Republic of Poland
Technical Assistance Report-Tax Administration-Modernization Challenges and Strategic Priorities

This Technical Assistance Report provides advice on the modernization of the tax administration in Poland. Tax collections in Poland as a percentage of GDP are lower than those found in larger European Union member states. The report discusses collection performance of the main taxes in recent years and the approach to tax administration modernization. It also addresses selected issues concerning the tax administration institutional reform; the administration and delivery of core tax administration operations, including for the largest taxpayers; and the approach to managing compliance risks to the tax system.

Abstract

This Technical Assistance Report provides advice on the modernization of the tax administration in Poland. Tax collections in Poland as a percentage of GDP are lower than those found in larger European Union member states. The report discusses collection performance of the main taxes in recent years and the approach to tax administration modernization. It also addresses selected issues concerning the tax administration institutional reform; the administration and delivery of core tax administration operations, including for the largest taxpayers; and the approach to managing compliance risks to the tax system.

I. Tax Collection and Compliance Trends

1. This section analyses the effectiveness in collecting taxes under the responsibility of the tax administration in Poland.1

A. Tax Collection in Poland Compared with EU Countries

2. Tax collections in Poland as a percent of GDP are lower than those found in larger EU member states. Table 1 shows tax collections of the three main taxes collected by the tax administration in Poland in selected medium and large EU member states in 2012—excises and social security contributions (SSC) are not collected by the tax administration in Poland, but by the customs and SSC administrations respectively. Poland collects less tax revenues than similar countries in the region. As is generally the case for neighboring countries that acceded to the EU in the last decade, VAT has the largest share of tax collections in Poland, excluding SSC collections. Excise collections in Poland, 3.7 percent of GDP, are in the normal range for large EU countries, as are SSC collections, at13.0 percent of GDP.

Table 1.

2012 Tax Collections as a Percent of GDP in Selected EU Countries

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Source: Prepared by the mission based on IMF data; Organisation of Economic Co-operation and Development (OECD) Revenue Statistics—comparative tables, and from Eurostat.

B. Effectiveness in Collecting Value-Added Tax in Poland

3. The efficiency of the VAT in Poland is lower than neighboring countries that acceded to the EU at around the same time. C-efficiency2 is a commonly used indicator to measure the efficiency of a VAT in different countries. This measure suggests that Poland is collecting less of potential VAT than other countries in Europe—see Figure 1. However, observed c-efficiency is affected not only by losses from noncompliance, but also by the coverage of reduced and zero rates and exemptions—commonly referred as the ‘policy gap.’ In the case of Poland, the policy gap is relatively high, which will partly account for the relatively low observed c-efficiency. Higher policy gaps impact the management of taxpayer compliance by creating a more complex policy framework that tax administrations have to deal with.

Figure 1.
Figure 1.

Efficiency of Value-Added Tax Collections in Poland (2012)

Citation: IMF Staff Country Reports 2015, 112; 10.5089/9781498396493.002.A001

Source: Prepared by the mission based on IMF data.

4. Despite an increase in VAT rates in 2011, net VAT receipts have declined significantly in Poland since 2007. This is a concern because VAT is the largest tax in Poland (excluding SSC). In common with other medium-sized and large Eastern European countries acceding to the EU since 2004 (Bulgaria, Czech Republic, Hungary, Romania, and the Slovak Republic), VAT receipts in Poland grew strongly over the years around 2004, but then dipped in the financial crisis of 2008/2009. However, while its neighbors’ VAT recovered after 2009 to reach pre-crisis levels, Poland’s VAT receipts have declined further. Despite an increase in VAT rates in 2011, they are now 1.2 percentage points of GDP lower, equivalent to 15 percent of VAT revenues, than their peak in 2007 (Figure 2). This fall is despite an increase of one percentage point in VAT rates in Poland in 2011, indicating that tax collected as a proportion of the VAT tax base has declined still further.

Figure 2.
Figure 2.

Tax Collections in Poland 2006–13

Citation: IMF Staff Country Reports 2015, 112; 10.5089/9781498396493.002.A001

Source: Prepared by the mission based on Eurostat data.

5. CIT revenues as a percent of GDP have also declined in Poland since 2008 (see Figure 2). The percentage decline in CIT collections is larger than the decline in VAT, 33 percent, equivalent to 0.9 percent of GDP since 2007. However, CIT revenues are generally more volatile than VAT revenues over the medium term (because profits are generally more volatile than consumption). Moreover, the decline observed in Poland has also been observed in other European countries. Nonetheless, the continued decline in CIT is substantial and could indicate possible growth in compliance risks.

6. An independent study of VAT evasion in member states commissioned by the EC3 found strong growth in the Polish VAT gap. The study found that the VAT gap in Poland had grown from 9 percent of potential liabilities in 2005 to 24 percent in 2012—see Figure 3. This finding is consistent with both the PricewaterhouseCoopers (PwC) report (below) and falling VAT revenues.

Figure 3.
Figure 3.

Value-Added Tax Gaps in EU Member States 2009–2012

Citation: IMF Staff Country Reports 2015, 112; 10.5089/9781498396493.002.A001

Source: Prepared by the mission based on the EC-CASE study.

7. A recent report specifically for Poland also found growing VAT evasion in Poland since 2007. The report prepared by PwC4 was originally commissioned by a private sector business concerned at growing criminality in the metals commodity market in Poland. It has since been shared with the MOF, and published. It found that the compliance gap in VAT in Poland grew from a range of Polish Zloty (PLN) 7.1–23.7 billion (0.6–2 percent of GDP) in 2007 to PLN 36.4–58.5 billion (2.3–3.7 percent of GDP) in 2012. This growth is consistent with the observed decline in VAT revenues relative to GDP.

8. The PwC report found that VAT fraud in Poland was the key element in the growing VAT gap. The report’s evidence for this included recurring indictments in VAT fraud investigations, suggesting it had penetrated several industries, and EC reports of endemic refund fraud across the whole EU. In particular, the report found that ‘carousel’ refund fraud, a highly corrosive variant of Missing Trader Intra-Community fraud, which exploits EU rules on the intra-community movement of goods, had a significant presence in the following sectors: scrap metal; construction steel; fuels; electronics (mobile phones, computer parts); agricultural goods (oils, sugar); wood industry.

9. The fall in net VAT receipts is largely attributable to increasing refunds while payments have been suppressed by growing arrears of unpaid VAT (Figure 4). VAT refunds in Poland have increased more in recent years than gross VAT payments, rising by 37 percent from 2010 to 2013 compared to 16 percent growth in gross payments over the same period. The impact of this represents a loss of some PLN 12 billion, equivalent to around 11 percent of net VAT collections 2010. The number of refunds has also increased, from 1.6 million in 2011 to 1.8 million in 2013, an increase of 16 percent.

Figure 4.
Figure 4.

Arrears of Unpaid Tax 2010–13

Citation: IMF Staff Country Reports 2015, 112; 10.5089/9781498396493.002.A001

Source: Prepared by the mission based on Ministry of Finance data.

10. Overall, the available evidence suggests that the VAT compliance gap has risen sharply in recent years, likely due to big increases in missing trader fraud. Both of the above studies estimated the VAT gap by comparing actual VAT collections against estimated potential collections using a methodology that takes into account the composition of GDP and the current policy framework. This methodology takes a similar approach to that used by FAD in its Revenue Administration Gap Analysis Program (RA-GAP).5 However, it provides only aggregate estimate of the gap. Instead, RA-GAP program determines a more granular estimation of the gap, including by identifying causes of the gap that could then be addressed through compliance activities. In this context, the simultaneous strong growth in both refunds and arrears of VAT indicates a risk of strong growth in missing trader frauds.6 Such frauds are not only an endemic risk in EU VAT regimes but have been increasingly reported in the results of compliance operations and risk assessments by the Tax Administration Department; Fiscal Control Department; and Customs Control, Tax Inspection, and Gambling Department.

Effectiveness of tax operations

11. Performance indicators of tax administration operations also seem to indicate deterioration on taxpayer compliance. Detailed indicators are provided in Appendix 1.

12. There is a large number of taxpayers in Poland. There are over 20 million registered taxpayers in Poland, the vast majority of whom are PIT taxpayers—all PIT taxpayers are required to register and file tax returns. New registrations and de-registrations are broadly in line with demographic norms for Europe. The number of taxpayers controlled by the LTO is very large; this is discussed later in this report.

13. Late filing of PIT and CIT returns is a concern, but nonfiling is at relatively low levels. Data supplied by the Tax Administration Department of the MOF shows high—though fairly steady—late filing rates for PIT and CIT returns over the period 2010—2013 of between 25–30 percent. Late filing of VAT returns is lower, at around 15 percent, but a high number of VAT returns claiming refunds will have reduced this rate (international experience suggest that refunds are rarely claimed late). The nonfiling rate for all three taxes is much lower, at around 5 percent.

