The Catalan experience on building a modern Tax Administration (2013-2018)

1. The Catalan experience on building a
modern Tax Administration
Barcelona, June 1, 2018
International Congress on efficiency of tax administrations,
international cooperation and governance

2. Contents
2
1. Introduction and context
1. Big issues on multilevel tax administration
2. Catalonia: a quick overview
3. The Catalan tax system
2. Case study: Catalonia, towards a modern tax administration
1. Initial situation
2. Challenge
3. Solution
4. Results
3. Future challenges on efficiency, governance and cooperation

3. 1. Introduction and context
1.1 Big issues on multilevel tax administration
3
Two important ideas to start with…
*Source: OECD (2017). Tax Administration 2017: Comparative information on OECD and other advanced and emerging economies
Tax administrations eco-system. 2017*
Transfer pricing
Cooperation
Tax compliance
Taxpayer services Innovation
Compliance costs
Fairness
Modern
Efficiency
Effectiveness
BEPS
Fiscal federalism
Information exchange
Dispute resolution
Rights and duties
Capacitation
Integration
Digital
Transparency
Tax fraud
Co-creation
Governance

4. 1. Introduction and context
1.2 Catalonia: a quick overview
4
Catalonia is an autonomous community and exercises its self-government in the Spanish State in
accordance with the Constitution of 1978 and the new Statute of Autonomy, approved in 2006. The
Generalitat de Catalunya is the institutional system around which Catalonia's self-government is
politically organized and it dates from 1359.
Some basic data of Catalonia
30.078 €
GDP per capita (2016)
7.534.813
inhabitants
32.108,2 Km2
surface area
Catalan, Spanish and Aranese
official languages
13,69 %
immigration rate (2015) + info at: web.gencat.cat
Source: Generalitat de Catalunya

5. 1. Introduction and context
1.3 The Catalan tax system (1/2)
5
Catalonia has a competitive fiscal system and the Catalan Government constantly seeks its
optimization to promote a fair taxation adapted to the socioeconomic needs and challenges.
Catalan tax system summary map
Main taxes by level of Government
State taxes Generalitat de Catalunya Municipal taxes
Inheritance tax*
Transfer tax and Stamp Duty*
Wealth tax*
Tourist tax
Sugar tax
Taxes on Gambling*
Personal Income tax
Corporate tax
Value Added tax
Income tax for N-R
Customs and Excises
duties
Eco-taxes
Property tax
Motor Vehicles tax
Business tax
Construction,
Installation and
Building Work tax
Basic regulatory framework
General Tax Act
(58/2003)
Catalan Tax Code
(17/2017)
Regional Governments
Finance Act (22/2009)
Tax Administration bodies
Secretary of Finance
Catalan Tax Agency
General Directorate of
Taxes
Catalan Tax Board
Catalan Financial &
Research Institute**
Financial Council**
* State taxes ceded to regional governments. ** Newly created by regulation. Not built yet.

6. 1. Introduction and context
1.3 The Catalan tax system (2/2)
6
The tax revenue collected by the Government of Catalonia from both ceded and own taxes is quite
smaller than the tax revenue collected by the Government of Spain from state taxes in the territory of
Catalonia.
Tax revenue from state and regional taxes in Catalonia. 2016
58,0%
17,5%
15,8%
6,7%
1,7%
0,4%
0 20 40 60 80 100
Transfer tax and
stamp duty
Wealth tax
Inheritance tax
Taxes on gambling
Tourist tax
Other taxes
40,8%
38,0%
12,1%
3,7%
1,8%
1,8%
0.0 20.0 40.0 60.0 80.0 100.0
VAT
Personal income tax
Corporate tax
Excises
Other taxes
Customs duties
37,836 M€
2,826 M€
State taxes Ceded and own taxesTax revenue proportion
Total: 40,662 M€
Source: Statistical Institute of Catalonia (IDESCAT)

7. 2. Case study: Catalonia, towards a modern Tax Administration
2.1 Initial situation (1/2)
7
2013: the worst moment in the financial crisis and most
Catalan citizens demanding a strong Tax Administration…
In 2013, the new Government of Catalonia started a new legislature in the middle of the worst
moment in the global financial crisis, and with most Catalan citizens demanding a stronger Catalan Tax
Administration.
Source: Statistical Institute of Catalonia (IDESCAT) and Center of Public Opinion (CEO)
Social and economic indicators of Catalonia.
Pre-, during and post- Financial Crisis
GDP interannual variation: Balance of PA to GDP:
2013: -2.1%
2016: -0.9%
2007: -0.6%
Unemployment rate:
1T2013: -2.8%
4T2017: 3.5%
1T2007: 4.1%
1T2013: 24.45%
1T2018: 12.19%
1T2007: 6.65%
People at risk of poverty:
2013: 24.5%
2016: 22.5%
2007: 20.8%
Catalan citizens’ opinion about the convenience of
having a strong Catalan Tax Administration. 2014

