Tax Administration

Comparative Information on OECD and Other Advanced and Emerging Economies

English
ISSN: 
2307-7727 (online)
ISSN: 
2308-7331 (print)
http://dx.doi.org/10.1787/23077727
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The OECD's Tax Administration Comparative Information Series, which commenced in 2004, examines the fundamental elements of modern tax administration systems and uses an extensive data set, analysis and examples to highlight key trends, recent innovations and examples of good practice. The primary purpose of the series is to share information that will facilitate dialogue among tax officials and other stakeholders on important tax administration issues, including on identifying opportunities to improve the design and administration of their systems both individually and collectively.

 
Tax Administration 2017

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Tax Administration 2017

Comparative Information on OECD and Other Advanced and Emerging Economies You do not have access to this content

English
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Author(s):
OECD
29 Sep 2017
Pages:
208
ISBN:
9789264279124 (PDF) ;9789264279117(print)
http://dx.doi.org/10.1787/tax_admin-2017-en

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This report is the seventh edition of the OECD's Tax Administration Comparative Information Series. It provides internationally comparative data on important aspects of tax systems and their administration in 55 advanced and emerging economies. The format and approach for the 2017 edition of the publication has been revised. The commentary is now more succinct, focusing on significant tax administration issues and trends. It provides increased analysis, backed by more than 170 data tables and complemented by more than one-hundred examples of innovation and practice in tax administrations. It also features eight articles authored by officials working in participating tax administrations that provide an “inside view” on a range of topical issues tax administrations are managing. The report has three parts. The first contains seven chapters that examine and comment on tax administration performance and trends up to the end of the 2015 fiscal year. The second part presents the eight tax administration authored articles, while part three of the publication contains all the data tables which form the basis of the analysis in this report as well as details of the administrations that participated in this publication.

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  • Foreword

    The Tax Administration 2017 is the seventh edition of the OECD Centre for Tax Policy and Administration’s biennial comparative information series first published in 2004. The primary purpose of the Tax Administration Series (TAS) is to share information that will facilitate dialogue on the design and administration of tax systems.

  • Preface

    The Tax Administration Series has developed into a rich resource of comparable information for tax administrations since the first edition was published in 2004. This comprehensive survey of organisation, process and performance helps tax administrations to understand better how they and their peers are operating. The new 2017 edition contains more analysis of trends and activities and of the changing environment in which tax administrations operate. It includes, for the first time, country-authored articles on some of the latest developments in the field.

  • Abbreviations
  • Executive summary

    The 55 tax administrations participating in the seventh edition of the OECD’s Tax Administration Series (TAS 2017) collect net revenue of EUR 8.5 trillion (2015), equal to about 20% of the GDP. They are large and complex organisations employing almost 2 million staff that deal with the tax affairs of more than 750 million personal and corporate taxpayers. Their combined operating budgets amount to EUR73 billion, less than 1% of net revenue collected.

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  • Expand / Collapse Hide / Show all Abstracts Comparative information on tax administrations

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    • The changing face of tax administration

      This chapter provides an overview of how tax administration is changing as the ecosystem in which tax administrations operate becomes broader and deeper, including as a result of a vast increase in the flow of digital information. Administrations are responding to these challenges through the introduction of new technologies and analytical tools. This is allowing tax them to rethink how they operate, offering the prospect of lower costs, increased compliance and a reduction in burdens for compliant taxpayers.

    • Tax collection

      The primary purpose of a tax administration is the collection of tax revenue on behalf of citizens to fund the work of the government. Administrations, in serving the public interest, look to collect the proper amount of tax due to the government at the least economic cost, while conducting their operations in an efficient and effective manner. Given most administrations rely on taxpayers meeting payment obligations of their own accord (voluntary compliance); they perform their role as tax collectors giving careful regard to the relationship of trust that needs to exist between them and their customers. Before examining in Chapters 3 to 7 how tax administrations go about the tasks of tax collection, it is appropriate to look at their importance to governments and economies in discharging their primary role. In this respect, this chapter provides information on the aggregate net tax revenues collected as well as other key figures related to activities of the administrations covered in this publication.

