United nations of tax incentives

Part II: Practical Aspects
exists (such as it is often the case with respect to extractive industry 
agreements) the MoF will usually be represented on the negotiating 
team and the Attorney General’s office will sign off on the agreement. 
The tax administration may or may not be represented. If it is not, 
there is a secondary issue as to whether the tax administration has a 
right to receive a copy of the agreement.
It may be that the tax administration has no right to a copy 
of the agreement due to confidentiality of the agreement. There have 
been cases where the first the tax administration knows of a particular 
agreement is when the taxpayer provides the agreement in seeking to 
claim the tax benefits of the agreement, and the agreement may be 
provided in a sensitised form. This shouldn’t happen because the tax 
administration has no simple way of checking the authenticity and 
validity of the agreement. It is true that the tax administration could 
check with other government agencies but they often find that there is 
some resistance in this regard.
One solution to deal with these issues is to require the MoF 
to keep a formal list of government agreements affecting tax and to 
provide the tax administration with an official copy of such agreements. 
The authority for a tax administration to administer the tax provisions 
of a particular agreement would be strictly limited to those that are on 
the MoF register and where the official copy of the agreement has been 
received. This is what the provision in the tax law for implementing 
government agreements might say.
This approach provides a level of certainty for the tax 
administration. They do not have to question the validity of a 
government agreement provided by the taxpayer (as often happens). Of 
course, this does not resolve the reconciliation issues discussed above: 
while the tax administration will be clear that it must administer the 
tax provisions of the agreement, it will still have to determine how 
those provisions interface with the general tax rules of the tax law.