Jorge Correa is a busy man. If the devil makes work for idle thumbs, he should look elsewhere; Jorge's digits are busier than a texting teenager's. He spent the past year and a half on secondment at the OECD during the most intense, comprehensive and ambitious period of work the multilateral organisation has taken on in decades. And on returning to the Mexican Tax Administration Service (SAT) earlier this month, he was immediately tasked with establishing an area to oversee the fiscal regime for hydrocarbons to deal with issues related to Mexico opening up the oil and gas sector to private investment for the first time in nearly a century.
International Tax Review (ITR): After more than a year in Paris, it must have started to feel like home? Are you sad to leave the city behind? What will you miss most about France?
Jorge Correa (JC): I have mixed feelings. On the one hand, it did start to feel like home. The team at the ICA [International Cooperation and Tax Administration] Division of the Centre for Tax Policy and Administration (CTPA) gave me a very warm welcome and made my stay very pleasant. My son was born on September 16 2013, the Mexican Independence Day, at the Clinique de La Muette. And I could go on. On the other side, my wife and I did miss our family and friends, the Mexican cuisine, and so on. Although I cannot say I am sad, I am already missing some things. For example, I miss passing by the boulangerie on my way home for a just-out-of-the-oven baguette, having pain au chocolat and croissant for breakfast on Sundays, and playing with my kids at the Jardin Sainte-Périne. Hopefully, I will still be able to visit every once in a while.
ITR: Your role at the OECD came at a very busy time for the organisation, with plenty going on surrounding the BEPS project, among other things. How did you find the experience?
JC: Developing the new automatic exchange of information (AEOI) standard was quite an experience. The high level of political support coupled with the technical complexity and the tight deadlines to deliver made the project a very challenging one. However, the strong commitment of both delegates and the Secretariat made possible to deliver the standard and to do it on time. Personally, I am very grateful to both OECD and SAT for allowing me to be part of such project.
ITR: Given your previous roles at the Mexican SAT, did you have any influence on the level of engagement the OECD has with developing countries? For instance in relation to the BEPS project.
JC: Indeed. With respect to the AEOI project, I was responsible for, for example, liaising with Latin American countries, such as Argentina, Brazil, Chile, Colombia, Costa Rica and Mexico, all of which have publicly committed to implementing the new standard. In the case of the BEPS project, I had a lower level of involvement given the pace of the AEOI project.
I was only able to be involved in the FTA MAP [Forum on Tax Administration's Mutual Agreement Procedure] forum and the forum on harmful tax practices, where I expect to continue to participate as both delegate from Mexico and Bureau member.
ITR: Given your SAT experience, what motivated your move to the OECD?
JC: Soon after the January 2013 CFA [Committee on Fiscal Affairs] meeting, the OECD asked SAT to second me to work on the AEOI and BEPS projects. The head of SAT, Aristóteles Núñez, and the head of the Large Taxpayers Office, Oscar Molina, kindly agreed to do so. In the middle of the 12-month initial period, the OECD requested for an extension of my secondment and SAT agreed to do so for two more months. My return to SAT comes at a very interesting time. Among other changes, Mexico has just opened up the oil and gas sector to private investment for the first time in 75 years, and SAT together with the Ministry of Finance will be in charge of administering its fiscal regime.
ITR: What does your new role at the SAT involve? What areas will you be focusing on?
JC: My main task right now is setting up an area to administer the new fiscal regime for the hydrocarbons industry. For this purpose, I am drawing on international best practices and I have been in communication with the OECD, the IMF and HMRC, among others. In a nutshell, I intend the new area to reflect the principles of integration of direct and indirect taxes, functional organisation, taxpayer segmentation and sectoral organisation, while it focuses on non-routine functions, such as risk assessment, enforcement and audits.
I remember how this assignment was handed to me. On the bus home from CTPA I noticed something weird: a couple of missed calls from Oscar. Any working professional will know that seeing a missed call from a boss or colleague – especially when you are already on the journey home – is a potential cause for concern. Seconds later, just as I was about to ring Oscar back, a third call came in. Aristóteles and Oscar wanted to entrust me with establishing an area to oversee the fiscal regime for hydrocarbons. I was shocked; such an idea had never crossed my mind. Minutes later, my wife asked me if there was something wrong. Of course nothing was wrong, but my face must have conveyed the fact I had just accepted an enormous task and that I had to get up to speed as fast as possible.