14. Arrears of unpaid tax have grown for all four main tax types since 2011, with particularly strong growth in VAT arrears. As noted above, the growth in VAT arrears in recent years has been much stronger than in PIT and CIT (Figure 4) collected by the Tax Administration Department. Growth in excise arrears (under Customs responsibility) has been relatively low. Overall, arrears have grown from 9.2 percent of collection in 2011 to 13.8 percent in 2013. Most of this growth has come from VAT arrears, which grew from 14.0 percent to 22.4 percent, which could indicate widespread missing trader frauds. Write-offs of uncollectable arrears are low; less than 1 percent of collections overall for all taxes. Whilst this indicates strong diligence of write-offs by the Tax Administration Department at the MOF, it is also possible that the growth in debt as a percent of collections partly reflects growing levels of uncollectable debt that should in fact be written off. There is some evidence for this in the distribution of debts (statistical appendix 1, Table 14) in data supplied to the mission by the Tax Administration Department.

15. Audit assessments in the tax administration have increased from 2011 to 2013; however, collectability is unknown. Overall, the number of audits has fallen, from 123,000 in 2011, to 93,000 in 2013. However, the total additional taxes identified has risen from PLN 1.1 billion to PLN 2.2 billion, with most of this increase coming in 2013, when audit assessments almost doubled. This might suggest more effective targeting of audits and/or more effective audits; however, there is a risk that the improved additional assessments are also due to an increase in the incidence of noncompliance and could mainly relate to uncollectable assessments. The great majority of the increase in additional taxes identified in audits comes from audits of taxpayers not controlled by the LTOs. The sharp rise in additional tax identified in audits in 2013 seems likely to have come from a relatively low number of very large cases, as both the percentage of audits with results and the number of audits are largely unchanged.

16. Around 40 percent of taxpayer appeals in Poland are successful. The total number of appeals was around 15,000 in both 2012 and 2013, of which around 40 percent were successful, around half of those at the court level. The total amount appealed increased by about 20 percent from 2012 to 2013.

C. Tax Revenue and Performance Analysis

17. The tax administration in Poland has established a large number of performance indicators for local tax offices and tax chambers.7 The performance indicators agreed between local tax offices and tax chambers, and tax chambers and the Tax Administration Department in the MOF are described in Appendix 2. These performance indicators are discussed further in Section III, but it is noteworthy that there are around 90 regional indicators compared to only 13 central indicators.

18. Aggregate receipts, arrears and compliance indicators are monitored and reported internally within the MOF by various departments. The Analysis and Reporting unit of the Tax Administration Department at the MOF is responsible for compiling quarterly performance indicators from aggregate totals of data uploaded from local tax offices and tax chambers to a central data warehouse. This unit does not have direct access to micro taxpayer data, except for arrears cases. The tax policy departments of the MOF8 also use data and analysis provided by the Analysis and Reporting unit, to assess policy impacts. The State Budget Department of the MOF reports monthly receipts progress against budget forecasts separately, for publication on the ministry’s website. The Macroeconomic Policy Department of the MOF produces the budget forecasts, and monitors monthly collections against those forecasts, in consultation with the tax policy departments, for internal reporting purposes. They also reconcile annual outturns against forecasts for Parliament and produce annual Convergence Program reports for the EC. In addition to these reports, the Fiscal Control Department of the MOF receives monthly VAT refunds aggregates from their own data warehouse, using data downloaded from local office and tax chamber databases.

19. The monitoring and reporting of high level revenue indicators within the MOF is fragmented. Each of the departments engaged in monitoring revenue trends reports to a different undersecretary, meaning that their respective analyses are not brought together until they reach the minister’s level. This risks not only conflicting analyses, but gaps in the coverage of high-level reporting systems.

20. There is a need for a more strategic overview of collections and fiscal risks within the MOF. To ensure a more coherent overview of collections and fiscal risks, a single unit should be responsible for reporting collections and analyzing progress against forecasts. This unit needs to work closely with the operational units of Tax Administration Department at the MOF and other departments working in tax to be able to monitor major compliance risks, operational changes and one-off large payments or refunds, in addition to economic and other tax base risks.

21. Given the current scale of compliance risks in VAT there is a need for a more strategic view of the compliance position, updated monthly. There should be a monthly risk analysis process for VAT involving both analysts and operational experts to analyze the likely progress of the VAT gap in real time and review detailed time series of returns and payments data for specified taxpayer segments for potential changes in compliance levels, to allow timely and appropriate strategic responses, potentially at a national level, where necessary. These time series should include disaggregated VAT outputs, inputs, output tax and input tax, which are critical indicators of changes to the composition of the tax base, not only for monitoring compliance risks but for forecasting purposes more generally. Currently, these components of VAT are included on VAT returns, but not uploaded to the central data warehouse.

22. Revenue analysts in the Tax Administration Department need to be able to directly access returns and payments data for individual taxpayers in analytical databases. Currently, the data warehouse used by the Tax Administration Department at the MOF contains mainly aggregate taxpayer data uploaded monthly from local tax offices and tax chambers. The exception to this is for arrears cases, which are uploaded at the micro level. Although individual taxpayer details can be requested from the relevant local office, this lack of detailed data in the warehouse severely limits the scope for analysis at the center, both for forecasting and reporting purposes and for national risk analysis. Such a centralized database would also enable the development of performance indicators to assess the relative performance of individual operational units. The Tax Administration Department does recognize this limitation, and is planning to start consolidating the 400 individual databases into a single, national database in June 2015—starting with inheritance and gift tax, tax on civil law transactions and flat-rate income tax in the form of “Tax Card”. This consolidation needs to be specified so that it delivers a relational database that can be used for data mining and systematic risk analysis techniques.

Recommendations

  • Bring together the revenue analysis, currently reported separately, in a single report for tax administration.

  • Create a national database of micro level taxpayer returns and payment (especially VAT) for centralized data mining, risk analysis, and revenue and gap analysis.

  • Take immediate steps to address the compliance problems in main taxes—following sections discuss and recommend concrete measures.

II. Current Modernization Initiatives

23. The MOF has undertaken a number of modernization initiatives to improve efficiency and effectiveness of tax administration. Box 2 highlights these initiatives and demonstrates that there is a desire to deal with issues related to both the institution and to compliance management that have constrained progress in the past. These initiatives are well-targeted but are not part of any strategic approach to modernization.

Ministry of Finance Modernization Initiatives Related to Tax Administration

Institutional strengthening

  • Implementing a transformation strategy—heavily focused on IT.

  • Strengthening the reporting relationship of tax offices to tax chambers.

  • Consolidating administrative support.

  • Increasing a service focus.

  • Developing specialized competence centers.

  • Enhancing management and accountability.

Compliance management enhancement

  • Strengthening risk-based approaches.

  • Improving planning and monitoring.

  • Standardizing core operations.

  • Enhancing IT support to operate and manage compliance.

24. There is no cohesive and overarching strategy for tax administration. Successful reform efforts usually begin with a comprehensive assessment of what needs to be improved and developing an understanding of the best way to achieve these improvements. Inter-relationships between modernization initiatives can be identified and properly managed. In the absence of a cohesive modernization strategy, it will be difficult to determine priorities and to make resourcing decisions if priorities conflict—and efficiency and effectiveness gains will remain elusive.

25. The development of a modernization strategy should be an immediate priority. The transformation strategy is now close to two years old and IT developments were the main focus of the document. It is now time to update this approach and to develop a vision for tax administration in Poland. Five years is often the horizon selected by many countries engaged in modernization. In this case, a strategy for 2020 could be developed that would focus on and prioritize initiatives that have the potential to achieve breakthrough improvements in performance. To do this well, the current state and end state should be clearly described and opportunities, constraints and risks identified.

26. This report in many ways provides a road map for reform. The advice provided on institutional reform, core business processes and compliance management provides a sound basis for discussion and inclusion into a modernization strategy.

III. Institutional Reform for Tax Administration

27. This section analyses institutional changes taking place in tax administration and advises on an improved path for institutional reform. The section addresses selected issues concerning (i) organization; (ii) governance, management and accountability; and (iii) the recommended way forward. To set the context for the analysis, features of modern organization and governance arrangements for tax administration are discussed first.

A. Organization and Governance in Modern Tax Administration

28. Institutional reforms allow tax administrations to improve their organization and governance arrangements to enable better delivery of their mission. The right organization (at central and operational levels), modernization of strategic and operational planning and performance management, proper budget and human resources management, and the development of workforce skills are all key aspect of institutional reform. Governance relates to how the organization is managed, directed and held accountable for achieving strategic and operational objectives. It is critical to ensure that a governance framework is in place, with clear management accountabilities and lines of command across the organization, that is conducive to managing the tax system effectively and efficiently, with transparency, and free of corruption and political interference. Thus, institutional reform helps create the proper conditions for efficient and effective delivery of daily operations and for supporting the reform agenda faced by most tax administrations.

29. Organization and governance design should be guided by modern features to support effective operational delivery, maximize voluntary compliance and promote a good investment climate. Based on IMF technical notes on organization and governance and EU Fiscal Blueprint, Box 3 sets out key organization and governance features of modern tax administration.

