Training Course on Drafting Tax Legislation

Tax laws determine overall public revenue amounts and thus the level of public services a nation is able to provide its citizens. They also directly and indirectly act to help establish the macroeconomic environment in a country, including attractiveness for foreign investment, stability, and international competitiveness. Effective tax laws must be drafted in a way that achieves the policy goals of the government, taking into account the amount of revenue to be raised, equity, efficiency, and simplicity. The approach to drafting a tax law will vary widely from country to country due to differences in language and local drafting styles. Poor drafting often leads to substantial problems in the implementation of a new tax law, and errors or inefficiencies may be introduced at each stage of the drafting process. When using foreign advisors to draft tax legislation, it is essential that they have extensive experience in comparative tax law, a strong knowledge of tax policy, and the ability to read and discuss the draft with local counterparts. The foreign advisor should not be a person who seeks to impose a law copied from another country, but rather one who understands the local legal system, including civil law, administrative law, family law, business law, social law, and the cultural and customs of the society. Tax policy drives the drafting process, but policy itself is not fully formed until the final legal draft is developed and the policy objectives operationalized. The policy embodied in tax law should represent the objectives of the government in broad areas, and the law itself should be consistent with these objectives to the greatest degree possible. However, policy cannot be precisely translated into a legal framework, resulting in some implementation inefficiency, and the law itself may have effects unforeseen and unwanted by its designers. A tax code can replace separate tax laws, providing consistent provisions for every tax, including definitions, filing systems, penalties, and timetables. A tax code can also be simpler, as consistent definitions and directions can be used throughout, and it may be easier to maintain than separate tax laws. However, drafting a whole tax code takes more time, and in some cases, a basic income tax law may be a more suitable starting point.