8. 2. Case study: Catalonia, towards a modern Tax Administration
2.1 Initial situation (2/2)
8
... but our Tax Administration had important weaknesses
that made it unable to face the delicate situation.
Tax Administration, which is responsible for the management of tax system, is a fundamental tool for
improving public finances and social welfare. But the Tax Administration of Catalonia had in 2013
significant deficiencies that did not make it possible.
Management of
ceded taxes and
enforced tax
collection
Greatest weaknesses of Catalan Tax Administration in 2013
Workforce size,
training and
structure of tax
bodies
Organizational
and Territorial
model
Anti-Tax Fraud
Strategy
Interadministrative
collaboration and
positioning with
respect to local
governments
Information systems
capacity and
Information capture
policy

9. 2. Case study: Catalonia, towards a modern Tax Administration
2.2 Challenge
9
In order to deal with this situation, since the beginning of the tenth legislature (2013), the Government
of Catalonia has worked with one big purpose and 6 strategic goals for Tax Administration:
Main purpose and strategic goals for Tax Administration
Become a
service
provider to
the Catalan
public sector
“To strengthen the Tax Administration of Catalonia as a necessary tool to
improve the public finances and to deal with the painful social and
economic consequences of the financial crisis”.
P
U
R
P
O
S
E
Exercise
all the
competences
attributed by
the regulations
Be prepared
for the
management
of any kind of
taxes
Improve
compliance
and the fight
against tax
fraud
Transform our
organization
and enable
our
workforce
Adapt our
functioning
to the new
needs of the
21st century
G
O
A
L
S
1 2 3 4 65

10. 2. Case study: Catalonia, towards a modern Tax Administration
2.3 Solution
10
For all this reasons, a 5 years plan was designed focusing on 6 priority work areas to address our
goals and change our model from an integral perspective of transformation:
5 years transformation plan
BUDGET AND HUMAN RESOURCES
IT & DIGITAL
TRANSFORMATION
DATA AND INSIGHT
ORIENTATION
COMPLIANCE AND
RISK MANAGEMENT
INSTITUTIONAL AND REGULATIVE
OPTIMIZATION
COLLABORATION
AND INTEGRATION
Work
areas

11. 2. Case study: Catalonia, towards a modern Tax Administration
2.4 Results
11
As a result of the actions carried out during the transformation process…
And greater things are yet to come…
* 3 of them were declared unconstitutional for the CC (Medical receipt, Credit entities deposits and production of electricity from nuclear origin)
14 new taxes* and 2 bodies created
From 4 to 19 own offices
From 471K to 963K self-assessments
From 840 to +60K enforced debts
557 M€ collected in anti-tax
fraud activities (2015-2017)
26.5% of tax gap measured
(2014)
A multiannual Anti-Tax Fraud
Plan with 86 activities (2015-2017)
168 single-window points (TdC)
13 new shared offices
850K debts transferred from 21 institutions
20 collaboration agreements with
professional associations (2014-2018)
From 325 to 740 employees (2013-2018)
222.34% budget increase (2014-2017)
From 13.49 to 25.56h of training
per employee/year (2014-2016)
24.27 M€ invested in IT (2015-2017)
From 30% to 70% of electronic filling
72% users find the info they are
looking for at the website (2017)
10/17 forms available for electronic
filling and payment
Main quantitative results
162 potential data sources
identified
5.33M people removed from
databases through data quality
processes (2016)

12. 3. Future challenges on efficiency, governance and cooperation
12
With the previous transformation plan in its final phase, the Government of Catalonia is already
working on defining the new objectives and priority work areas for the next years:
New challenges for the immediate future
Prevent and reduce tax fraud
through fiscal awareness,
improvement of tax
compliance, and the
involvement and social co-
operation in prevention and
tax control activities.
Develop a transversal tax
administration that provides
proximity services to all
taxpayers in Catalonia.
Promote cooperation and
networking to make the Tax
Administration more open and
collaborative with the different
stakeholders in society
Consolidate the functional, territorial and digital transformation of the Tax Administration of
Catalonia to become a reference administration at European level.
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4

13. www.gencat.cat