## Framework Administered Account for Selected Fund Activities: Tax Policy and Administration Topical Trust Fund Subaccount

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### Purpose and request
- Request for Executive Board approval to establish the Tax Policy and Administration (TPA) Topical Trust Fund (TTF) subaccount (the “Subaccount”) under the Framework Administered Account for Selected Fund Activities (the “SFA Instrument”).
- Background: In March 2009, the Fund established a new Framework Administered Account to administer external financial resources for selected Fund activities (the “SFA Instrument”).
- Approval sought on the basis that the essential terms and conditions of the Subaccount are consistent with the terms of the SFA Instrument, and the activities to be financed are consistent with the purposes of the Fund.

### Rationale and objectives
- Management and Staff have discussed with donors scaling up the Fund’s capacity building, training, and related activities in the area of tax policy and administration.
- Boosting domestic revenue raising capacity is important for:
  - meeting public expenditure and development needs,
  - supporting state-building,
  - over time, reducing aid dependency.
- The Subaccount would enable partnerships with donors in the form of a topical trust fund and provide an opportunity for key stakeholders in global tax reform efforts to leverage the Fund’s technical expertise while facilitating coordination among donors and TA providers.

### Essential terms and conditions of the Subaccount
- a. Resources:
  - The resources of the Subaccount shall consist of amounts contributed to the Subaccount by donors (“Contributors”), and earnings that accrue as a result of the investment of these amounts (net of any costs associated with such investments).
  - The resources of the Subaccount will be used to finance capacity building, training and related activities, consistent with the purposes of the Fund for TPA.
- b. Contributor consent:
  - Each Contributor will consent to essential terms and conditions of the Subaccount before the Managing Director may accept the Contributor’s resources into the Subaccount.
- c. Placement and transfers:
  - Resources will be placed in the Subaccount by each Contributor after signature of a Letter of Understanding between the Contributor and the Fund.
  - The subaccount will permit Contributors to transfer resources from any bilateral subaccount under the SFA into the TPA subaccount.
- d. Joining:
  - Contributors may join the Subaccount at any time.
  - A Contributor’s consent to the essential terms and conditions of the Subaccount will constitute the Contributor’s ex ante concurrence to any additional Contributor joining the Subaccount on the latter’s consent to the same essential terms and conditions.
- e. Withdrawal:
  - A Contributor may withdraw from the Subaccount, and receive a retransfer of its net contributions, without precipitating the termination of the Subaccount.
- f. Management reimbursement:
  - To help defray the expenses incurred by the Fund in the management of the Subaccount that it will finance, reimbursement equal to seven percent of the expenses financed from the Subaccount will be paid to the Fund from the Subaccount.

### Proposed action
- It is proposed that the Executive Board approve the establishment of the Subaccount.

*Prepared by the Legal and Finance Departments, and the Office of Technical Assistance Management; Approved by Sean Hagan, Andrew Tweedie, and J.R. Rosales; November 10, 2010.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_111010.pdf_