B. Organization Issues in Tax Administration in Poland

30. The current organization for tax administration in Poland comprises several units at the MOF (the central level), tax chambers and tax offices. Figure 5 depicts the current situation.

Figure 5.
Figure 5.

Poland: Current Organization for Tax Administration

(Shaded boxes have responsibility for tax administration)

Citation: IMF Staff Country Reports 2015, 112; 10.5089/9781498396493.002.A001

31. Many, but not all, key tax administration functions are the responsibility of one Undersecretariat in the MOF. This Undersecretariat has broad responsibilities for revenue entities (tax and customs—and also gambling). With respect to tax administration, there are literally dozens of direct reports that are described in Box 4. There are over 40,000 employees involved in tax administration, with close to 99 percent in operational offices.

32. With respect to customs administration, the Undersecretary has a similar set of responsibilities. This includes 16 customs chambers and 46 customs offices as well as departments for customs duty, customs service and excise duty.

33. The Undersecretary has several other responsibilities not related to revenue administration matters. These include responsibilities for computerization for the entire public service, and for the management of the education center for the MOF.

Organization and Governance Features of Modern Tax Administration

Organization

  • They are unified, with all critical functions in a single organization.

  • There is a strong headquarters that directs and supervises operations.

  • They have a streamlined network of field offices; limited number of offices that reflects the application of modern processes and takes advantage of intensive use of technology.

  • They are organized around major tax administration functions (e.g., services, returns, audit, and collections) instead of by tax type.

  • The approach to taxpayer management is segmented for greater effectiveness – large, medium, small, and micro.

Governance

  • There is a single empowered head of tax administration with the ability to delegate powers throughout the organization.

  • There is a clear chain of command from headquarters to regional offices to local offices.

  • They are based on a stable legal framework to ensure proper administration and enforcement.

  • They are accountable for their operations and manage and regularly assess performance.

  • They use modern management techniques, including a strategic management approach to run the organization; clear mission, vision and values, and structured senior management committees.

  • They have structures and processes in place to identify and manage compliance risks.

  • They have sufficient human resources (HR) autonomy to manage most HR aspects to meet tax administration needs.

  • They are adequately resourced.

  • They have management control over their own IT—full control of all aspects of IT support to tax administration.

Tax Administration Direct Reports to the Undersecretary

  • One Tax Administration Department that coordinates but does not manage or oversee tax administration and enforcement.

  • One Customs Control, Tax Inspection and Gambling Control Department that coordinates risk analysis and tax audit activities.

  • Sixteen tax chambers (akin to regional offices and 380 tax offices that report through the tax chambers but have a distinct separate organization status, are deemed to be separate employers and manage their own HR requirements).

  • Twenty specialist offices that are described as LTOs but which in fact administer also small and medium taxpayers.

  • Five tax information centers that handle interpretations and rulings (both general and private rulings requested by taxpayers).

  • Three competence centers (for collections, administrative enforcement and risk analysis) to develop and provide guidance to tax chambers and offices as centers of excellence. They will not be responsible for standardization or consistency in operations. These offices are affiliated with a tax chamber for resourcing purposes but report directly to the undersecretary.

  • One information exchange office that deals with all international tax information exchange requests, including verifying trade transactions with other EU member states.

Issues

34. Tax administration is fragmented. There is no single and unified organization responsible for the whole of tax administration or only for tax administration. The current tax administration department at the MOF is not a unified tax service, nor does it represent the headquarters of the tax administration—it simply coordinates or acts as an intermediary between the Undersecretary and the tax chambers and offices and other specialist offices. As illustrated in Figure 5, no fewer than 11 different points in the MOF have some level of involvement in tax administration. While the Undersecretary has oversight of much of this, this is not unified tax administration. Audit, a key tax administration function, is partially conducted by a department reporting to another Undersecretary at the MOF—the Fiscal Control Department. The diffuse responsibility for tax administration is confusing for taxpayers and increases their cost of doing business.

35. The span of control for the Undersecretary (tax, customs, gambling, and the several responsibilities not related to revenue administration matters) is enormous. The number of direct reports is clearly challenging and complex, and senior level responsibility below the Undersecretary level becomes diffuse. At present, the Undersecretary manages close to 60 direct reports, including responsibilities for customs, excise and gambling regulation and the various other functions not related to revenue administration matters. This impacts the tax administration organization at the central level, where headquarters functions should be performed.

36. The headquarters function is virtually absent. As in any large business, one part of the organization is devoted to developing programs and procedures, supervising implementation through field offices, monitoring results and ensuring a proper allocation of resources. HQ should act as the brain of the tax administration, constantly focused on the core business areas, i.e., registration and service, payment and processing, compliance, audit, enforced collections, policy, and legislation and appeals. The fragmentation of several units at the central level in the MOF dealing with tax administration matters and the broad span of responsibilities of the Undersecretary translates in practice into the absence of a unified HQ, performing HQ functions. To the extent any of these functions are present they are limited, diffused and staffed by less than 1 percent of overall resources. The competence centers will attempt to address this gap to a small extent but are not intended to perform full HQ functions. Tax administrations dedicate a relatively small portion of their resources to activities that are generally described as HQ functions—but much larger than the current allocation in the case of Poland (see Subsection D). Section IV discusses the importance of HQ in more detail as it relates specifically to core business processes.

37. There is no single IT organization dedicated to the needs of tax administration. A further example of fragmentation is IT; responsibilities are managed by five different MOF units involving two Undersecretaries and one Director General. Nowadays, IT plays a substantial role in defining tax administration process design and delivery. Given the scale of IT support to tax administration operations, international practice has geared towards complete control over IT resources by tax administrations—this includes both software and hardware. This has been particularly critical in using the internet for tax administration delivery to ensure high quality on line service delivery and rapid responses to risks.

38. The field network is too large. 400 tax offices overseen by 16 tax chambers is clearly inconsistent with more effective tax administration,9 in which IT innovations have reduced or eliminated the need for taxpayers to present themselves at a physical office. In the case of Poland, all core business functions are currently delivered in all offices and there is no consolidation into selected offices of functions that require specialized skills.

39. The LTOs do not focus on the largest taxpayers. The 20 LTOs have a mix of taxpayers that do not represent the top taxpayers in Poland. This is discussed in more detail in Section IV.

C. Governance and Management Issues in Tax Administration in Poland

40. A tax administration act is being developed. It will create the legal notion of the “tax administration” and the position of head of tax administration. However, at present there is no intention to create a unified organization structure responsible for all aspects of tax administration. For example, the tax chambers will retain their separate employer status—see below. The draft legislation includes roles of tax chambers and offices, some HR provisions (e.g., recruitment), territorial jurisdiction, collaboration with other levels of government and focuses on service to the taxpayer. Work continues on the draft and the authorities expect that the act will be in force in early 2016.

41. Development of the planning and monitoring functions is ongoing. Goals are set by units related to tax administration at the MOF for implementation by the tax chambers and offices. Annual action plans are developed and employee teams work collaboratively to ensure that goals are met and a risk mitigation plan is also developed. Tax office goals are monitored monthly.10

42. Changes are planned to how tax operations are managed. The supervisory and coordinating role of the tax chambers with respect to tax offices was strengthened in January 2015. An amendment to the act on tax offices and tax chambers (1996) will remove the separate legal and employer status held by the tax offices and consolidates these roles at the tax chamber. It is expected that this amendment will take effect in April 2015 when the tax chambers will assume all HR and other administrative support functions for the offices. This will involve the movement of 2,228 tax office staff that deliver these support functions and in anticipation of this transition a staffing freeze is in place.

43. Management committees, common in most modern tax administrations, are not fully in place. There is a senior management executive committee—the Tax Administration Transformation and Development Team chaired by the Undersecretary responsible for revenue at the MOF. Tax chambers meet quarterly with tax offices, some monthly meetings are held while others are held on the basis of subject matter or urgent issues. However, there are not specific committees to address cross-cutting issues such as strategic and operational planning, compliance risk management, HR, and IT. There had been a committee that managed the current transformation strategy that focused mainly on IT (the Council of the e-Taxes Program), that committee is now used informally to discuss other reform initiatives. The impact of the fragmentation of tax administration is again evident in the prevailing approach to managing reforms.

44. The Tax Administration Department at the MOF has a central HR function but the tax chambers and offices also manage HR. This department has an HR unit that supports competitive processes for the heads of chambers and offices and position classification and acts as a liaison point with the civil service agency. Training is managed on a two year cycle by HR, with employees and their managers asked to submit training proposals consistent with development needs.11

45. The legal framework presents certain restrictions. There are a number of aspects to this. The requirement to have a first instance (the tax office) and a second instance (the tax chamber) for reviews of disputes is a principle embedded in law and could limit the extent to which the field network can be streamlined in terms of, for example, reallocating core tax operations to tax chambers or reducing their number. There are also legal constraints that dictate where offices must be located and tax officers can exercise their functions i.e. only within the geographic area of the tax office they are assigned to rather than nationally.

