After Kosie Louw took over as chairman of the Global Forum on
Transparency and Exchange of Information for Tax Purposes, the
forum conducted peer reviews on 50 jurisdictions, worked to
develop a methodology for the implementation of the standard
for automatic exchange of information (AEoI) drawn up by Achim
Pross and the CTPA's International Cooperation and Tax
Administration Division, and oversaw 51 countries signing up to
that standard. It's an impressive resumé, and one that
has earned Louw another two years in office as well as a place
in ITR 's Global Tax 50 2014.
|Kosie Louw is a
new entry this year
"The world is a very different place now to what it was even
five years ago when the Global Forum was restructured and this
is due in large part to the consensus that the Global Forum has
built up around its work," said Louw in the Forum's 2014 tax
transparency progress report.
Louw also serves as the chief legal and policy officer at
the South African Revenue Service (SARS) – a
particularly challenging position given South Africa's domestic
growth and emerging role as an example for other African
With forty years in tax behind him, Louw has not slowed down
in his commitment to improving the system in his native South
Africa and stamping out evasion globally.
International Tax Review: AEoI has been a landmark
step for global transparency – what needs to happen
now to ensure its success?
Kosie Louw: Commitment to the process is a
very important step. Thus far 93 jurisdictions have committed
to AEoI in either 2017 or 2018. This is a significant number
and a major step forward, but the goal is to grow this number
The next step is of course implementation. There will no
doubt be challenges from various perspectives. It is our
collective responsibility to find solutions to these challenges
and to assist especially smaller and developing
The task of the Global Forum is to monitor the
implementation of AEoI and to make sure the necessary support
is provided to those jurisdictions that need it.
In all of this it is crucial for the Global Forum to
maintain and sustain the leading role it is playing in
promoting tax transparency to combat tax evasion.
ITR: Many businesses still pursue aggressive tax
planning. Given that new laws against evasion are developed all
the time, compliance can be confusing. What is the role of
industry and business in this debate?
KL: I think it is important for leadership
in business and industry to set the example and create the
culture in their environment that it is morally the right thing
to do to pay your fair share of tax. There is a massive
industry out there of people who design and market tax schemes
which creates the temptation for businesses to improve their
profitability. Yes, at the end of the day the tax laws set the
rules of the game, but there is a bigger picture and context
for everything. It requires a mind shift. Proper governance
mechanisms should be put in place to ensure tax compliance and
tax should be raised to the board level of domestic and
ITR: You've had an impressive two years in office
and have another two years to come as head of the forum. What
is first on your agenda for 2015?
KL: To prepare for the monitoring of
implementation of AEoI for 2017/2018.
We need to finalise the Terms of Reference for AEoI and the
methodology in 2015 to monitor the implementation thereof by
We need to assist smaller jurisdictions and developing
countries so they can also enjoy the benefits of AEoI. We will
have to develop programmes in conjunction with our partners
such as regional bodies, international organisations and
individual countries who wish to contribute.
At the same time we must not lose sight of our monitoring
work in relation to EOI on request and to raise our standards
in that regard as well to be ready for the new round of peer
reviews that will start in 2016.
ITR : Africa has been struggling with corruption,
tax evasion, and illicit outflows of funds. How will the OECD's
African Initiative improve this? What is South Africa's
KL: The Africa Initiative has a number of
- Raising awareness of EoI in Africa and its benefits;
- Creating the space and structures for Africa and African
leadership to take ownership of this initiative;
- Growing the number of African members of the Global
- Providing assistance through capacity building and
technical assistance by working with African and
international bodies; and
- Leaving a legacy in Africa of improved EoI after a period
of three years.
South Africa will play its role but at the end of the day
this is an African initiative. We are looking at first mover
countries who together with bodies such as the African Tax
Administration Forum (ATAF), CREDAF (Centre de rencontre des
administrations fiscales) and other international bodies, will
work to steer and drive this initiative.
Although some African countries are still trying to build
their basic tax administration capabilities, laying the
foundations for EoI will assist them in doing that. For
example, creating the basic rights to request information and
to require taxpayers to keep records hugely assists in
administering your domestic tax system. In today's world this
is an absolutely essential tool a tax administration must have
in its administrative toolkit. You cannot just be reliant on
what is disclosed. You require additional information gathering
powers to obtain information from both taxpayers and third
parties domestically and internationally. Having the additional
powers to request and exchange information internationally
provides countries with that additional advantage to obtain
information about money and assets invested outside their
countries that might have escaped their domestic tax net. This
is especially so in Africa which is a mineral-rich continent
and where we have seen many examples of profit shifting.
ITR: What do you foresee as the biggest challenge
the global tax community faces in 2015?
KL: The slow growth in many parts of the
world still places great stress on governments' revenue
streams. Although tax increases are options, they have their
limitations and increasing tax compliance will remain a key
feature. We have seen the first set of BEPS guidelines seeing
the light to assist in limiting unacceptable tax practices and
implementation of these rules will have to commence in 2015.
Practical and creative ways will have to be found to implement
these, especially around amendments to tax treaties. However,
you can have the best rules in place but if you do not have the
information it remains a problem. That is why EoI is such an
important ingredient in this total package to improve tax
compliance worldwide and to stop the disproportionate leakage
of governments' revenue streams which can otherwise be used to
improve the lives of hundreds of millions of poor people.