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Revenue Administration

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  2. 2. Rationale for developing this tool by the World Bank Group• Important role and increasing capacity building work of the WBG in tax policy and revenue administration: – As of December 2011, around 126 WBG operations (credits, loans, and technical assistance advisory services) have components involving tax policy and revenue administration. – These operations target more than 70 countries-most of the operations target Low Income Countries in AFR, and Upper Middle Income Countries in LAC and ECA.• IEG Evaluation (2008) of the WBG support for PS reform recommended: – Better upstream diagnosis to better understand the context of reforms; and – Implementation of a set of tangible indicators to measure effectiveness and progress towards achievement of objectives;• A standardized and comprehensive tool to assess the performance of tax administration has not been developed yet. 1
  3. 3. Tools currently available to measure the performance of tax administrationOECD´s Comparative Information Series for OECD and non-OECDcountries (2010) Comparative Information Series: A pilot study on Revenue Administration in Sub-Saharan Africa (OECD/ATAF) Public Expenditure and Financial Accountability (PEFA) Framework The European Commission´s Fiscal Blueprints The USAID´s Collecting Taxes Database Diagnostic Framework for Revenue Administration (WB/RAPTG, 2000) 2
  4. 4. INDEX 3
  5. 5. IAMTAX: a comprehensive model to assess the performance of tax administration• The World Bank (PRMPS) has developed the IAMTAX as a comprehensive and systematic tool for assessing tax administration performance over time.• Overall performance of tax administration is analyzed by covering a wide array of elements encompassing three levels of analysis: (i) legal and regulatory framework; (ii) institutional set-up/capacity building; and (iii) core business processes.• The model is built on benchmarking analysis, but it recognizes the fact that no one- size fits all.“As a result, the model places strong emphasis on a country’s context and its evolving nature by proposing a framework to better accommodate changes in the country’s environment”. 4
  6. 6. IAMTAX: Objectives and main elements• The IAMTAX consists of two main elements: (i) the diagnostic tool; and (ii) the measurement framework• The diagnostic tool would :  assess the current situation of a given tax administration; and  establish the baseline for the entire set of indicators against which the performance of tax administration would be monitored and assessed throughout a period of time. The diagnostic tool would play a critical role in putting into context the current performance of a given tax administration vis-à-vis the proposed measurement framework.• The measurement framework would contribute towards achievement of two main objectives:  identify and asses performance gaps of tax administration by comparing the actual performance against a set of desirable benchmarks and good practices (“benchmarking” tool); and  assess and monitor performance of tax administration over time. 5
  7. 7. Using the IAMTAX as a benchmarking tool 6
  8. 8. Finding the core strategic dimensions of the model Current trends in tax administration: ✓ A new paradigm for ✓ New organizational control of compliance model ✓ Customer orientation ✓ Process orientation ✓ Market segmentation ✓ The key role of ICT together with risk ✓ International dimensions analysis techniques as a of taxation central plank of a modern control of compliance strategy 7
  9. 9. Core Strategic Dimensions of the Measurement Framework • The measurement framework has been developed around a reference system that consists of 14 core strategic dimensionsD widely recognized to beI key features of modernM tax administrations.ENS • The reference systemI ultimately centers on aO new paradigm of taxN administration that focuses on encouragingS compliance and cooperation with taxpayers. 3 LEVELS OF ANALYSIS Legal and Regulatory Institutional set-up Core business Framework and capacity building processes 8
  10. 10. Measurement Framework Indicators IAMTAX Indicators Type of taxpayerOutcomeindicators(30)Intermediate Economic sectoroutputindicators(20) Drill down indicators Geographic Location/ Region 9
  11. 11. Reference system is linked to the environment in which tax administration operates…..Key Objectives Strategic Dimensions Operational Level A. Simplification of tax legislation; Transparency, B. Client/taxpayer orientation; Outputs Outcomes equity and C. Enhancing voluntary compliance; • No. of tax audits; • Change in compliance simplification • Tax disputes resolved; behavior; D. Extensive use of Information and of tax • Increased level of Communication Technology; • Tax services provided; legislation E. Segmentation of taxpayers; • Tax arrears collected; voluntary compliance; F. Application of risk based criteria to • Other analyze and monitor tax Strategic Vision compliance; G. Information as a fundamental Core Business Processes asset of the tax administration; Market segmentation (Tax Mass Processes (Processing of H. Emphasis on Human Resource audit function, revenue arrears tax returns, taxpayer services..) Management; management…) I. Increasing relevance of Taxpayer registry Taxpayer account Effectiveness international taxation; J. Equity and transparency of tax system; K. Process orientation; Third party Efficiency L. Planning as a core element of tax e - Offices Banks information administration; M. Increasing the analytical capacities of tax administration Taxpayer N. External communication policy, Inputs services and Human resources; budget; and infrastructure which fosters relations with the external (physical and IT) communication private sector and other stakeholders; Environment 10
