Managing (potential) Conflict of Interest
Conflict of interest can be defined as a situation that occurs when an Expert is in a position to exploit his or her own professional or official capacity in some way for personal or corporate benefit. These situations involve public officials who, in their private capacity, have interests that improperly influence the performance of their official duties and responsibilities.
Fostering public trust in government institutions is a crucial element of good governance and builds a stronger relationship between the taxpayer and the State. As an Expert working in a foreign country or jurisdiction for the Host Administration, TIWB Experts have an important role to play in maintaining this taxpayer trust, notably by preventing and managing potential conflict of interest. Further information can be found in Managing Conflict of Interest in the Public Sector: OECD Guidelines and Country Experiences.
State institutions other than the tax administration may have the responsibility for controlling and monitoring how conflict of interest is dealt with in practice. This could include internal audits and investigations by anti-corruption agencies or tax police. It is not possible to identify all possible forms of conflict of interest in advance of a TIWB programme. However, it is possible to manage the risk.
All parties to a TIWB programme must maintain a clear understanding of the applicable rules within the Host Administration that deal with conflict of interest, whether these are contained in formal legislation, regulations, codes of conduct or elsewhere. This includes awareness of the agencies (if any other than the tax administration itself) responsible for monitoring conflict of interest issues, the process for managing any conflict that arises, and any sanctions that may apply in a conflict of interest situation.
The legal responsibility of the Expert to appropriately manage conflict of interest must be defined by the Host Administration and referenced in the TIWB programme Terms of Reference. Existing rules and regulations set by a Host Administration may apply directly to the Expert if she/he is considered to be an employee of the Host Administration. Alternatively, if the Expert is not considered to be an employee of the Host Administration, equivalent obligations and legal responsibility may need to be defined in the Terms of Reference. The Expert is also expected to sign a declaration of no conflict of interest before commencement of a TIWB programme.
Experts must consider not only existing conflict of interest, but also apparent and/or potential conflict of interest. Apparent conflict of interest arises where appearances suggest to third-parties that an official's private interests could improperly influence the official's performance of duties. Potential conflict of interest may arise where an official has private interests that could have an improper future impact on the official's professional performance.
Herein, "conflict of interest" includes apparent and potential conflict of interest. Where there is an allegation of conflict of interest, it is important to ensure that investigations are carried out and managed appropriately before a determination is made on whether any such conflict exists. During the investigation process, appropriate support for the Expert should be provided from the Host Administration and any Partner Administration if the Expert is a currently serving official.
Within the context of a TIWB programme, conflict of interest could impact not only the expert, but also tax administrations in two separate jurisdictions. This may occur when the public duties of an Expert working for one tax administration (either Partner Administration or prior tax administration) improperly influences the performance of that Expert's official duties while working for another tax administration (Host Administration). In the case of currently serving officials from a Partner Administration working as TIWB Experts, there is an additional possibility of a conflict arising when a company being audited in the Host Administration is a tax resident in the Partner Administration country or jurisdiction.