46. Tax administration’s mandate extends beyond national taxes. In terms of the overall accountability for tax collection, tax chambers and offices are involved in the collection of a range of taxes, including various local taxes and fees, among them traffic tickets and television licenses. In addition, the local tax office is responsible for the transfer of a share of corporate income tax (as frequently as three times a month) and PIT (generally annually) to the corresponding local government within their jurisdiction.

Issues

47. There is no single head of tax administration. As described in subsection B, there is no single point of accountability for tax administration below the level of the Undersecretary for revenue. This means that the Undersecretary, responsible for various other functions not related to revenue administration matters, is the only senior official who can view tax administration as a whole. Daily management of tax administration should not be vested in this management level. The coordination role played by the director of the Tax Administration Department is an inadequate replacement for a single head or chief executive officer (CEO) that has full responsibility for tax administration.

48. The ability to assess priorities across tax administration is inadequate. The document on Tasks of the Tax Chambers Directors and Tax Offices Heads falls short as a strategic plan or modernization strategy for the tax administration and does not include a medium-term vision for the organization. As described in Section IV, the National Action Plan is just indicative for the local level. Performance information and regular monitoring are in place with close to 90 indicators tracked by the offices and reported to the tax chambers (see Appendix 2). It is unclear how such an extensive list of indicators is actually evaluated and can be of any real use to address performance gaps—all while creating a substantial reporting burden on offices. This situation limits the ability to set priorities and make decisions about what to do, what can be done differently and what can be stopped—all in the interest of creating some resource space to pursue much needed reform initiatives.

49. Tax chambers and tax offices have excessive local autonomy. Tax chambers and offices can make decisions with limited or no reference to the various departments at the MOF level. The chambers and offices have direct lines of communication to the various departments at the MOF level and to the Undersecretary responsible for tax policy—but this is described as for coordination or advice rather than direction or supervision. Staff allocation across functions can be decided by the tax office—as tax offices are losing their separate organizational status, this is changing. The creation of the Tax Administration Department at the MOF in 2008 established an intermediary office, rather than a management layer between the chambers and offices and the Undersecretary.

50. There is no HQ focus on direction and management of chambers/offices, particularly to ensure consistent operational delivery. Inconsistency across offices is an issue that was identified by business stakeholders and others but the management structure and the size of the field network (with 400 tax offices) makes efforts at standardization close to an impossible task. Further, according to the business community the mission met, a level of differentiation is actually accepted by officials as needed to deal with local circumstance. Modern tax administrations strive to create a level playing field for taxpayers and this generally means the same processes are applied in the same way throughout the country. The Tax Administration Department at the MOF plays a limited role in the development of procedures and instructions and this is a recent development.

51. Staff resources directed to tax administration are not properly aligned to functions. General principles have emerged over the years that help modern tax administration decide on proper resourcing levels for major tax administration functions. For example, taxpayer service/registration should have 15 to 20 percent of staff resources, audit 25 to 30 percent. There is no such approach that governs tax administration in Poland and as a result, resources could be inappropriately allocated across work functions—which can be aggravated by the excessive autonomy of chambers and tax offices.

52. Management committees—in early stages of implementation in the case of Poland—need to be further developed. The committee system plays a major role in binding together a large and diverse organization and promoting effective cross-function working arrangements. The establishment of permanent committees responsible for key management issues and proper documentation of their work provides the vehicle for creating a “corporate memory” of important operational and reform activities and facilitates the transfer of knowledge to new members of the management team. Given the small size of staff at the central level (see subsection D), this good practice will be challenging in the short term but further steps should start being taken in this direction. Appendix 4 provides more detail on governance and committee arrangements.

53. Overall workforce management deserves greater attention. A great deal of the time of the HR central unit at the Tax Administration Department is now consumed with the consolidation of support functions to the chambers and the HR consequences of this change. However, given that staff resources consume the biggest share of the available budget, and the large number of staff, it is essential to develop a comprehensive view of the workforce and the HR policies that will be required for the tax administration reform agenda ahead.

54. The legal framework needs to be reviewed to remove restrictions. The need for a first and second instance review by separate organization units should be dealt with when the tax offices lose their separate organizational status; this will require addressing the possibility of also consolidating core tax operations at the chamber level. The need for the physical presence of tax chambers and offices reflects the administrative structure of the country and there is at present a requirement for a tax administration presence in each region and district/city. Finally the law restricts the authority and ability of tax officers to operate anywhere in the country. This restricts how management can assign its workforce in the most effective way possible. There are a number of legal aspects to consider as the next reform steps are developed. The draft tax administration act may be a vehicle to address some of these problems.

55. The tax administration’s mandate should be focused on national taxes. The additional tasks related to parking tickets, TV licenses, etc. means that staff specialized in tax matters are devoted at least in part to relatively simple, transaction-based work. Other options could be considered. In a review of what taxes should be collected by the tax administration, the question of whether excise should be managed as a separate tax type should also be addressed. Finally, expenditure/budget issues are not usually the purview of the tax administration.

D. The Way Forward for Tax Administration in Poland

A unified tax administration

56. Establishing a unified national tax administration service should be an immediate priority for the Ministry of Finance. The problems due to the absence of a unified national tax administration have emerged as a recurring theme in this section and the negative impact of this weakness is equally clear in Sections IV and V. This weakness must be addressed urgently to make a sea change in improving efficiency and effectiveness. A proposal on the features of a Tax Administration Service (hereafter referred as TAS in this section) is elaborated in Box 5. The tax administration act under development for 2016 could be the vehicle to make the legislative changes necessary to create the TAS.

57. One of the first steps towards implementation would be to appoint a single head of TAS. This person would then be able to build the new organization and lead the development of the myriad of initiatives needed to move from the current fragmented approach to tax administration to a unified and robust structure.12 Many countries have nominated a senior official and assigned them responsibility for implementation even before the legal basis for the new organization and position exists i.e. using the position of director of the Tax Administration Department as the interim TAS head until the position can be formally created and filled. The TAS head should be granted all necessary powers to begin to build the new organization.

Features of the Tax Administration Service

  • A single senior official (i.e., the new TAS chief) is responsible for all aspects of tax administration—much like a CEO, General Manager, Director General.

  • TAS would be an entity belonging to the MOF and be accountable to it through the Undersecretary responsible for revenue administration matters; but the TAS chief would have authority for strategic and daily operational management.

  • All tax field or operational offices would come under TAS management.

  • TAS would have all tax-related audit functions as well as risk management as it relates to tax administration—this means transfer of functions from the Customs Control, Tax Inspections, and Gambling Control Department as well as the Fiscal Control Department.

  • The boundaries between the Fiscal Control Department (for investigations) and TAS for tax investigations must be clearly delineated, removing tax function powers from the Fiscal Control Department.

  • All specialist offices including competence centers, large taxpayer offices, national tax information centers and any other specialized office will be included in TAS.

  • TAS should be able to manage its own IT and HR without reference to other parts of the MOF—this implies transfer of functions and capabilities (software and hardware in the case of IT) to TAS.

  • TAS should be responsible for the collection of national taxes only (implementation of this aspect may need to be phased).

  • TAS should not be assigned any MOF-wide management responsibilities, e.g., the education center for the MOF (currently situated in the Tax Administration Department at the MOF).

Improving tax administration in the current context

58. A number of initiatives should begin now—whether an immediate decision is made on TAS or not. As analyzed in this section and sections IV and V, there are a number of weaknesses that can and should be addressed as soon as possible and are not dependent on adopting a unified national structure. Thus, it is still possible to make progress before any decision on structure is made.

59. A modernization strategy should be developed. The end state would need to include the issues raised in this section—organization structure, governance, management, and accountabilities—as well as the operational reforms described in Sections IV and V. Developing the tax administration’s vision for the next 5 to10 years is the first step in the development of the detailed modernization strategy. This work should not be delayed.

60. The appointment of an empowered leader of the modernization strategy supported by a high level reform committee will be crucial for success. The scale of the reform required to realize real change in tax administration in Poland demands the highest political commitment and sustained support. A strong and empowered reform program leader will need to be appointed to manage across departmental boundaries in the MOF and drive the changes necessary to implement the modernization strategy.

61. A modernization team of dedicated senior officials should be established, with full-time responsibility for designing and managing the modernization strategy. International experience has shown that where this is not the case, reform efforts lag, are not coordinated and ultimately fail. Reform program governance arrangements need to also be substantially strengthened.

62. Building a strong HQ to ensure standard methods and monitoring should be a first order priority. HQ is the business owner of all core processes, i.e., registration and service, payment and processing, audit, enforced collections, compliance, and appeals. It is also the focal point for IT, HR, and other forms of needed management support—it is an essential pre-condition to operational improvements.

