Most customs administrations are undertaking reform of their operations—even the most advanced see modernization as a continuing process—with change being driven by a desire to achieve the objectives of revenue collection, trade policy administration, and interdiction in the most effective and efficient manner possible. Reform is ongoing, with each customs administration at a different point on the reform spectrum. “The old maxim that ‘the only constant is change’ is no longer a clever statement of contradiction but a dominant reality of business life.”61
Governments and administrations are often intimidated by the scale of the reform task that they face and need a well-defined strategy and plan of action to implement it. The same strategy is not necessarily appropriate for every customs administration. Nevertheless, there are certain principles that should be addressed first, particularly in those countries where improving revenue collection is the primary objective. This chapter sets out those principles, and the need to embed them in a coherent strategy for which the country itself takes ownership. It sets out and begins the exploration of key themes developed further in subsequent chapters, and in doing so provides an overview of the approach to the reform of customs administration advocated in this book.
A. Problem Areas
Experience points to several key and common problem areas:
Outdated customs procedures that have not kept pace with developments in transportation, technology, and business practice.
Inadequate legislation, embodying overly complex trade policies and procedures, making it difficult to introduce the changes required to support new ways of doing business. All too often, however, customs administrations use legislation inadequacies as an excuse to delay, or not adopt at all, new systems or procedures.
A belief that computerization is the answer to all problems. Too little thought is given to understanding the role of computers, the need to simplify procedures, and the use of information produced by computer systems to effectively control operations effectively.
Little attention to the organization and staffing needs of a modern administration. Many administrations accept passively the standard civil service rules—including controls on organization structure, job classifications, and salary levels—instead of striving for control of their own organization.
A lack of understanding of the need for coordination and cooperation between tax and customs administrations. In an era when most countries have a VAT, there is more reason than ever (for reasons noted in Chapter 1) for close cooperation between these administrations.
High levels of corruption that continue to plague many administrations, causing loss of revenue, inequity, and wider economic inefficiencies.
By its very nature, customs administration is complex. The legislative base and the procedures are difficult and complicated to administer, and, over time, too little attention has been paid to the costs imposed by this complexity on the private sector and to its impact on the effectiveness of controls. It is now understood, based on the experiences of modern customs administrations in industrialized countries, that these problems can best be addressed by developing a strategy for reform that is based on transparent legislation and simple, well-designed, and well-understood procedures. This is critical to create an environment for improved increased compliance by taxpayers and reduced costs not only for the government but also for taxpayers themselves.
B. Undertaking Reform
Reform of a customs administration must be accompanied by commitment of the government and strongly supported by senior management within the administration. Ownership of the reform process requires that the administration itself be involved in the design and implementation of the changes.
The trade community should also be invited to contribute to the reform process. This is often accomplished through the creation of a modernization committee with participation from importers, exporters, transportation companies, port and airport authorities, and customs brokers. Their contributions are particularly important in identifying areas in which service improvements would be most beneficial.
The scope and magnitude of the reform process normally requires that competent and dedicated resources be assigned full-time to the project team responsible for the reform. Too often the reform is looked upon as a part-time undertaking that can be accomplished on top of day-to-day tasks. The problem with this approach is that fighting fires—dealing with whatever the immediate crisis happens to be—usually takes precedence, with the result that less attention is paid to the reform requirements, and deadlines are often missed. In Canada in the early 1980s, it was found that the major reform effort to introduce changes to the customs commercial system was falling further and further behind schedule. The successful solution was to create a headquarters directorate whose sole responsibility was to develop and implement changes to legislation, systems, and procedures based on an approved modernization plan.
Investments are required to undertake both the design and implementation of the reform program and for ongoing operations. At the outset, it is important that a realistic estimate of the resource requirements be developed and that the government commit to providing them.
C. The Context and Priorities of Reform
This section considers the first three of the four key areas of reform set out in Chapter 1 (the fourth—focused on organizational and management issues—is taken up in Section D). These are the needs for the existence of appropriate and transparent legislation; simple, up-to-date procedures; and a revenue control strategy based on an assessment of risk and selective controls targeted at high-risk goods and enterprises. The new revenue control strategy has, as its center piece, effective post-release verification and audit.
