Gonzalo Arias and Palmer De La Cruz Pineda
According to the G20, the world is experiencing an “inequality emergency”. This is demonstrated in several studies. For example, a study led by Joseph Stiglitz concludes that between the years 2000 and 2024, the richest 1% of the world captured 41% of all the wealth generated, while the 1% of the wealth generated ended up in the hands of the poorest 50% of the world’s population (Stiglitz, J.E. 2025).
To address this problem, which mainly impacts developing countries, but does not exclude several countries considered as developed, it is necessary to work at a global and local level. No government is self-sufficient to address this issue, given that capital has no borders, especially in the current times, where it is estimated that intangible and digital assets concentrate a significant part of the world’s wealth. For example, the World Bank, in its publication “The Changing Wealth of Nations” (2021) mentions that 80% of wealth could be made up of intangible capital.
Fiscal policy can have a positive or negative impact on inequality, depending, among other factors, on the progressivity of tax systems and the quality of spending. Professionally managed, fiscal policy plays a key role in the redistribution of wealth, by strategically transferring resources to promote the development to the most vulnerable sectors of society. It sounds logical, but on a practical level it is a complex task. For example, if we focus on public revenues of a tax nature, the principles of progressivity, proportionality and equity are mentioned in many magna carta or constitutions of countries, but they are not fully complied with, either due to tax policy and/or tax administration issues.
In this regard, numerous initiatives have been proposed to address inequality from the perspective of public income. These initiatives range from the adoption of more progressive scales in direct taxes, to the introduction of tax benefits in indirect taxes or simplified regimes, among other developments.
In recent years, civil society (e.g., OXFAM, TJN, LATINDADD, ICRICT, etc.) and some governments (Brazil, Spain, etc.) have been promoting the idea of taxing large fortunes more effectively. Although ambitious and technically well-thought-out standards are designed, there are many limitations that governments face in order to implement them effectively and achieve the desired results. High-income and high-wealth taxpayers are typically well advised and therefore more likely to take advantage of legal loopholes by adopting complex ownership or financial structures. These arrangements often involve multiple legal entities, contractual layers, and/or operations in opaque or low-tax jurisdictions. Usually, these types of taxpayers do not maintain significant assets or sources of income in their name.
In a scenario where access to information on the economic and financial situation of this segment of taxpayers is still limited, the verification and control powers of the tax administrations are neutralized, thus violating the principle of equity, both horizontally and vertically. From a horizontal perspective, the greatest tax burden will fall on those “rich” who could be considered “captives” (for example, those who have properties in their name, are easily identifiable or conduct businesses related to the exploitation of land in the country, where barriers to exit are extremely high). From the vertical perspective, taxpayers with lower manifestations of wealth would end up paying proportionally more taxes than those who are outside the effective scope of the tax administration.
However, positive aspects can also be cited. Tax policy and administration are gradually evolving towards greater transparency, cooperation, efficiency, and effectiveness in their actions. For example, in terms of transparency, the vast majority of the countries of the world are part of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum), which implies the possibility of signing the Convention on Mutual Administrative Assistance in Tax Matters (signed by more than 140 jurisdictions), giving rise to the exchange of information on request, the automatic exchange of information, the spontaneous exchange of information, the coordination of joint, simultaneous and external audits and, eventually, the transfer of documents and mutual assistance in tax collection. Associated developments of the Global Forum, such as the Common Reporting Standard (CRS), the regulatory framework on final beneficiaries, the Crypto-asset Reporting framework (CARF), and the Real Estate Exchange, also help tax authorities adapt their capacity to the demands of the context.
Internally, many tax administrations have devoted considerable effort to accessing greater sources of domestic information (property records, financial transactions, etc.) and adopting risk-based management approaches, which allow the available international and national information to be used intelligently to apply evidence-based treatment actions on the behavior of taxpayers. This approach facilitates taking preventive and prospective actions, generating greater perception of fraud detection, and promoting voluntary compliance.
With such management capabilities, for example, a Modern tax administration would be able to know in detail a national and international property chain. Access to an internationally owned chain is possible for a tax administration if it makes use of information exchange upon request, identifies assets through the automatic exchange of information on financial accounts, crypto-assets, and real estate, and could even apply precautionary measures or amicable or coercive collection processes., with the collaboration of its peers, when the taxpayer decides not to pay and does not keep assets in his country of tax residence.
In this sense, the opportunities offered by mutual administrative assistance mechanisms to better manage taxes originated in international transactions are significant; however, the use of more advanced mutual assistance mechanisms (e.g., joint controls or collection assistance) is usually limited in developing countries, due to restrictions in legislation, their limited capacity or lack of synergies between the competent authorities. Advancing on new cooperation mechanisms represents an important improvement opportunity for these countries. For example, the latest Progress Report of the Fiscal Transparency Initiative for Latin America 2025 (OECD, 2025) shows that only 4 countries out of the 15 signatories of the Punta del Este Declaration account for 90% of the on-demand exchanges conducted in the region, and that tax audits abroad or simultaneously are still considered as a project for the future.