63. Additional staff will need to be urgently considered to strengthen HQ. International practice has shown effective tax administrations dedicate at least 5 percent of overall staff resources at HQ, to perform HQ functions. It would be unreasonable to think that this sort of quantum leap could be made in short order for two reasons—it would put too much strain on the organization and some time will be needed to determine the right HQ size. It may be that the base for calculation (of over 40 000 current staff) is too large given efficiencies that will be realized through IT, other reforms, and changes to the field network. At present, it is estimated that roughly 200 people (from the two departments) are involved in functions that approximate those of HQ. As an incremental approach to building HQ, these resources (and those assigned to the competence centers) could be directly assigned to the Tax Administration Department at the MOF and initial staffing over the next twelve months could seek to strengthen HQ staff to around 800 to 1,000 people.

64. The legal framework needs to be reviewed to resolve operational impediments. A small legal team could be formed and tasked with a review with a goal of submitting a report to management within three months.

65. The field network should be streamlined. Considerations should be given to grouping delivery of some core business functions at the tax chamber—creating offices with specialized competencies.

66. Governance must be strengthened by establishing strategic management committees. These would include an executive committee (for overall strategy) and committees for operations, compliance, HR, IT, and for reform.

67. Strong working relationships with other parts of national government will be needed. For instance, the relationship with the customs service will remain important and specific initiatives should be developed to build and fully leverage the working relationship, e.g., reviewing the potential for enhancing the exchange of information. The management of VAT refunds is another critical area where tax and customs administration cooperate, as well as on largest taxpayers, usually an overlapping taxpaying population.

68. An overall sequence for these and other reforms should be developed. The reform agenda is complex and not all priorities can be launched at the same time. This obviously creates high risks. Immediate indicative priorities have been described in this section and the reform team needed to be appointed should develop a plan and sequencing of these and other initiatives for discussion with senior management. With elections expected in 2015, it would be a positive step to have a detailed roadmap articulated for the establishment of the TAS, as well as for the several modernization initiatives to undertake pending the establishment of the TAS. Box 6 sets out an indicative prioritization of initiatives under two scenarios: (1) TAS is created and (2) what can (and should) be done without TAS.

Scenarios: With and Without the Establishment of a Tax Administration Service

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In either scenario:

  • Develop a modernization strategy.

  • Build HQ function.

  • Undertake legal review: identify main issues and time needed to assess.

  • Streamline field network—consider further consolidation.

  • Establish management committees.

  • Create one single LTO for top 1,000 taxpayers.

  • Develop strong working relationships with other parts of national government, e.g., customs.

IV. Managing Core Tax Operations

69. There are fundamental weaknesses in the core business functions of the tax administration in Poland that contribute to the apparent low level of taxpayer compliance in Poland. These include (a) a decentralized tax administration IT system; (b) a weak and under-resourced headquarters function; (c) a fragmented audit function; (d) absence of a dedicated Taxpayer Services department; (e) absence of a true dedicated large taxpayer office; (f) excessive autonomy at the operational level; and (g) absence of any effective central monitoring and control over operational work.

70. A centralized IT system to support administration core operations is under development but will not be completed until 2018. Several important elements of this system have already been delivered (e.g., e-filing for national taxes and a centralized taxpayer register). However, the main taxpayer administration systems and taxpayer databases remain distributed across servers located in the 400 local tax offices with limited capacity for efficient information sharing across sites. Core tax administration business functions currently have only low levels of automation (e.g., tax returns filing enforcement and collections enforcement).13

71. This section provides guidance on improving tax operations in the current tax administration organizational situation, pending the establishment of a unified tax administration within the MOF and the completion of the centralized IT system. It focuses on headquarters, audit, taxpayer services, and large taxpayer administration. Appendix 6 provides advice on a range of other core business functions; Box 7 provides a summary of the main issues identified in those functions.

Main Issues in Core Tax Operations

Taxpayer registrations

  • The risk management framework of the registration process needs to be strengthened (see Section V).

  • Business registration requirements should be harmonized across all tax types.

  • The central taxpayer register is not yet complete and is not sufficiently aligned with other key central registers i.e., Ministry of Economy (individuals), and Ministry of Justice (entities).

Filing enforcement

  • The process is not fully automated.

  • E-filing is still voluntary, even for large taxpayers.

  • There are no performance indicators specifically aimed at improving on-time and final filing rates.

Collection enforcement

  • The process is not fully automated.

  • It is fragmented across too many sites and needs to be consolidated into fewer specialized sites.

  • The reasons for the sharp increase in VAT arrears have not been fully analysed.

  • Clearance of the stock of old debt would be facilitated by taking a centrally managed project approach focused initially on the largest collectible debts.

Dispute resolution

  • The second instance (tax chambers) could be streamlined by reviewing only those issues in dispute, and providing tax chambers with jurisdiction to directly conduct enquiries required to resolve the disputes.

  • Structured feedback between tax chambers and local tax offices are needed to reduce procedural errors.

A. Improving Headquarters Management of Tax Operations

Current situation

72. Control of tax administration operational work by relevant MOF departments is weak and many key headquarters’ responsibilities are simply not undertaken at the central level. As discussed in Section III, the headquarters function is almost absent. It is clear that the MOF departments responsible for tax administration do not currently exercise effective control over the large network of tax chambers and local tax offices that instead operate largely under the discretion of their local management. The tax law prescribes high level business processes and defines the organization structure for tax chambers and local tax offices (i.e., the number and functions of organizational units required in each office). However, the design of operational business procedures and the allocation of resources across functions are at the discretion of heads of local tax offices. As a result, core business processes are currently not standardized across or within regions, and the central administration has limited information on what is happening on the ground across its 400 local tax offices. Headquarters departments have only recently commenced to develop national business plans and these are still at a very high level, set only broad objectives, and provide little more than general guidance.14

73. Headquarters does not have a structured performance management system in place and minimal effective performance monitoring and oversight is exercised at the central level. In practice, the planning process remains heavily weighted to bottom-up processes, existing performance measures are generally inadequate,15 management information systems are underdeveloped, and there appears to be little consequence for local tax offices for lack of adherence to headquarters’ directions. As a result, there is a major disconnect between the high level plans developed at the central level and the activities actually undertaken at the local office level. In these circumstances, there can be no guarantee that corporate priorities are being addressed.

74. Some recent initiatives are aimed at developing standardized business processes across the organization. Tax chambers have been tasked with responsibility for “supervising” the work of the local tax offices in their geographic patch. The chambers have commenced to take a stronger role in business planning (i.e., to develop regional work plans based on national plans), and new organizational units have been formed to quality assure the work of the local offices in respect of some core business functions such as audit. Two new ‘competence centers’ have also been established to assist in the development of standardized national procedures for the arrears management function.16 These competence centers are located within the tax chamber network but are effectively out-posted headquarters units.

Issues

75. As noted in Section III, successful tax administrations are anchored by a strong headquarters that sets policy and provides specific program direction and guidance to the operational level. Broadly, the role of a headquarters department in managing tax operational work is to provide a management system that delivers clear organizational direction and leadership to operational staff, translates organizational goals and objectives into annual work plans, and assures the effective implementation of those plans. A more detailed description of the tasks typically performed in this regard by an effective headquarters is provided at Box 8.

Role of a Headquarters Department in Managing Operational Work

  • Contribute to the development of the strategic direction of the tax administration.

  • Prepare an annual national work plan that reflects corporate priorities (for both reform objectives and operational business objectives) and specifies required service and enforcement activities, reform related development tasks, expected work volumes, staffing levels, and expenditure budget requirements.

  • Ensure that available resources (human and financial) are appropriately allocated across activities and locations and aligned with corporate priorities.

  • Develop specific performance measures related to the quantity, quality, and timeliness of the planned activities.

  • Regularly monitor performance against the national work plan and budget by means of a structured performance measurement system.

  • Identify reasons for variances from the plan and develop corrective actions.

  • Report on performance against plans to the Head of the tax administration (and/or the appropriate management committee) explaining variances and remedial actions taken.

  • Develop national policies, and design and maintain standardized business processes and procedures (with supporting guidelines, manuals and instructions).

  • Take “ownership” of the IT business systems related to those business processes and procedures.

  • Identify training needs and oversee the development and delivery of appropriate staff training programs

  • Provide advice and guidance to field operational units as required.

76. MOF departments responsible for tax administration are clearly under-resourced for a full headquarters role. Section III highlights the relatively small proportion of overall tax administration resources devoted to headquarters functions in Poland. MOF departments responsible for tax administration are currently resourced in line with the more policy oriented departments at the MOF. This does not recognize the extensive operational management responsibilities of a modern tax administration headquarters. As a result, the relevant MOF departments simply do not have the capacity to effectively playa headquarters role.

77. These departments must take greater control of operational work pending establishment of a unified tax administration service. It will take time to design and establish a unified tax administration. In the meantime the relevant MOF departments need to secure greater control over tax administration operations using the resources available to them. This will entail an analysis of the headquarters tasks illustrated in Box 8 to determine priorities. At a minimum, the following steps should be taken in the short term:

  • The respective roles, accountabilities and reporting lines for all MOF departments responsible for tax administration, and for tax chambers and local offices, should be clearly articulated and widely communicated across the organization.

