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8/14/2019 Copernican Revolution in Tax Administration
1/22
12 August 2007
1
Putting the Client First
The emerging Copernican Revolutionof Tax Administration
Stuart HamiltonCentre for Tax Policy & AdministrationOECD
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Im from the OECD, and Im here to help.
really!
There is an increasing recognition that helping clients
comply in a way that assists them to grow: enables better compliance
allows clients to get on with the job of business, and
helps attract investment to the country in a fair and
transparent manner.
A Client Centric Strategy is a key part of enabling this
Aims
Putting the Client First
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Administrationcentric view
Tax
ClientClient
Client
Client ClientClient
Traditional view: A client must meet the administrations needs
Changing world views - from:
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Clientcentric view
Client
TaxTax
Tax
Tax TaxTax
Client
Client
Client
Client
New view: That the administration is responsive to client needs
A Copernican Revolution
Changing world views - to:
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Revenue authorities are important in creating a viablemarket economy
Revenue authorities interact with all businesses in theeconomy - they need to do so even handedly
Revenue regulations can spur or retard markets. Overregulation can stifle commerce, under regulation canundermine honest compliant clients.
A careful balance is required.
Effective neutrality of treatment between market segmentsis generally the policy aim.
Businesses and Revenue authorities - a developing partnership
Tax matters to business
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There is a growing recognition by Revenue authorities thatservice provision to business and citizens is critical inensuring high levels of voluntary compliance.
By making the system easier to comply with(Simplification)
By helping businesses to comply with the system(Service)
Thus enabling and 'encouraging' compliance
Revenue authorities and services to business and citizens
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Ready(The client knows what compliance is - knowledge)
communication strategies
Willing(The client is prepared to comply - attitude)incentives contained in instruments relationship with the regulatory agency acceptance of the reasons for the regulation trust in government
Able(The client has the capacity to comply - systems) regulatory design simple to comply, low compliance costs strategies that develop client capacities, business models
We want to have Clients who are ready, willing and able tocomply - and do...
Clients who are: Ready, Willing and Able to comply
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Compliance
Remembering that ...
Most clients
pay most of their tax
most of the time ...
Compliance models represent that most pay most of their tax
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Revenuestrategy:
Enforce
PersuadeAssist
SupportEducateEncourage
Customerbehaviour:
Evading
ResistantResigned
Trying
UninformedWilling
Not every problem is a nail to which the only response is a hammer ...
Compliance
Enabling compliance is the key factor for most Clients
-Spectrum-
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Client rights and Client obligations
It is a two way street
Right to: Obligation
Informed, assisted & heard Honesty
Appeal Co-operative approach
Pay correct tax only Provide accurate information
Certainty Keep records
Privacy Pay tax on time
Confidentiality
Rights and obligations...
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ClientGroup
Admin FunctionFiling, Payment, Audit, Debt Mgmt, Service,Appeals etc
VAT
W&S/SS Withholding Tax
Corporate Income Tax
TaxType
Large Business Taxpayers
Small Medium Business
Individuals non business
Traditional systems are organised by tax type or admin function
Systems
Solving the tax Rubik Cube
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Structures
Audit AppealsAdvisings
TaxAdministration
COMPLEX
SMB
NBUS
Client
COMPLEX
SMB
NBUS
COMPLEX
SMB
NBUS
Small and
MediumBusinesses
Non BusinessIncome Taxes
Complex-
LargeCorporates
A
D
V
I
C
E
A
U
D
I
T
A
P
P
E
A
L
TaxAdministration
A
D
V
I
C
E
A
U
D
I
T
A
P
P
E
A
L
A
D
V
I
C
E
A
U
D
I
T
A
P
P
E
A
L
Client
Functional vs Market Structure
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Cumulative distribution of tax paid
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 380 400 420 440 460 480 500 520 540 560 580 600
Rank of tax paid in class
ProportionoftotalLB&Itax
Chosen by largest tax contribution Chosen by largest income reported Chosen by largest total assets
Not all Clients are equal - some matter more than others
Structures
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Countries with Dedicated Organisational Units for Large Taxpayers
Africa Algeria, Benin, Burkina Faso, Cameroon, Cote d'Ivoire, Gabon,Guinea, Kenya, Madagascar, Mali, Morocco, Niger, Togo, Uganda.
Asia Bangladesh, Mongolia, Philippines, Sri Lanka, Cambodia
Ex Soviet Union Azerbaijan, Georgia, Russia, Ukraine
Europe Albania, Bulgaria, Finland, France, Hungary, Ireland, Latvia,Romania, Slovakia, United Kingdom, Serbia.
North America USA.
Central and Argentina, Bolivia, Columbia, Ecuador, El Salvador, Haiti,
South America Mexico, Nicaragua, Paraguay, Peru, Venezuela.
Middle East Iran, Pakistan, Saudi Arabia, Yemen.
Pacific Australia, New Zealand.
The trend towards Large Taxpayer Units
Structures
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Depth ofKnowledge
Width of
Knowledge
The Specialist
The Generalist
Breadth of Client needs
The Frontline
Staff: Specialists vs Generalists - no magic point of balance
Staffing
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Emerging trends in revenue authority client service approaches
Trends re service provision
From > To
Taxpayer > Client/Customer
Segmented service > Integrated one stop shop Paper communications > Electronic
Cheques & cash > Electronic Funds Transfer
Manual responses > Automated responses
Reactive programmes > Proactive programmes
Assistance > Self help & education
Evolving system
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PAPER v ON-LINE
7-14 days v On-line batch/real time
Pages of data to be keyed v small electronic data file
Single interface v multiple interfaces/approaches
Other benefitsKeying errors significantly reducedRequests for additional data reduced
Better client service can be provided
Its Better, Faster, Cheaper - but not easy!
Paper v On-line processing
Evolving system
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Revenue authorities - pulling and pushing a country on-line
Revenue authorities can pull a country on-line by makingservices and materials available over the Internet: 24/7
Legislation
Rulings & Guidelines
Tax record keeping and calculation software
Help -> FAQs, KB Systems, Proactive assistance
Governments can push a country on-line by requiringpayments and form filing to be made over the Internet
Generally medium to large businesses are targeted, thoughthe systems are available to all
Evolving system
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Pull requirements
To pull a country on-line Revenue authorities have to be earlyadopters of technology
Interactive - SMEs are a key target audience here(Non-resident SMEs are a consideration - if you want them to
comply.)
Plain language guidance with relevant examples(multi-language may be a consideration)
Linked with other relevant Government agencies(business entry point portal to Government)
Grouped around business events(Responsive to business needs at a point in time. One stop shop.)
Evolving system
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Push requirements
To push a country on-line the necessary infrastructure mustbe created & available
It must be secure - but not difficult to use
It must be reliable > first time, every time, any time
It should be a win-win implementation and provideadoptees with something - cost savings &/or greaterconvenience &/or certainty. Eg:
ability to estimate and keep track of taxes falling dueability to consolidate tax accounts - reduce payment churnability to schedule payments (match to cash flows, ifactor)
Evolving system
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For deliberate evaders Better, Faster, Cheaper will have a down side
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Contact......
More info
www.oecd.org Theme: Taxation
Contact