Policy Research Domains (Adjacent Basic Research Areas) A. Institutions Related to Financial and Labor Markets, and New Corporate Law and Governance

International Cooperation for Improving Tax Compliance and How Japan Should Respond

Project Leader/Sub-Leader

ISHII Michitoo

ISHII Michitoo Senior Fellow



2009 - 2010

With the globalization of economic and financial transactions, the use of aggressive tax planning (ATP) schemes using tax shelters in tax havens has become widespread. Needless to say, for countries across the world, ensuring tax compliance has become a very serious issue both in terms of ensuring tax fairness and safeguarding sound national finances.

The move to seek international cooperation in this area has gained momentum particularly since 2008, following the revelation of cases of unprecedented international tax evasion and the outbreak of the global financial and economic crisis. In a series of international forums, including Group of Eight (G8) and Group of Twenty (G20) summits, as well as the Organization for International Cooperation and Development (OECD), world leaders and delegates have renewed their recognition of the importance of ensuring tax compliance and corporate governance.

As the measures toward achieving that goal, the tax authorities of major countries have come to emphasize the importance of building an "enhanced relationship" with taxpayers that is firmly underpinned by mutual trust and understanding, rather than relying solely on enforcement measures against tax havens and taxpayers. This "enhanced relationship approach" is to improve compliance through the "real time solving" of tax problems in a prior confirmation-and-consent process after securing full disclosure and transparency of underlying transactions. Such an approach has already been adopted by the tax authorities of the United States and some European countries. Their experience has shown that the approach, in addition to contributing to the transparency and efficiency of both tax administration and taxpayers, also helps improve corporate governance through enhanced tax risk management on the part of companies.

In Japan, this poses an important issue that should be considered not only by the administrative authorities but also by the whole society, including companies and individuals as well as financial and capital markets, as part of initiatives for improving compliance, efficiency, and transparency. This research project aims to review and identify the significance of these recent moves toward international cooperation in tax compliance and consider how Japan can and should respond in its policies in the future.

September 8, 2009 - September 14, 2010

Major Research Results


RIETI Discussion Papers