At the outset, and as the basic starting point for the reform of the customs administration, each country should make a conscious decision to align its legislation and procedures with international standards and practices. This should include a country’s international obligations, notably those required by membership in the World Trade Organization (WTO) and the internationally accepted practices outlined in the conventions and recommended practices of the World Customs Organization (WCO). By using agreed international standards, the customs system will be aligned to international practices and a country will be more fully integrated into the world trading community. Box 3.1 outlines three of the more important conventions and declarations that a customs administration should take into account when it reforms and modernizes.
World Customs Organization Conventions and Declarations
The following three conventions and declarations of the WCO should form an important part of a customs administration’s reform and modernization program.
Harmonized Commodity Description and Coding System (HS). The HS is the de facto world standard coding system that is used for tariff classification and trade statistics purposes. It comprises about 5,000 commodity groups, each identified by a six-digit code, arranged in a legal and logical structure, and is supported by well-defined rules to achieve uniform classification. It is used by 179 countries and customs or economic unions representing approximately 98 percent of world trade. The WCO manages the HS and it is updated periodically (every 4–6 years) to take into account developments in technology and changes in trade patterns. While the HS establishes the rules for classifying goods, each country establishes its own rates of duty applicable for each code. In addition, many countries expand the coding structure beyond the internationally agreed six digits for their own purposes.
International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention). The original Kyoto convention came into force in 1974 with the objective of simplifying and harmonizing customs procedures to promote international trade. It includes a series of standards and recommended practices for all major customs procedures. In June 1999, a revised Kyoto convention was approved by the WCO. It includes a comprehensive package of up-to-date customs procedures dealing with such topics as assessment, collection, and payments of customs duties, application of information technology, appeals, and virtually every procedure that must be dealt with by a customs administration. The revised convention is awaiting the required signature of 40 countries before coming officially into force.
Declaration of the World Customs Organization Concerning Integrity in Customs (“Arusha Declaration”). In 1993, in recognition of the significant problems of corruption in customs administrations, the WCO adopted the Arusha declaration. The declaration sets out the main features that should be present to promote integrity, including clear and precise legislation; simple and consistent procedures; automation; merit-based hiring and promotions; good training; adequate remuneration; and an open and transparent relationship with the business community.
Appropriate and transparent legislation
A country’s economic characteristics and international trade relations may make some degree of complexity unavoidable. For example, preferential trade arrangements or implementation of a customs union introduces a degree of complexity in customs administration through the need to apply differential tariff rates and to validate the origin of imports. Most complications for customs administrations, however, result from restrictive and protective foreign trade policies, an irrational tariff structure, and a lack of coordination with the domestic tax administration.
As discussed in Chapter 2, many tariff systems are characterized by complex rate structures and/or high tariff rates, with little economic justification. High tariff rates increase the incentives to evasion (through undervaluation, misclassification, and outright smuggling) and the pressure for exemptions. Multiplicity of rates facilitates evasion through the incentives and opportunities for the importer to classify imports in the lower-rate categories, and requires extra vigilance and control by customs. This is a recurring finding in Fiscal Affairs Department (FAD)’s technical assistance work, one mission finding, for instance, that62
A major cause of the difficulties faced by the customs administration was a tariff regime that was one of the most complex in the world. The myriad of tariff rates (which could change weekly), import surcharges, licenses, industry specific plans, exemption and drawback provisions, and export incentive schemes would have seriously taxed the ability of any customs administration to operate effectively.
For revenue reasons, some countries may need a higher tariff level than others. But this does not mean that they need a complicated tariff. Both the revenue objectives and the proper degree of protection of domestic activities can be achieved through a simple, easy-to-administer rate structure. As argued in Chapter 2, the trade and import tax system should ensure that
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the tariff is the main instrument for protection, and there are only minimal nontariff restrictions;
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there is a very limited number of duty rates (i.e., no more than three or four) and all rates are ad valorem;
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exemptions are limited to those provided for in international conventions and trade agreements;
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duty relief and/or drawback is in place for imported inputs incorporated in export products; and
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VAT and excise duties apply equally to domestic products and imports.
The procedures administered by the customs administration are incorporated in the customs code63 and the supporting regulations. It gives authority to the customs administration to
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establish control over goods and people and the means of transport for entering and leaving the country;
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collect duties and taxes (such as VAT and excises on imports); and
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enforce other government agencies’ rules and regulations related to imports and exports (ensuring, for instance, that health and/or agricultural certificates are presented with the customs declaration when required).