  • These MOF departments, pending the establishment of the TAS, playing a tax administration headquarters role should take a far stronger role in developing annual business plans and a standardized performance measurement system to facilitate more effective monitoring and control over operational work should be developed.17 This may require a modest injection of resources into these departments that could be provided by reallocation (or assignation to) from the operational level.

  • The development and implementation of standardized business process and procedures across all core business functions should be fast-tracked. Given the accommodation and resource constraints within the MOF, this work could be done by dedicated work teams out-posted to tax chambers using the approach piloted by the new collection enforcement competence centers. Under this approach, the work teams would be located in the tax chambers but would report directly to the relevant headquarters department in MOF.

  • The division of responsibilities within the tax administration departments at the MOF needs to be reviewed to better delineate core functions across deputy directors and their respective unit under their supervision. Overlapping functions for core tax operations should be avoided to improve management, accountability and strategic drive of modernizations.

B. Tax Audit

78. Responsibility for tax audits is split across two separate departments within the MOF with overlapping powers. Tax audit responsibilities are shared by the Customs Control, Tax Inspection, and Gambling Control Department and the Department of Fiscal Control that report to different Undersecretaries of MOF.18

79. The Customs Control, Tax Inspection, and Gambling Control Department is primarily focused on the formal economy. It is responsible for both risk analysis and the audit program for customs, taxes and gambling and focuses mainly on registered taxpayers. Tax field audits are conducted by dedicated tax audit units in all 400 local tax offices and are focused mainly on registered taxpayers. Tax auditors have jurisdiction only over taxpayers registered (or required to be registered) in the geographic patch of their own local tax office.

80. The Fiscal Control Department is primarily focused on the informal economy. Its responsibilities encompass both protecting state revenue and ensuring financial integrity within MOF departments and agencies. It has a mandate to conduct investigations across all heads of revenue. In regard to taxes, it has primary responsibility for addressing the informal economy (unregistered taxpayers) and the broader grey economy risks. It takes the lead in fighting major tax frauds including carousel fraud. Fiscal Control has a field audit presence in the same 16 provinces as the tax chambers. While organized in provincial units, Fiscal Control field staff all have national jurisdiction.

81. Risk analysis for tax audits is at an early stage of development and is conducted at multiple levels. Risk analysis is carried out at the central level by the Customs Control, Tax Inspections and Gambling Control Department based principally on the results of audits completed in prior years. Some third party data is captured but not on a regular and structured basis. Intelligence on new or emerging risks is captured through analysis of frequently asked questions in the National Tax Information Center and results from a ‘random’ audit program conducted by local tax offices. Staff involved in the central risk analysis process for tax audits is mainly drawn from operational areas and is not expert in the use of data mining techniques and other modern analytics. Risk analysis units were established in tax chambers in April 2014. Small planning and analysis teams are present in all of the 400 local tax offices to support the audit case selection process. A new central risk analysis unit will be established early next year to support the Customs Control, Tax Inspections and Gambling Control Department and will focus solely on tax risks.19

82. A National Action Plan (NAP) is produced that identifies a range of high level risk issues and a number of high risk industry segments. The NAP requires that 50 percent of the overall tax audit effort should be directed to these national risks and that a further two percent of effort should be directed to auditing a random sample of selected industry sub-segments. Tax chambers are then required to prepare regional audit plans based on the NAP and any regionally identified risks. Tax offices, in turn, develop operational audit plans based on the risks identified through the regional audit plan. Audit case selection takes place exclusively at the local tax office level using an IT supported risk rating engine that incorporates pre-determined risk parameters. The Heads of local tax offices are responsible for approving the final audit case selection.

Issues

83. The effectiveness of the tax audit function is seriously eroded as a result of the current organizational arrangements. There are two main issues: (1) responsibility for risk management and the tax audit program is split across two separate organizational entities within MOF with overlapping powers; and (2) the tax auditor workforce is fragmented across sixteen provincial level Fiscal Control Offices and 400 local tax offices. These factors combine to preclude the development of a coordinated compliance strategy as neither department has a complete picture of the risk environment.

84. The lack of an appropriately organized and managed audit program is undoubtedly a major contributing factor to the level of noncompliance in Poland. In most advanced countries, tax audits are performed exclusively by the tax administration staff. These administrations establish their own specialist investigations units whose staff are trained, equipped, and empowered to deal with serious fraud and evasion cases (e.g., carrousel fraud), including cases likely to result in criminal prosecutions. Separate agencies are responsible for investigating other forms of economic crimes and close cooperative arrangements are maintained so that, where necessary, specialist tax investigators can be deployed to support the work of the other agencies in cases involving tax issues. The need for a specialist tax investigation capability to deal with VAT fraud is further discussed in Section V.

85. A fragmented audit capability is less effective in countering noncompliance. There is no single organizational unit that has a complete picture of the tax risk environment; no assurance that the MOF’s enforcement program is properly directed at the highest risks; and no real opportunity to evaluate the overall impact of the tax audit effort. Given the overlapping mandates of the two departments responsible for tax audit, it appears highly likely that there are major overlaps in the separate audit programs. Taxpayers may be treated in an inconsistent manner and confused about the powers of the particular auditors they are dealing with. Both departments claim that close cooperation is maintained to avoid targeting the same taxpayers, but feedback to the mission from taxpayer representatives suggested that this was often not successful. The mission assessed that effective coordination of audit activities across two separate organizational structures at sixteen provincial sites and 400 local tax offices would be problematic at best—especially in the absence of good management information systems. Furthermore, under the current organization, there is little incentive for the local tax offices to enforce collection of additional assessments raised through the fiscal control audits. The mission was advised that many of the assessments raised by fiscal controllers were unrealistic and unlikely to be collectible (e.g., assessments raised in relation to tax fraud cases).

86. The audit program is heavily skewed towards micro and small taxpayers. The risk analysis process and case selection process is relatively weak. The predominance of data from previous audits tends to perpetuate a focus on the same risks. The ‘random audit’ program is not managed centrally and does not reflect a truly random sampling approach. Instead these ‘random audits’ are selected by local offices and therefore reflect a local bias. They are unlikely to fulfill the objective of identifying new and emerging risks. Market segmentation principles are not applied below the tax type/industry segment level. This does not deliver a sufficiently granular analysis of risk. For example, large taxpayers are not singled out for special analysis and the process has not surfaced major compliance risks commonly encountered in the region.20 Instead, all taxpayers are subjected to the same suite of risk parameters. Finally, case selection is only done by local tax offices, of which 380 deal mainly with micro and small taxpayers. The overall result is an audit program that is heavily weighted to the small end of the market and is therefore unlikely to have any significant impact in reducing the overall tax gap (see Table 2 in subsection D).

Table 2.

Stratification of Taxpayers, and the Audit Focus, 2013

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Source: Prepared by the mission based on MOF data.

87. The tax auditor workforce is too small and is spread across too many sites. In modern tax administrations, at least 25 percent of the workforce is allocated to the audit function that encompasses both risk analysis and field audit. In Poland, the tax audit workforce (4,200 staff) represents only around ten percent of the total staff, and this workforce is fragmented across all 400 local tax offices. Furthermore, the tax auditors have jurisdiction only over taxpayers registered in their own local office and must rely on cooperation from other local offices where information is required from taxpayers not registered in their patch. This creates major logistical problems. These factors combine to dilute the effectiveness of the audit program and no doubt create scope for significant differences in approach across sites. Tax audits are also conducted by the 2,250 Fiscal Control inspectors located at the Fiscal Control provincial audit units, but these inspectors are not solely engaged on tax issues.

88. There is therefore a clear need to re-organize the overall tax audit program in Poland as follows:

  • The mandate and powers of tax auditors and fiscal controllers should be revised to shift full responsibility for all tax related audits under one department. This department should have responsibility only for tax enforcement (i.e., it should be separate from Customs and other heads of revenue) and should report to the same Undersecretary as the Tax Administration Department under the current MOF organization structure. It would then be subsumed into the unified tax administration service when that service is established.

  • Tax field audit teams should be consolidated at the provincial level similar to the way in which Fiscal Control is organized. This would include extending the jurisdiction of these staff at least to the provincial level and preferably to the national level. Consolidating the audit function into larger provincial audit teams would increase the critical mass of the audit teams, allow for greater specialization and more targeted training, simplify the line of command and improve communication with headquarters, tighten control over audit case selection, and facilitate a shift in audit focus more onto medium and large taxpayers. Any legal constraints related to the structure of first and second instance decisions would need to be identified and removed.

  • The tax risk analysis approach should be strengthened and audit case selection centralized. In particular, a far more detailed level of market segmentation should be employed to gain a sharper picture of risks within particular taxpayer populations (especially the top 1,000 genuinely large taxpayers). Better access to third party data should be secured and skills developed in the use of modern analytics such as including data mining. Audit case selection should be centralized with only a small proportion of audit resources made available for locally identified risks. This will result in better targeting and reduced opportunities for corruption.

  • Allocation of staff and financial resources within MOF should be reviewed to take account of the workload transferring from the Fiscal Control Department. Ideally, the specialist tax audit workforce should be built-up over time to at least 25 percent of the total tax administration staff.