  12. 12. Grouping strategic dimensions into key objectives Strategic Vision, Legal and Regulatory Framework Operational Performance 11
  13. 13. Good Practices in Tax Administration• The model incorporates a significant number of good practices (190) extracted from the current literature and the extensive experience of the World Bank Group in tax administration reform projects. Good practices are classified according to the three levels of analysis: (i) legal and regulatory framework; (ii) institutional set/up and capacity building; and (iii) core business processes. 12
  14. 14. Methodology of the Benchmarking Tool• Each strategic dimension is linked to a • The “benchmarking tool” would set of good practices, outcome and determine how the tax administration intermediate output indicators. scores in each of strategic dimensions and key objectives.• Strategic dimensions are grouped into 5 key objectives including (i) • It would also determine how the tax transparency, equity, and simplification administration scores in (i) good of tax legislation; (ii) strategic vision; practices, outcome and output (iii) effectiveness; (iv) efficiency; and indicators; (ii) particular processes or (v) taxpayer service and external functions; and (iii) specific level or sub- communication. level of analysis.• Objective values or range of values are The overall score of the tax administration assigned to each of the indicators. would be the sum of scores of each strategic dimension.• Application of the model involves a comprehensive analysis of tax administration processes by using all available information sources. 13
  15. 15. IAMTAX: Reporting Results 14
  16. 16. IAMTAX: Assessing performance of the tax administration from different perspectives 14 Strategic Dimensions5 Key Objectives 12 Core Business Processes 15
  17. 17. Reporting results for each strategic dimension 16
  18. 18. IAMTAX: Approach to Key Objectives 17
  19. 19. Reporting results for key objectives 18
  20. 20. IAMTAX: Approach to Core Business Processes 19
  21. 21. Performance assessment graphics 20
  22. 22. Reporting Results: Tax Administration performance over time Strategic Vision Taxpayer service Tax audit performance Revenue arrears management 21
  23. 23. Reporting Results: Strategic Vision and Operational Performance OUTSTANDING PERFORMANCE GOOD PERFORMANCE AVERAGE PERFORMANCE LOW PERFORMANCE 22
  24. 24. Reporting Results: Performance of a given Tax Administration in Strategic Vision and Operational Performance Country X 23
  25. 25. Reporting Results: Cross-Country Comparison in LAC Region (hypothetical situation) H I G F E B C D Country A 24
  26. 26. Comparative Analysis of Tax Administrations in LAC Region (hypothetical situation) H 201 6 I F E 20 G 12 B C D Country A 25
  27. 27. IAMTAX AS ADIAGNOSTIC AND MONITORING TOOL “Theory is when you know everything but nothing works. Practice iswhen everything works but nobody knows why. We have put together theory and practice: nothing is working… and nobody knows why” (Albert Einstein) 26
  28. 28. IAMTAX as a Diagnostic and Monitoring Tool Setting a Setting aDiagnosis of a tax Analyze the baseline baseline and administration underlying respective factors that targets for the explain indicators over institutional a period of time gaps or weaknesses Analyze the Monitoring Context With the help of Performance Monitoring the diagnostic Performance tool against targets 27
  29. 29. IAMTAX as a Diagnostic and Monitoring Tool- Monitoring progress over time Year 1 Targets Year 2 Targets Year 3 Targets Indicators Diagnostic tool baseline Country X Country X Supervision Monitoring and Supervision mission 2012 assessing compliance mission 2014 against targetsMeasurement Benchmarkingframework tool 28
  30. 30. Full set of Indicators and Good Practices OUTCOME INTERMEDIATE INDICATORS OUTPUT (30) INDICATORS (20+40) GOOD PRACTICES (190) DRILL DOWN DRILL DOWN INTERMEDIATE OUTCOME OUTPUT INDICATORS INDICATORS Indicators and good practices used toIndicators and good practices used asa benchmarking tool + carry out diagnosis and monitoring of tax administration 29
  31. 31. Implementation of the model- Roadmap Refine themethodology Prepare documents, questionnaires and indicators matrix and monitoring cards Analyze tax administration Validate the proposed set processes by using all of indicators and good available information practices sources The results of the first pilot will be used to build a web application which would produce reports and results of the gap analysis, and transform them in a graphical form 30
  32. 32. IAMTAX-Indicators Matrix 31
  33. 33. IAMTAX: Indicators Cards 32
  34. 34. Web page IAMTAX: Assessment WORLD BANK IAMTAX The IAMTAX is a tool that evaluates in a comprehensive and systematic way performance of tax administration. It consists of two main elements: a diagnostic tool and a measurement framework. The measurement framework would contribute towards achievement of two main objectives: identify and assess performance gaps of tax administration by comparing the actual performance against a set of desirable benchmarks and good practices (“benchmarking” tool); and assess and monitor performance of tax administration over time (diagnostic and monitoring tool). The diagnostic tool would: (i) assess the current situation of a given tax administration; and (ii) establish the baseline for the entire set of indicators against which the performance of tax administration would be monitored and assessed throughout a period of time. Methodology  Diagnostic tool  Measurement framework  Best Practices  List of indicators  Statistics and reports  33
  35. 35. Additional functionalities of the model Comparative Studies of Documents Tax Database Administrati on Manual of Tax Case Administrati Studies on 34