake, what’s been proposed, and supporting them via their decision-making,” she mentioned. Applications resembling Tax Inspectors With out Borders, a joint effort with the United Nations Growth Program that helps creating international locations with tax audits, give her hope for the way forward for tax multilateralism.

“For each greenback spent, there’s a return in tax income of $100. I wasn’t the one who developed it, however I’m very happy with it, and we’re trying to broaden it into different areas,” she mentioned.

“We’ve moved into the felony tax space as a result of these are a few of the most difficult instances to pursue and prosecute as they normally are usually cross-border. It’s actually vital to point out your residents, particularly in creating international locations, that you’re not letting folks get away with tax evasion. It’s actually vital to deal with that finish of the spectrum, even when coping with multinationals and excessive internet wealth taxpayers might be a greater worth when it comes to return,” she mentioned.

“Those that are committing fraud or evasion undermine belief within the system, and undermine general voluntary compliance,” she defined.

Within the current day, it’s properly understood that tax evasion and cash laundering typically work in tandem. But that wasn’t at all times the case.

Recall that Perez-Navarro was as soon as advised that cash laundering is the next precedence than tax evasion. However over time, she actively pursued a relationship with the FATF, as a result of she knew that when tax evasion occurs, cash laundering rapidly follows.

“The primary contact she had with the FATF, they have been virtually like ‘What is that this character Grace coming to speak to us about? Why does the tax particular person wish to become involved with us?’” Owens mentioned. Ultimately, the FATF got here to see issues the way in which she did, and in 2012, declared tax crimes as a predicate offense to cash laundering.

“That doesn’t sound like a lot. However consider me, that was very a lot a revolution,” Owens mentioned.

The OECD’s work on tax crimes routinely will get misplaced amidst the political theater of its work on BEPS and tax havens, nevertheless it’s a few of the work that Perez-Navarro is most happy with. And in 2013 the group established an OECD Academy for Tax and Monetary Crime Investigation in Ostia, Italy, to supply coaching for officers hailing from international locations the place that training merely isn’t accessible. Through the years, the academy has expanded and now runs regional facilities in Africa, Asia-Pacific, and Latin America.

“While you take a look at an enormous tax administration just like the IRS, they’ve a Legal Investigation Division the place they do coaching, and the U.S. Justice Division does coaching,” she mentioned. “However in smaller international locations, they barely have a felony investigation division, they usually don’t do coaching.”

A Tax Evolution

The phrase “revolution” is commonly used to explain the OECD’s tax work, however Perez-Navarro has a special tackle the group’s historical past.

“I at all times say, ‘The work we’ve got performed has been evolutionary, not revolutionary,’” she added. “Lots of people suppose it’s a revolution, however we couldn’t have performed the work that we have been in a position to obtain via the International Discussion board if we hadn’t beforehand performed the essential work on financial institution secrecy and dangerous tax practices. With out the International Discussion board, I don’t suppose we may have established the inclusive framework on BEPS. With out the BEPS challenge, we wouldn’t have pillars 1 and a pair of. So it’s evolutionary.”

Both manner you describe it, the OECD’s work has considerably modified the worldwide tax panorama and the way in which that the world discusses worldwide tax policymaking.

“Within the tax world, when folks ask you, ‘What do you do?’ and also you say, ‘Nicely, I make some huge cash,’ that’s straightforward within the tax world,” Owens mentioned. “In case you can say ‘I modified the world, simply by a small quantity, simply by just a little bit,’ that’s rarer. And Grace can say that due to the work she did on tax crimes, due to the work she did on tax havens and change of knowledge. It’s a proud legacy that she leaves behind,” Owens mentioned.

That legacy, extending again to the dangerous tax practices challenge, allowed her to be essentially the most skilled particular person within the staff, with a novel historic reminiscence, Saint-Amans added. “She is an open library [and] extraordinarily properly organized. She has at all times been key to protecting initiatives on observe.”

And Perez-Navarro is on the cusp of her personal evolution — she is going to retire from the CTPA in March. What is going to Perez-Navarro, who has had one of the storied and attention-grabbing careers on the very heart of worldwide tax, do subsequent?

“Keep tuned,” she mentioned.



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