C. Taxpayer Service

Current situation

89. The tax administration in Poland is in transition to a new taxpayer service approach. It has embraced the need for a strong taxpayer service program to support a self-assessment tax system and to build community confidence in the tax administration.21 A number of impressive taxpayer service initiatives have been rolled-out in recent years including: E-filing of tax returns; modern customer service centers in local tax offices; targeted information campaigns; a seminar program for new businesses; a centralized National Information Center aimed at delivering consistent and accurate advice; a system of general and private binding rulings system to provide greater certainty to taxpayers; and a tax portal through which taxpayers can access information on their own accounts. A new program of personal assistance to all new micro taxpayers for a full eighteen months after registration has also been proposed in the draft Tax Administration Act, but the details of how it would work in practice have yet to be finalized—it will be one of the systems of taxpayer service and support initiatives.

Issues

90. Responsibility for taxpayer services is fragmented across several areas at the MOF tax administration department. There is some confusion around the term ‘taxpayer service’ and a number of filing, verification and payment processing activities are currently labeled ‘direct services.’ Other initiatives more in the nature of taxpayer assistance are managed across different units reporting to different deputy directors at the Tax Administration Department of the MOF. As a result, while good progress has been made on a number of service fronts, they have not been part of any overarching taxpayer services strategy.

91. All genuine taxpayer assistance responsibilities should be consolidated into a dedicated Taxpayer Services manager and a taxpayer services strategy developed. This will help ensure that the overall service program is developed and delivered in a structured way. The strategy should provide for differentiated services tailored to the needs and capabilities of different taxpayer segments; determine the appropriate communication channels for delivery of particular services; and accommodate the development of both general service campaigns aimed at broad sections of the community and more targeted service initiatives delivered as an integral part of compliance improvement strategies addressing specific risks.

92. The taxpayer service strategy should pay particular attention to new businesses as a discrete taxpayer segment. Many countries have developed outreach programs specifically for new businesses in order to promote good compliance behavior right from the start. Typical elements of such an outreach program would include: free seminars conducted in conjunction with other government agencies to help new businesses understand their obligations and entitlements; outbound telephone calls to check if the new business operator is experiencing any problems and to offer help and advice; optional free advisory visits at the taxpayer’s premises to resolve any problems that have emerged; and targeted advisory visits (nonoptional) to the premises of new businesses that are considered high risk.

93. Particular attention should also be paid to businesses that become employers for the first time. The transition to employer status introduces many new obligations and complexities for taxpayers. New employers are a key leverage point for embedding good compliance behavior from the start around obligations to withhold income from employees’ wages and to make social security payments where required—though these last fall within the remit of the Social Security Administration.

94. The proposal to provide personal assistance for new micro taxpayers is a commendable initiative but will need to be managed carefully. Ongoing one-on-one assistance to this number of taxpayers is simply not sustainable. These types of programs are better delivered through dedicated teams of service officers that take responsibility for providing support to groups of taxpayers through a structured program of seminars, outreach visits, and telephone and electronic communication.

D. Large Taxpayer Administration

Current situation

95. In all legal and operational respects the current LTOs are identical to the broader network of local tax offices. The current network of LTOs was established in Poland in 2004. The network comprises twenty full-functional offices with a presence in every province.22 The criteria for identifying the large taxpayer population are shown in Box 9. In total, this office network is responsible for around 87,000 taxpayers ranging in size from micro businesses to genuinely large taxpayers. As is the case with the broader local office network, each LTO is a separate organizational entity with its own budget and operates with a high degree of autonomy. They have the same management and reporting relationship with the provincial tax chamber and the MOF that applies to all other local tax offices.

Taxpayers Included in the Large Taxpayer Population

  • Capital groups

  • Banks

  • Insurance companies

  • Investment and retirement funds, and other financial institutions

  • Branches and representatives of foreign enterprises

  • Legal entities who:

    • ⚪ generate gross sales of at least €5 million per annum;

    • ⚪ hold shares in companies based abroad or control such companies; and

    • ⚪ are managed by nonresidents.

Issues

96. The original purpose for establishing the LTOs has not been achieved. In line with international practice, the original intention was to secure tax revenues by achieving a sharp focus on the relatively few taxpayers who account for a large share of tax revenues. In most countries, LTOs are responsible for only the largest 500–1,000 of the largest taxpayers who typically account for 50–70 percent of total tax revenue. However, the criteria adopted for identifying the large taxpayer population in Poland has resulted in the capture of a far greater number of taxpayers (more than 80,000 in total) including a multitude of small and even micro taxpayers.23 Inevitably, resources are strained to deal with the workloads imposed by large numbers of relatively small taxpayers and the focus on genuinely large taxpayers has been lost. The mission was advised that, in practice, around 80 percent of effort is expended on small and medium sized taxpayers. The loss of focus is perhaps best demonstrated by the fact that the same risk parameters are applied to all taxpayers regardless of size with the result that the audit program is heavily skewed towards the bottom end of the market (see Table 2).

97. A more sophisticated approach to managing compliance of large taxpayers is required. Because of their size, all large taxpayers represent a risk to the revenue and advanced tax administrations develop risk profiles for each and every one. Box 10 illustrates some of the issues that are considered in this risk profiling activity. This individual risk profiling is the main determinate of which large taxpayers will be selected for audit. Auditors in a properly functioning LTO will normally be organized into specialist industry sector teams focused on key client groups such as: information technology and communications; energy; transport; construction; banking and insurance; etc. This allows for the development of specialist industry expertise that is critical to understanding how large businesses operate. Service initiatives are also tailored to the needs of large taxpayers with a particular focus on fast turnaround of technical advice related to large scale projects.

Illustrative Risk Indicators for Large Taxpayers

  • Related party cross-border and tax haven dealings where profits returned in Poland do not reflect economic activities undertaken or the taxable nature of imports.

  • Complex structures and intra-group transactions associated with generating tax benefits unrelated to the economic substance of the commercial activity.

  • Tax benefits from financial or other arrangements that are disproportionately high compared to the financial exposure.

  • Characterization of transactions for tax purposes that are at odds with their economic substance.

  • Distortions and inconsistencies in market valuations.

  • Unexplained losses, low effective tax rates, and cases where a business consistently pays relatively low or no tax.

  • Financial or tax performance that varies substantially from industry patterns.

98. The decline in revenue collections signals the need to re-focus on genuinely large taxpayers. It is essential to secure the large share of revenue contributed by genuinely large taxpayers. In Poland, the largest 1,000 taxpayers account for around 50 percent of total tax revenue. A new LTO, responsible only for these top 1,000 taxpayers, should be established without delay. Given the demographics of this large taxpayer population, the new LTO should be located in Warsaw but have national jurisdiction. It should deal only with national taxes (CIT, PIT, and VAT). The best qualified and most experienced auditors from the existing network of LTOs should be recruited for this specialist office.

E. Recommendations

Improving headquarters management of tax operations

  • Clearly articulate and communicate the roles, accountabilities and reporting lines for all levels of the tax administration.

  • Strengthen central control of the national planning processes.

  • Implement a standard performance measurement system across all relevant MOF departments.

  • Support headquarters with dedicated work teams out-posted to tax chambers.

Taxpayer audit

  • Establish a single Tax Audit Control Department with full responsibility for control of national taxes.

  • Consolidate tax field audit teams at the provincial level and extend tax auditor jurisdiction to the national level.

  • Strengthen the tax risk analysis function and centralize the audit case selection process.

  • Increase the size of the tax audit workforce over time to at least 25 percent of total tax administration staff.

Taxpayer service

  • Establish a single accountability for Taxpayer Service within the tax administration department at the MOF.

  • Develop an overarching taxpayer service strategy.

  • Develop a structured outreach program for new businesses and micro taxpayers.

Large taxpayer administration

  • Establish a new LTO in Warsaw to deal only with the largest 1,000 taxpayers, using turnover as the main selection criteria, and only with national taxes.

  • Recruit the best qualified auditors for this new LTO.

V. Managing Compliance Risks

99. This section provides guidance on the adoption of a more strategic approach to manage taxpayer compliance based on risks.

A. Introduction

100. As in most countries, Poland’s compliance risk picture has evolved considerably in recent years. Significant economic, social, technological, cultural, and demographic developments (including EU membership, increasing globalization, and the impact of the economic crisis) have changed the environment in which the tax administration operates. Taxpayers are increasingly mobile and have access to sophisticated technologies and services that allow them to engage in complex transactions that may cross jurisdictions, give rise to legal ambiguities, and leave few records or audit trails. Modern tax administrations continuously adjust their compliance approach to match the changing compliance risk environment.

101. Declining tax revenues in Poland indicates a negative shift in taxpayer compliance behavior, which the tax administration has been unable to address. There is compelling evidence (see Section I) that the tax gap in Poland is growing, especially in VAT. For example, while in neighboring countries VAT collections have recovered after 2009 to reach pre-crisis levels, Poland’s VAT receipts have declined further—despite a tax rate increase in 2011. Revenues from CIT have also declined since 2008 as a percentage of GDP. This strongly suggests that there are major taxpayer compliance problems that the authorities’ compliance efforts have not been able to address.