    • Institutional arrangements of tax administrations

      This Chapter describes the increasing responsibilities being undertaken by many tax administrations, the institutional structures adopted to administer these, and the key organisational features that support tax administration operations.

    • Tax compliance risk

      Tax administrations have traditionally relied extensively on audits of high-risk cases to bring in additional revenue and to enhance the perception that non-compliance is associated with significant risk. The last decade has seen a shift towards more evidence-based approaches to compliance risk management, as documented in a range of Forum on Tax Administration (FTA) publications. These approaches generally involve allocating resources and structuring activities on the basis of risk patterns, using a range of instruments to address drivers (rather than symptoms) of risk, and evaluating the success of activities in terms of their impact on the overall compliance environment. This chapter describes how changes in technology, combined with more extensive use of third party data and advanced analytical tools, are now ushering in another wave of change to the way administrations determine report and manage tax compliance risk.

    • The changing role of tax service providers

      Traditional tax intermediaries such as tax agents, bookkeepers and the accountancy professions continue to play a significant role in the operation of the tax system of many jurisdictions. These intermediaries often support taxpayers in complying with their tax obligations, as well as undertaking other services. They have a longestablished role in many jurisdictions of working with administrations to improve how the tax system functions technically and as an end-to-end process. As new technology has enabled new types of supporting services, including online accounting and automated filing, tax administrations are increasingly having to consider how they can best interact and engage with a wider range of tax service providers. This chapter explores the changing role of tax service providers and the nature of the working relationship with the tax administration. It also comments on how administrations are responding to the challenges and opportunities presented by the new business models and technologies.

    • Performance of tax administrations

      This chapter summarises operational performance data for key areas of tax administration. In so doing it examines each of the major functions of the tax system: • An integrated registration process for taxpayers; • Effective and low cost processing (assessment) of tax returns and tax payments; • Timely and effective support and services to help taxpayers fulfil their obligations; • Effective and timely verification interventions that confirm the accuracy of reported information; • Effective and efficient interventions to collect overdue payments and returns; and • Access to timely and cost effective tax disputes processes. This chapter concludes that overall performance by tax administrations remains strong. It also notes the significant challenges that lie ahead in utilising new technologies and business approaches to continue to decrease burdens and enhance compliance. This chapter also highlights a number of areas where administrations are invited to consider opportunities to improve performance and reporting.

    • Budget and human resources

      This chapter describes tax administrations operating budgets. In so doing it comments on improvements in productivity and innovation that are helping many administrations manage the significant on-going financial pressure they face; and in some cases allowing them to fund the development new capabilities. It provides information on tax administrations’ workforce and sets out challenges administrations are managing in increasing their capability while managing a workforce that in general terms is reducing in size and on average getting older.

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    • Advanced analytics

      “Advanced analytics” encompasses a set of techniques to uncover insights from data to inform decisions and to test policies and interventions. From its initial use in the selection of cases for audit, the scope of advanced analytics applications has broadened significantly, as has the amount of available data. Tax administrations now use analytic techniques to inform a wide range of actions, including optimising debtmanagement processes, improving filing rates and quality, delivering better taxpayer service, and understanding the wider impact of policy changes. Moreover, many of these applications now support real-time (or near real-time) operational processes. This widening of the field has given rise to a range of new organisational and technical challenges, from establishing appropriate governance and projectmanagement structures, to building representative datasets and selecting suitable modelling techniques. This chapter summarises how Forum on Tax Administration (FTA) administrations are using advanced analytics today and outlines the principal management and governance challenges they face.

    • Co‑operative approaches to tax

      Over the last decade an increasing number of tax administrations have adopted co-operative compliance programmes for large businesses. These are based on openness, disclosure and transparency between the tax payer and tax administrations and on the principle of trust. For business these programmes provide a higher degree of tax certainty at an early stage, enhance their internal understanding and management of risk and can lead to a reduction in compliance costs, particularly those associated with disputes, as well as reputational benefits. For tax administrations the main benefits are improved assurance of tax, reduction in disputes, increased awareness of business concerns and changes in business models as well as better allocation of resources. This chapter examines developments in co-operative compliance approaches and the scope for multilateral initiatives which may help increase tax certainty more widely, helping to promote investment and growth.