The above is highly relevant because it directly affects the tax administration’s ability to address certain groups or segments of taxpayers. Although discussions on tax policy (e.g., new taxes on large fortunes and incomes) are necessary, their impact is neutralized when these new taxes or reforms cannot be administered correctly by the tax administrations of the countries most affected by inequality. With some exceptions, these countries are usually those whose tax administrations have fewer resources or capacities. Even the deliberate creation of new taxes to obtain greater resources can turn countries into “tax infernos,” especially when these are added up over time and are administered in an ineffective way, without achieving the expected result and always impacting on captive taxpayers. Therefore, the most effective way to bring equity to the tax system is to create capacities that allow the tax administration to apply the tax system correctly, regardless of the reforms that may be implemented in the short or medium term to contribute to this purpose. In other words, it involves working with the available resources more effectively.
An example worth highlighting that substantiates the above is the experience of the National Superintendency of Customs and Tax Administration (SUNAT) of Peru. Among its main challenges, in the field of risk management, they consider the control of the segment of taxpayers with large assets. This experience shows that with creativity, methodology, specialized personnel and making efficient use of available resources, a significant impact on compliance can be achieved in the short/medium term, without the need to resort to significant legal reforms. This experience was supported by the Cooperation Program of the Inter-American Center of Tax Administrations (CIAT) and the Secretariat of State for Economic Affairs (SECO) of the Government of Switzerland, under the project called “Evaluation and Improvement of Compliance Risk Management and Tax Rules Applicable to Individuals in Peru, to Increase the Tax Pressure in the High-Net-Worth Segment”, whose implementation stage began in 2023 and concluded in 2025.
The first step was to conduct a thorough diagnosis of the SUNAT risk management model and the way in which this model addressed the risks of the segment of taxpayers with high net worth. This diagnosis allowed to identify opportunities to optimize the use of information sources and develop coverage strategies. It also contributed to the consolidation of the model and the improvement in the identification of risks associated with the segment of taxpayers under analysis, thus strengthening the use of available data and consequently the analytical capacity of SUNAT.
The second step was to develop a specific strategic agenda for the control of large private assets. This led to a third phase, aimed at improving controls on income from foreign sources. This is a key area of action within the framework of the global income principle that govern Peru.
During the planning and development of the project, an integral approach was promoted that combines improvements in data management, new organizational forms of resources, issuance and updating of administrative regulations, expansion of the use of international information exchange, preventive controls, and the intensive use of data analytics. In this way, the foundations were laid to address non-compliance gaps, strengthen fiscal transparency and consolidate a SUNAT more prepared for the challenges of contemporary global taxation.
This strategic effort has resulted in measurable and sustainable improvements, which today position the entity as a benchmark in the modernization of tax control. As a result, SUNAT recorded significant achievements in the income tax for the 2024 financial year compared to the previous year[1]:
- approximately 25% increase in the number of returns filed by high-net-worth individuals.
- the amount of declared income increased by 31%.
- the amount of the declared tax due was increased by 52%.
- voluntary compliance was evident in the payments made, which increased by 55%.
- in the segment of taxpayers reached by the Common Standard Report (CRS), an exceptional growth of 80% was achieved.
In addition, this performance has contributed to the increase in the annual collection due to the regularization of the personal income tax, which marked a growth of 28.2% in 2025, compared to the previous year[2].
The results show the impact of data-based tax intelligence, the benefits of a compliance improvement strategy for specific taxpayer segments and the importance of advance and personal assistance to taxpayers, which allows generating a virtuous cycle of continuous improvement.
In addition, important aspects such as the need to incorporate new registration assumptions to the Single Taxpayer Registry (RUC), the obligation to include the wealth declaration in the income statement, the strengthening of specialized supervision and the creation of the Large Wealth Unit were addressed.
All these actions also allowed the SUNAT to complement the Catalog of High Fiscal Risk Schemes of the year 2024 and contribute to the formulation of a medium and long-term strategic vision.
These advances demonstrate the importance of aiming at the efficiency of the current tax system before addressing reforms and reflect a solid and coherent institutional effort, focused on improving transparency, strengthening voluntary compliance, ensuring tax management in line with the challenges of the current environment. In addition, this experience also demonstrates the importance of technical collaboration and international cooperation, which has made it possible to reduce learning deadlines and strengthen the response capacity of the Tax Administration.
References
World Bank (2021). The Changing Wealth of Nations, 202: Managing Assets for the Future. Washington, DC: World Bank.
Stiglitz, J.E. (2025). The Inequality Emergency: Global Report for the G20 Task Force on Inequality. G20 South Africa/Columbia University Policy Reports.
Organization for Economic Cooperation and Development (2025). Fiscal Transparency in Latin America 2025. Progress Report of the Initiative for Latin America.
[1] Information available at:https://www.ciat.org/el-programa-ciat-seco-fortalece-capacidades-de-la-sunat-para-el-control-de-transacciones-internacionales-y-grandes-patrimonios/
[2] According to collection statistics published by the SUNAT (Table A1) available at:
https://www.sunat.gob.pe/estadisticasestudios/ingresos-recaudados.html