As in the case of the tariff and trade laws, the customs code can contribute to the complexity of administration. Experience shows that operational inefficiency in many customs administrations results from the application of antiquated provisions in the customs code. Customs legislation is among the oldest in the world and, over the years and especially the last few decades, it has had to adapt to far-reaching developments in technology, international trade, and the economic environment in general. The failure to update the customs code to allow for change impedes the reform of the customs administrative system. Problems frequently encountered in the legislation include
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the requirement that every single importation be physically checked;
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inadequate provisions for the reporting of goods by transportation companies;
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lack of clear treatment of the various customs regimes (e.g., temporary admission);
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lack of authority for customs administrations to review declarations after the goods have been released and to audit the books and records of traders; and
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obsolete penalty provisions (e.g., penalties may not be applicable for violations detected after the goods have been released).
Modern, simple procedures
Procedures related to the processing of goods should be simple, transparent, and easily understood by the trade community. Customs administrations in most developed countries understand that the costs imposed on traders by inefficient procedures are just as real a cost to them as are the trade taxes themselves. There is, however, less appreciation of the scope and significance of these compliance costs in the customs administrations among developing countries.
The design of customs procedures should be based on an assessment of risk and selective controls targeted at high-risk goods and enterprises. Administrations that have not implemented this approach continue to impose high, unwarranted costs on their importers and exporters, as another finding from an FAD technical assistance mission illustrates:
The control systems are the same for all importers regardless of their record with customs. A large multinational pharmaceutical manufacturer, with approximately 2,500 declarations a year, must have samples taken for laboratory analysis from every shipment prior to release. No violations were ever detected; nevertheless, no thought was given to changing the procedures.
The continued application of such procedures reduces the competitiveness of the industries concerned, distorting and dampening economic developments. At the same time, there is evidence to suggest that these types of controls are much less effective than the risk-based, selective controls that are in place in modern customs administrations.
As a first step in introducing modern, up-to-date procedures, the processing of imports should receive priority. The procedures should be designed to
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ensure that all goods are reported and placed under customs control;
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process import declarations based on the principle of self-declaration by the importer or agent;
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reduce the number of processing steps to a minimum;
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introduce selective and effective goods inspection;
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release goods from customs control in the least amount of time possible;
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ensure that the correct amount of duties and taxes is paid and deposited to the government account; and
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ensure that information is provided to support timely reporting of import trade statistics.
While these basic, simplified procedures can apply to all importers, the administration can go even further. This could include the introduction of simplified procedures, with minimum controls prior to release, for large importers who have a good compliance record: Another mission found that:
… nine importers represented 21 percent of import transactions. The impact of developing new procedures for these importers, based on audit, was self-evident—the largest contributors to the economy would immediately benefit from reduced costs of customs intervention; significantly fewer staff would be required for physical and documentary control; and customs control resources could be redirected to high-risk goods and traders.
Implementation of simplified procedures for the processing of exports (which are typically relieved of import tariffs) is next in priority for reform. The procedures should be designed in a way to keep controls to a minimum. At the same time, however, there must be sufficient control to ensure that the goods really have left the country and are not diverted, duty-free, to the domestic market. This is particularly important for the verification of zero rating for VAT (false export claims are one of the most frequently committed VAT frauds)64 and the processing of drawback claims (for the repayment, that is, of duty on imported goods used in the production of exportables). Not only must there be adequate means of verifying that the goods have left the country, but there must also be a good system for sending information from the customs administration to those responsible for administering the VAT.
Effective post-release control
In modern customs administrations, the basic approach to customs control has changed from 100 percent pre-clearance control to a heavy reliance on post-release control. (This is analogous, as noted in Chapter 1, to the shift toward self-assessment in other taxes, with taxpayers declaring their own liability subject to selective audits conducted to verify compliance, sometime after the return and payment have been made). Many customs administrations have now designed systems and procedures that provide for certain basic verifications to be completed when the goods are under customs control supplemented by audit-based controls that are undertaken after the goods have been released.
Controls prior to the release of the goods, including physical inspections, have a role to play, particularly for the verification of quantity, ensuring that the description of goods is sufficient for tariff classification and origin purposes, detection of contraband, and the enforcement of laws not related to revenue (for instance, phytosanitary, drugs, intellectual property rights, money laundering, anti-terrorism measures, and the control of endangered species). However, such controls are less effective for the verification of tariff classification, valuation, drawback, and exemptions that often requires an accounts-based audit to verify compliance.
