Front Matter

Front Matter

Author(s):
Duncan Cleary
Published Date:
June 2017
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    The Fiscal Affairs Department

    Understanding Revenue Administration

    Results from the Second Survey of the Revenue Administration – Fiscal Information Tool

    Duncan Cleary, William Crandall, and Andrew Masters

    Copyright ©2017 International Monetary Fund

    Cataloging-in-Publication Data

    Joint Bank-Fund Library

    Names: International Monetary Fund. Fiscal Affairs Department.

    Title: Understanding revenue administration : results from the second survey of the Revenue Administration : fiscal information tool.

    Description: Washington, DC : International Monetary Fund, [2017] | At head of title: The Fiscal Affairs Department. | Includes bibliographical references.

    Identifiers: ISBN 9781484301913 (paper)

    Subjects: LCSH: Revenue management | Tax administration and procedure.

    Classification: LCC HD60.7.U526 2017

    The Departmental Paper Series presents research by IMF staff on issues of broad regional or cross-country interest. The views expressed in this paper are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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    Contents

    Acknowledgments

    This paper presents the results of the second round of the Revenue Administration Fiscal Information Tool (RA-FIT). It is made possible by the participation of IMF member countries that provided data. This round was a joint venture with the Inter-American Center of Tax Administrations. The authors are members of the RA-FIT team, based in the Fiscal Affairs Department (FAD) of the IMF. Staff in the revenue administration divisions and in the IMF’s Regional Technical Assistance Centers were most helpful in conducting the survey.

    The authors’ views as expressed in this paper do not necessarily reflect the views of FAD. Errors and omissions are the authors’ sole responsibility. Summary information presented in this paper is derived from data that are self-reported by participants and thus may be subject to review and change without prior notice; this is particularly true for data maintained on the RA-FIT Data Portal.

    Funding for the RA-FIT project was provided by the IMF and by the Tax Policy and Administration Topical Trust Fund (TPA-TTF); both sources are gratefully acknowledged. The following donor governments and organizations contribute to the TPA-TTF: the Africa, Caribbean and Pacific Group of States; Belgium; the European Union; Germany; the Republic of Korea; Kuwait; Luxembourg; the Netherlands; Norway; and Switzerland.

    Additional documentation, data, and information are available online through the RA-FIT Data Portal at http://data.rafit.org.

    Executive Summary

    This paper presents the results of the second round of the Revenue Administration Fiscal Information Tool (RA-FIT) country survey in an aggregated manner for all respondents and by income group. Notwithstanding regional biases and some data quality issues with the sample, broad insights and trends are discernable from the data, and the results form part of an evolving series that will continue to develop and grow with the International Survey On Revenue Administration (ISORA), the successor survey to RA-FIT conducted by the IMF in collaboration with the Inter-American Center of Tax Administrations (CIAT), the Intra-European Organisation of Tax Administration (IOTA), and the Organisation for Economic Co-operation and Development (OECD). This paper expands on a previous one, which covered the first round of RA-FIT (Lemgruber and others 2015),1 and aims to allow countries to access information about key measures in revenue administration. Unlike the first paper, this one does not cover issues specific to customs administration but focuses rather on tax administration data.

    There were 89 participants, with an average completion rate across the survey of 81 percent. The participants were mainly from Latin America, sub-Saharan Africa, the Caribbean, and the Pacific region, with a smaller contingent from Europe and the Middle East. Thus, there is a bias toward the Southern Hemisphere in the data.

    Institutional Arrangements: The respondents represent a wide range of governance structure models. Forty-five percent report having a semi-autonomous status, in which tax and customs are typically managed in an integrated2 manner within the same administration. These semi-autonomous organizations appear to show greater autonomy and transparency across a range of measured areas than those that do not classify themselves as being semi-autonomous.

    Staff and Offices: The mix of staff types varies across income groups, and as income levels increase, it seems that proportionately more staff are assigned to audit and investigations functions.

    Taxpayer Segmentation and Registration: The majority of respondents across all income levels have a large taxpayer office (LTO) or unit (over 84 percent) and some sort of regime for small taxpayers. The most common means of assigning taxpayers to either taxpayer segment is based on turnover. The majority (over 90 percent) also have a value-added tax (VAT). Data were also sought on the major tax types, such as corporate and personal income taxes (CIT and PIT). In spite of the importance of an accurate and reliable register, a large number of respondents across income groups had difficulty providing high-quality responses regarding the activity status of their registered taxpayers; that is, whether taxpayers are considered active or inactive.

    Taxpayer Return Filing: On-time filing rates vary across tax, time, and income levels. VAT tends to have the best results at about 70 percent. Key income taxes (for example, CIT and PIT) have lower on-time filing rates at, on average, 50 percent to 60 percent. This seems lower than expected and suggests considerable room for improvement. In some cases, the rates may be tied to inaccurate register data on active taxpayers, which would inflate the number of expected returns. Some administrations show improved filing rates at a point six months from the due date, but this is far from universal.

    Taxpayer Service: Taxpayers communicate with their administrations via a number of contact channels; the most commonly used channel by the surveyed group (averaging over 46 percent) is in-person or face-to-face communication. This is a costly channel to maintain compared with other channels and again suggests some room for change. Other channels used were telephone (27 percent), hardcopy correspondence (letters) (16 percent), and electronic correspondence (email/Internet) (11 percent).

    Arrears, Verification, and Disputes: Response rates to questions on these critically important areas were among the lowest in the survey. Arrears increased in the years surveyed, albeit with some slowing in the rate of increase for lower-income countries. Audits are still mostly comprehensive in lower-income countries (50 percent of intervention types), suggesting that scope exists for the use of other, less costly, intervention types. Little data were provided on disputes or appeals, suggesting a gap in many administrations’ performance management information capabilities in this area. These data are at the core of compliance management, so the fact that many countries cannot provide them suggests that compliance monitoring is weak in those countries.

    Available under the publication tab in the RA-FIT Data Portal: http://data.rafit.org/?sk=3dba84d7-1dd8-4533-b682-c0dfcb1d7f13&sId=1445908451587

    In this context, “integrated” usually does not mean that tax and customs administrations are entirely integrated but that they are separate branches reporting to a single head of administration.

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