ITR: When we last spoke, you mentioned you were in Brussels attending a conference looking at the taxation of the extractive industries. What do you think needs to be done to improve tax policy and tax compliance in this area? Are initiatives such as the EITI useful in this regard?
JC: Good tax design and good revenue administration are key requirements for converting natural resources into economic development and transparency plays an important role in such regard. In the case of Mexico, the new fiscal regime for the hydrocarbons industry was designed not only to capture the economic rent for the nation, but also to ensure adequate incentives for investors and improve the governance of natural resources. For these purposes, the Ministry of Finance has drawn on international best practices, one of which is the EITI [Extractive Industries Transparency Initiative] standard. In fact, a workshop was co-hosted by the EITI and the Mexican government in Mexico City in early July 2014 and the board of the EITI held its most recent meeting immediately after that workshop.
ITR: How have your experiences at the OECD impacted your outlook as a revenue official now that you are returning to the SAT? What lessons will you be taking with you and how will these impact Mexican policy and its conformity with multilateral best practices, such as guidance provided by the OECD?
JC: Working with such a talented team of professionals has, no doubt, left a long-lasting impression on me. The lessons learned are many and, of course, I intend to draw on that experience to further improve the involvement of Mexico at the international tax bodies and to act as a bridge between Latin American countries and such bodies. I believe that Mexico is responding to a calling to become more and more active in the global arena.
ITR: Are there any Mexican tax reform plans on the horizon? Should we be looking out for anything outside of the Budget proposal?
JC: As shown by the 2015 Budget proposal, the current tax policy was clearly set out in the Tax Certainty Agreement issued by the Mexican government in late February 2014. Such policy includes, among others, pledges to not propose substantive tax changes (including new taxes and tax rate increases); to fight tax evasion; and to promote the formal economy. Thus, the focus should now be in taking advantage of that policy and the structural reforms approved during the past two years (for example, energy, telecom, financial, labour reforms) while complying with both the letter and spirit of tax laws and regulations.
ITR: What are the big challenges for tax professionals in Latin America at the moment? What areas will need the most attention in the next 12 months? Do you have any predictions?
JC: As the region becomes more integrated and globalised, being familiar with the international tax developments, such as the AEOI and BEPS projects, and their domestic implementation, is now a must for tax professionals in Latin America. The recent release of the global standard for AEOI and the 2014 update of the OECD Model Tax Convention, for instance, make clear that areas such as exchange of information and tax treaties, together with the ever-present transfer pricing, will continue to be relevant in the short run. I believe that the 2014 BEPS deliverables are a step in the right direction.
ITR: This has already been a very busy year for you! But when you look back on 2014, what do you hope to have achieved? What will make 2014 a successful year?
JC: It has been a great year and I would say an already successful one. For one, I feel very proud of the timely delivery of the full version of the AEOI standard. I still, however, have many expectations.
In June 2013, when I was still the delegate from Mexico to the OECD's Working Party 10 [on Exchange of Information and Tax Compliance], I proposed the AEOI standard to be based on the Multilateral Convention and operationalised through a multilateral agreement. In such regard, I am eager to see it come true at the signing ceremony that will be held in Berlin in late October.
Another achievement would be the release of the Spanish version of the AEOI standard, which I have already reviewed and hopefully will be published in the following months. Of course, the icing on the cake would be to have the new hydrocarbons area at SAT up and running by the beginning of 2015.
Jorge Eduardo Correa Cervera was, until September 2014, a consultant at the OECD on secondment from the Tax Administration Service of Mexico. He previously served as central administrator for international tax legal affairs, where he was competent authority for tax treaty interpretation and delegate from Mexico to several OECD working parties and UN Committee of Experts on International Cooperation in Tax Matters.
Jorge obtained his law degree from the Universidad Anáhuac Mayab and his master's degree in taxation from Universidad Panamericana, both with honours. Until 2004, he practiced in a law firm, before joining the Ministry of Finance and Public Credit in 2005.
He is an assistant professor at Universidad Panamericana, where he teaches a master's course in business tax law. He is an active member of the Mexican branch of the International Fiscal Association and the assistant deputy representative from Mexico to the Latin American regional committee. He was recently recognised by Revista Expansión as one of 2014's "30 promising people in their 30s".