Post-release controls should be designed to identify and correct inconsistencies in the application of the legislation and procedures at the time of release of the goods. Typically, a selection of declarations is made for in-depth review based on criteria designed to identify high-risk transactions. For example, declarations that claim a zero rate may be misclassified for tariff purposes, claims for duty and tax exemptions require special attention, and drawback claims require verification. Post-release control is discussed at length in Chapter 5.
One of the most frequently identified problems—discussed at length in Chapter 6—is the valuation of imported goods. Import duties remain relatively high in many developing countries, which, especially when combined with value-added taxes and excises on imports, can result in a total tax and customs burden that is a powerful incentive to undervalue goods.65
The international standard for valuing goods is the WTO Valuation Agreement. It relies primarily on the transaction value, that is, the price paid or payable by the importer.66 All countries that are members of the WTO must base their valuation legislation and procedures on the agreement. Therefore, in addition to addressing day-to-day valuation problems, each country that has not yet implemented procedures based on the agreement must put in place a plan to implement such procedures, including the elimination of the use of minimum values.
In response to problems related to valuation, some countries have implemented preshipment inspection (PSI) programs. Based on an inspection of the goods in the country of export, a report of findings, including an assessment of value, is issued for use in preparation of the import declaration. PSI programs have had some degree of success in those countries where there are sound procedures to ensure that the PSI reports are used and cooperation between the customs administration and the PSI company is good. Nevertheless, PSI programs are expensive (with the PSI company taking around 1 percent of the value of the goods inspected, which can be a high proportion of the revenue collected). Therefore, there should be a clear indication of the benefits expected before a program is implemented. Experience with (and alternatives to) PSI, and other forms of private sector involvement in customs administration, are discussed in Chapter 12.
D. Changes Required to Support the Priorities for Reform
To support implementation of the reform strategy, changes will be required in computer systems, in the organization and management of the customs administration, in its recruitment and training policies, and in the services it aims to provide. A coordinated effort to undertake significant changes in all of these areas will result in a new way of doing business for the customs administration. For example, one cannot simply introduce computerization and expect that it will result in a reform of the customs administration. Similarly, changing the organization and making it part of an autonomous revenue authority will not in itself achieve the results expected from a major reform.
Major reform of a customs administration should be designed to achieve very clear objectives and should be implemented on a phased basis. It should always be kept in mind that, while major changes are being planned and implemented, the normal activities of the administration must continue. A sound strategy for undertaking procedural reform is by implementing the changes first in a pilot office; here they can be tested, evaluated, and modified before being implemented in other customs offices. In many countries, the priority is to implement changes that have the greatest revenue impact and, therefore, the changes would normally be phased in starting with the offices that have the highest revenue collections.
Computerization
The computerization of customs procedures should be undertaken on the basis of certain objectives:
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a reformed customs administration should operate in a fully automated environment with information moving electronically from the local offices, where individual transactions are processed, to the regions and headquarters;
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enterprises should transmit information electronically to the customs administration; and
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electronic information should be available to support post-release verification and audit, and for statistical and management purposes.
While these are objectives that every customs administration should strive for, each administration is not at the same stage of reform and, therefore, the plan should be realistic and designed to move step-by-step toward the desired goals.
Once the decision to computerize is made, the specifications of the system should be defined, and a detailed implementation plan should be prepared. The plan should consist of clearly defined objectives, with a list of actions, target dates, and resources required. As outlined earlier in this chapter, the first priority to be addressed in reforming the administrative procedures is the simplification and modernization of the import declaration processing procedures. Therefore, the first step in computerization is to develop the system to support the simplified import procedures.
Development of application software for processing import and export declarations and the collection of revenue typically requires significant resources to support the high cost of development, a high level of expertise to design and develop the system, and a long period of time for development. Therefore, the acquisition of a software package is recommended for most developing countries.67 These have the advantage that they have already been tested and are operational in other countries, they use internationally agreed standards and codes, and their cost is generally lower than in-house development.
The majority of customs administrations in developed countries receive a significant proportion of their information electronically, by, for example,
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direct access by members of the trade community to the customs computer system (as in Argentina and the United Kingdom);
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electronic filing of declarations (the United States and Canadian customs administrations receive 95 and 85 percent, respectively, of their declarations electronically); and
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the filing of declarations on diskette (South African Customs receives the majority of declarations on diskette at its largest offices).