    • Insights from innovations in tax debt management

      Tax administrations focus on achieving a high level of tax compliance on the premise that prevention is better than cure. This is especially the case when it comes to tax debt and the minimisation of arrears and write-offs. Traditionally debt management has focussed on approaches that produce better debt recovery performance. Increasingly tax administrations are investing in research to enable them to develop policy approaches that help avoid tax debt being incurred in the first place or avoid tax debt increasing through supportive interactions with taxpayers. This chapter provides an overview of some of the innovative approaches and strategies of tax administrations in this regard where the common theme has been around tailoring interventions more closely to the specific circumstances of the taxpayer.

    • Using digital delivery to enhance the integrity of tax systems

      Developments in digital technology and in the analytical tools available to tax administrations will facilitate fundamental changes in the way that tax is assessed, verified and collected. This has the potential to increase compliance while reducing burdens significantly, including direct costs, and freeing up resources for more productive activities. Tax administrations are at different stages of digital maturity and will profit from exchange of best practices and practical experience, in particular in the light of the pace of technological change, the associated change management issues and the proliferation of legacy systems. This chapter looks at the building blocks of digital delivery, in particular robust identification of taxpayers and integration of natural systems, and suggests further work on measurement of outcomes.

    • Large business and international

      Large business taxpayers are of critical importance to the economies in which they operate. They produce the majority of export income, provide a large share of the tax revenue and, in many economies provide the majority of jobs. They also have complex business structures with multiple operating entities that engage in international transactions presenting distinct and significant tax compliance issues that can have major consequences on tax revenues if not adequately addressed by tax administrations. In the wake of the work on the OECD/G20 project on Base Erosion and Profit Shifting (BEPS), which will provide tax administrators with new information and tools to address compliance issues related to this important taxpayer segment, it is incumbent upon tax administrations to ensure that their own actions do not create unnecessary tax uncertainty which could have negative consequences on economic growth and result in unpredictable government revenues. In this context, the issues surrounding tax certainty for both businesses and tax administrations will be of increasing importance. In this chapter, we will explore the current trends in managing large taxpayer compliance that focus on compliance risk management, international collaboration, co-operative compliance, and tax certainty.

    • Improving mutual agreement procedures

      Nearly all tax treaties between countries provide for a mechanism, known as the mutual agreement procedure (MAP), for resolving disputes as to the application and interpretation of the treaty provisions. Over time, however, the number of unresolved disputes within the MAP procedure has increased, creating uncertainty for both taxpayers and tax administrations. This chapter provides an overview of initiatives that have been taken to improve the MAP process, including the recent minimum standard agreed under Action 14 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project. This will provide context for a discussion of opportunities and approaches that countries might wish to consider in order to prevent disputes reaching MAP and, where they do, to improve the effectiveness of the MAP process.

    • The measurement of tax gaps

      A key objective of all tax administrations, whether explicit or implicit, is to improve tax compliance and minimise the tax compliance gap. An increasing number of OECD countries are estimating tax gaps and publishing their findings, particularly for value added tax (VAT). Estimation of tax gaps over time, as well as one off, or partial tax gap analysis, can provide valuable insight to inform policy and compliance strategies and help revenue authorities to understand the scale of noncompliance and emerging risks. While the tax gap has intuitive attraction for both the public and political representatives, it is a difficult concept to define precisely. Estimation is also difficult as much of the tax gap is either deliberately concealed from view and/or data may be difficult to find. The measurement and publishing of tax gaps should therefore be navigated and communicated carefully. Limitations of tax gap estimates mean they are not a good basis for explicit performance targets. This chapter sets out some issues to consider in tax gap measurement.

    • Third-party data management – the journey from post-assessment crosschecking to pre-filling and no-return approaches

      The use of third party data plays an important role in supporting modern tax administrations processing of tax returns and ensuring complete and accurate information in assessments. While post-assessment crosschecking of information remains the norm in most Forum on Tax Administration (FTA) countries, many administrations report strategies to extend the range of data sources used to improve both coverage of the regime and the quality of the pre-filled return. The majority of countries report that moving to pre-assessment verification is a high priority in their current compliance strategy, as is extending the use of data provided from third parties. This chapter describes the pathway from post-assessment crosschecking to pre-filling and, where appropriate, no tax return approaches

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