Recently implemented systems in the Philippines and Turkey also feature direct data input either through a kiosk in the customs office or directly from the broker’s premises. In the Philippines, the kiosk is operated by the Chamber of Commerce, which charges a small fee for the service.
In Australia, electronic data interchange (EDI) has been extended to transportation companies and banks, with the result that 98 percent of transactions are paperless. The EDI-based Singapore TradeNet system results in all trade participants using an electronic system to file and process their trade transactions. The system is essentially paperless and operates 24 hours a day, year round.
Organization
Traditionally, customs administrations have been part of the ministry of finance and have been subject to public service rules and regulations. The location of the customs (and tax) administration within the ministry of finance is based on the importance of its fiscal role. The main advantages of this arrangement are that it provides the minister of finance, who is responsible for budgetary revenue, with full control over a revenue-collecting department, and it provides a close link between tax policy decisions and the departments administering and enforcing the policy. It also should facilitate cooperation and exchange of information between revenue-collecting departments.
An emerging trend in public administration is to provide more accountability to the head of an organization and to the management of functional units.68 Recently, a number of countries have provided more autonomy to their revenue administrations. Greater autonomy means
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flexibility in the management of resources, including authority to recruit staff, change the organizational structure, and invest in computerization;
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authority to allocate resources between salary and nonsalary areas, provide performance-based incentives, and match salary levels for specialized staff with the private sector; and
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the ability to contract out certain functions to the private sector. Coupled with the increase in autonomy provided to these agencies, their degree of accountability to meet performance targets, and for meeting the government’s objectives related to both revenue collection and trade facilitation, has also increased.
Several approaches can be used to increase autonomy and accountability. Some revenue agencies have remained within the ministry of finance, although with enhanced authority to manage their affairs. Others have been established as largely autonomous units, with the head of the organization responsible to the executive branch or to parliament. At the same time, there have been moves toward the unification of customs and tax departments under a single revenue board, which, in turn, may or may not be independent of the ministry of finance.69
A customs administration requires a decentralized organizational structure consisting of
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a central office (headquarters), with a head who has overall responsibility for customs administration in the whole country;
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regional offices, responsible for administering a geographical area; and
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local offices, where customs control and clearance operations take place.
The number of regions and local offices will vary according to the size of the country and the nature of the trade and transportation patterns (small countries may not need regional offices, for instance). Nevertheless, there should be a clear separation between headquarters’ planning and monitoring functions and operational activities that properly belong in the field.
Management
Another critical area in implementing a customs administration reform program is that of management. The change process itself must be organized and managed, but even more important is the need to implement effective management practices that will enable the customs administration to meet its objectives. As just noted, headquarters should be responsible for the development of operational policy and the communication of the policy to the field offices and the trade community. Its responsibilities do not end there, however, as headquarters must also have in place mechanisms to monitor implementation of the policy. These should include
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development of strategic and operational plans that clearly set out what the organization is trying to achieve;
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development of performance criteria for the offices in terms of, for example, revenue targets, service standards, and resource utilization (such as the number of staff required to process the number of declarations presented at a particular office);
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ensuring integrity in the organization;
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creating an effective internal audit function responsible for determining that the policies, systems, and procedures have been followed and for investigating cases of corruption; and
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implementing a strategy to inform both staff and the trade community of planned changes.
Recruitment and training
In support of a fundamental change in the way a customs administration operates, attention must be paid to the type of staff that is required to administer the new systems and procedures, and the training that needs to be undertaken to ensure that all staff are able to carry out their new responsibilities. For most administrations that undertake reform, many of the new skills required will not be present or will be in short supply. Two fundamental changes in the way the customs administration will operate involve audit and computerization, but typically, customs administrations do not have sufficient personnel with the requisite skills to support these functions.
The training requirements of a reformed customs administration are multidimensional. Retraining of all customs professional staff will be required to support the new systems and procedures resulting from changes in legislation, simplification of procedures, and the introduction of computerization. In addition, training will be necessary to support entirely new requirements, such as audit, and new approaches to supervision and management.
Service
As was seen in Chapter 1, the costs associated with customs controls are significant and ways must be found to reduce them. Improving service to the trade community is one of the most effective ways of reducing such costs. The problem is not unique to customs administrations but is faced by many tax administrations as well:
All too many countries seem to do their best to make it difficult for taxpayers to comply with the law. The law is complex, contradictory, hard to interpret, and even hard to find; the necessary forms are hard to locate and sometimes even have to be purchased; forms and payments have to be submitted at inconvenient times and places; and many who become involved with tax officials feel annoyed or harassed.70
One of the most important areas in which better service is required is in the time taken for goods to be released from customs control. It is often found that governments were considering major investments to expand the facilities at seaports and airports without a clear understanding of the time taken to release goods from customs control, and of the improvements that could be introduced to reduce this time. If the time taken can be reduced significantly, the investments required to expand facilities can be reduced as well.
There are relatively simple changes that can be undertaken to improve release times without jeopardizing revenue. Possibilities include
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pre-arrival processing, under which the declaration is processed prior to the arrival of the goods;
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release prior to payment based on the posting of a financial guarantee (often a blanket guarantee for more than one declaration);71 and
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as described above, reduced physical inspections for known importers with a good record.
One measure that has been implemented in recent years in several countries (Thailand being one) is based on a recognition that certain traders should be entitled to benefits, resulting in improved service. These programs—often referred to as “gold card” schemes—are offered to traders who typically have a significant number of import and/or export transactions and who have demonstrated the ability and willingness to maintain a high level of compliance. The benefits offered may include electronic filing of declarations and verification, periodic payment (perhaps once-a-day payment for companies, such as customs brokers/agents that have numerous transactions with the customs administration), and very low levels of physical inspections. Verification of gold card companies is normally through periodic audits of their books and records.72 Such schemes can prove very effective but do require a good audit capacity, and perhaps a dedicated gold card audit team.
E. Conclusion
This chapter has outlined an approach to managing the reform of a customs administration. Everything cannot be done at once, so it is important that careful consideration be given to the priorities for reform and the sequencing of their implementation. For most middle- and low-income countries, revenue from trade taxes is still very important; therefore, the strategy should be designed in a way that maximizes the potential from these revenue sources. At the same time, each administration must be mindful of the costs imposed on the trade community by unclear, complex legislation and inefficient procedures.
The reform strategy and plan of action should be based on the principles of simplification and ownership and commitment to the reform program. From these principles, each administration should identify ways to make more transparent its legislation and procedures; adopt simple but effective procedures for dealing with such key issues as valuation and the control of exemptions; reorient its control strategy from a pre-release transaction-by-transaction approach to a risk-based, post-release verification and audit; and deal with the risk of corruption. In order to implement this strategy, changes will be required in computer systems, organization, management, recruitment and training, and service. The following chapters consider each of these elements in detail.
FAD technical assistance reports are confidential to the country concerned, so the precise source is not given for this or other quotations.
The customs code, in some countries, may be referred to as the customs “act” or customs “law.”
The processing of VAT refunds is a key challenge under the VAT; see Ebrill and others (2001) for a discussion of the problem and potential responses.
In principle, detecting undervaluation at time of importation is not important for VAT purposes (in relation to goods used as inputs into production) because undervaluation will be picked up at the next level of sale. However, not too much reassurance should be taken from this: if an importer goes to the trouble of falsifying invoices at the time of importation, it is unlikely that these goods will ever appear in the books and be declared as taxable. And for items of final consumption, VAT missed at the border is lost forever.
The agreement also has alternative methods for determining value in cases where the transaction value cannot be used: transaction value of identical goods; transaction value of similar goods; deductive method; computed method; and fall-back method. See Box 6.1 in Chapter 6.
Three main software packages are available: ASYCUDA, developed and maintained by UNCTAD; SOFIX, which is the export version of the software from the French customs system; and TIMS, developed by Crown Agents.
For a study of experience of such reform in the British customs service, see Colvill, Dalton, and Tomkins (1993).
LeBaube and Vehorn (1992), p. 311.
For many years in Canada, importers and brokers were permitted “end of day” settlement privileges. The duties and taxes for goods released on one day had to be paid by 10:00 a.m. the following day.
The “gold card” program can be implemented as part of the establishment of a large taxpayer unit for domestic taxes. Most often, the large taxpayers and gold card companies are the same, and programs such as joint audits provide both better service to the taxpayers and a more comprehensive approach to compliance verification.