102. Structural weaknesses in the tax administration and a somewhat outdated approach to compliance management constrain the effectiveness of current collection efforts. Section IV outlines a number of major weaknesses in the way in which the tax audit function is organized and managed. These weaknesses preclude the development of a clear picture of the overall risk environment for the tax system, militate against the development of coherent and integrated responses to key risks, and skew effort towards the smallest taxpayers. The current compliance program is based largely on a traditional taxpayer-by-taxpayer approach using audit as the main compliance tool. This type of approach rarely has an impact on compliance behaviors beyond the specific taxpayers to whom the audits are delivered, and the opportunity for a more leveraged return on investment in compliance activities is lost.

B. New Compliance Model for Medium-Term Implementation

103. Advanced tax administrations take a more strategic approach to compliance risk management (CRM). A full explanation of the CRM approach is provided in Appendix 7. Broadly, this approach:

  • recognizes that the factors underlying taxpayers’ compliance behaviors in any specific risk area are frequently quite complex and, as a result, are unlikely to be treated successfully with a single action strategy—particularly one based solely on enforcement actions;

  • directs attention to understanding the factors that shape taxpayers’ compliance behaviors, so that a potentially more effective set of responses can be developed and implemented;

  • promotes the development of treatment strategies that aim for an optimal mix of responses (e.g., education, assistance, clarification of the law, simplified procedures, audit, enforcement, and marketing) to achieve the widest possible impact on voluntary compliance across the entirety of the target taxpayer segment; and

  • ensures that these responses are sequenced in a coherent manner to deliver the maximum compliance leverage from the overall treatment strategy.

104. The CRM approach is founded on three key organizational capabilities.

  • Sophisticated risk identification and analysis—the revenue administration must have the capacity to access multiple sources of disparate information and to combine and interpret the data to create intelligence about the risk environment in which it operates. The proposed new central risk analysis unit for tax should form the nucleus for developing this capability.

  • Effective strategy development—compliance planning and management arrangements must be developed that look across operational functions and tax types to: identify and prioritize risks to the revenue; develop integrated response strategies; and then marshal and coordinate the necessary human and financial resources to deliver the appropriate mix of interventions. Appendix 4 provides a description of a typical management committee arrangement to oversee this activity.

  • Efficient core business operations—key tax administration business units such as taxpayer services, audit, filing and collections must be resourced, trained and equipped to deliver the targeted activities in a timely and effective manner. Section IV discusses opportunities to strengthen core business operations.

105. Moving to a modern CRM approach should be adopted as a medium term objective for the tax administration in Poland. It would not be sensible to attempt to move immediately to this approach given the scale of the overall reform challenges currently facing the organization. The CRM approach represents a sea-change in the way the tax administration plans and manages its compliance activities and it will take considerable time to develop the skills and expertise as well as the cross-cutting management arrangements necessary to support it. For this reason, the modernization strategy should include a roadmap aimed at fully implementing the CRM approach in the medium term.

C. Compliance Management Initiatives for Immediate Implementation

106. Falling revenues cannot await the implementation of a new compliance model—a more timely response is demanded. In particular, action needs to be taken immediately to secure collections of VAT and CIT. Ideally, a senior officer in the tax administration headquarters (risk owner) should be identified to lead the development of coordinated responses to declining revenues in these two important taxes.

107. VAT represents the greatest risk. VAT collections account for 50 percent of total tax revenues administered by the tax administration and the sharp increase in the VAT gap over recent years is the major concern.24 Action should be taken immediately on several fronts:

  • Industry based compliance improvement projects should be undertaken for the high risk industries identified in the NAP. The high risk industries identified in the current NAP are consistent with experience in other countries, so there is a high degree of certainty that they will account for a significant share of the tax gap. Box 11 illustrates how an industry based compliance improvement project is structured and delivered. Adopting this approach will also provide valuable experience to support the medium term shift to a modern CRM approach.

  • An overarching strategy should be adopted for the fight against the grey economy. Currently, the Fiscal Control Department and the Customs Control, Tax Inspections, and Gambling Control Department separately gather intelligence, analyze risks, and target taxpayers within the grey economy. Some general taxpayer information campaigns have also been aimed at promoting better compliance. However, these initiatives are all at a tactical level and are not part of any coordinated and integrated overall strategy. A senior officer appointed as the risk owner for VAT should take the lead in bringing the relevant parties together to share information and experience, and to jointly developed a more integrated and strategic approach. Appendix 8 provides an illustration of the range of activities included in such a strategy in other countries.

  • A specialist investigation capability should be established within the tax administration to deal with VAT fraud. Many tax administrations in the EU have created specialized anti-fraud units with the competence to co-ordinate preventive and repressive actions. Ideally, central VAT anti-fraud units cooperate closely with the customs administration, the office responsible for international administrative cooperation, as well as the judicial authorities.

  • The compliance framework around the registrations process should be strengthened. The VAT audit program must be supported by preventive measures to facilitate early detection of potential VAT fraud. Some key measures that should be introduced include:

    • Conducting pre-registration visits to verify the legitimacy of new VAT registrations.

    • Implementing a post- registration monitoring program for risky traders. Modern administrations monitor ‘from the start’ VAT filing and payment compliance for risky registrations, embracing early and on-going post-registration on-site visits. Some administrations have extended monitoring and visiting programs to a wider range of traders and include intermediaries, brokers, main dealers, exporters and freight forwarders in high risk sectors. The main purpose of such programs is to gather as much information as possible on ‘new players in the arena’.

    • Introducing a fast track process to refuse or cancel VAT registration where there is strong evidence of fraud or intended fraud. If the evidence is insufficient to refuse registration, the tax administration should be empowered to require securities as a pre-condition of registration. Moreover, good administrative practice seeks to keep the VAT register free of inactive taxpayers, which will reduce the possibility of re-activating or replacing a de-registered missing trader.

  • The power to recover losses of VAT revenue should be broadened. It is common that bona fide traders get involved in VAT fraud schemes. Where such traders could reasonably be expected to have known that they were collaborating in VAT fraud, many countries have legislated to make them jointly and severally liable for VAT payable by the fraud entity.

  • Criminal prosecutions for VAT offences should be increased and widely publicized. More criminal prosecutions will demonstrate to taxpayers and the general public that the government is taking VAT fraud seriously and will promote greater tax compliance. To address this issue, the tax administration should negotiate with the state prosecution authority to allocate high priority is to serious tax fraud cases.

  • Develop a much stronger revenue analysis and quantitative risk analysis. Currently, the analysis of VAT returns and payments is split across ten MOF departments reporting to virtually every MOF Undersecretary of State, and operational risk analysis largely conducted by local Analysis and Planning units or for individual cases. The VAT gap and potential high-level risks need to be monitored as an integral part of revenue analysis for VAT, and the risk analysis brought together, using national databases of individual taxpayer data on VAT registration, payment and enforced collection, to allow risks to be identified and prioritized for control action nationally. In this context, the creation of a simple, ‘fit for purpose’ analytical database that consolidates the 400 current databases should be more quickly achievable than the fully-specified database that is currently planned. In addition to using VAT records, the integrated IT platform might usefully include data from other sources: customs declarations, company formation agents, financial disclosure information from banks, data from administrative co-operation, and law enforcement agencies. Box 12 illustrates how a risk-based approach might be taken to examining VAT refunds.

Illustration of a Typical Industry Based Compliance Improvement Project

Where an industry or trade is identified as high risk, the tax administration should do as follows:

  • Engage with the relevant industry or business associations to explain why it is seen as high risk and to ensure that the revenue agency has an accurate understanding of how the industry operates.

  • Publicize the revenue agency’s intention to conduct a verification program of the industry and seek the support of the associations in informing their members.

  • Identify tax practitioners who have a significant client base in the targeted industry, alert them to the issues and request that they inform their clients of the intention to conduct a verification program.

  • Conduct a sample audit program to confirm the most serious areas of noncompliance and to quantify the amount of tax at risk across the industry.

  • Engage with the relevant associations and tax practitioners to prepare advice to industry participants on the areas of noncompliance identified through the sample audit program.

  • Send letters to taxpayers in the industry and/or communicate with taxpayers through the relevant associations and tax practitioners advising them of the specific areas of noncompliance and requesting that they review their returns and make any necessary self-corrections. Highlight that voluntary disclosures will attract lenient penalties, and that further audits are planned under which taxpayers who have not self-corrected will be subject to full penalties.

  • Offer free seminars and advisory visits to taxpayers who are unsure of their obligations (these seminars should ideally be conducted jointly with the industry association).

  • Ensure that the tax administration’s enquiry staff is aware of the compliance improvement program and has scripted answers for enquiries received from taxpayers about the program, including how to make a voluntary disclosure, attend a seminar or request an advisory visit.

  • Ensure that the collection enforcement staff is aware of the program and applies the reduced penalties and more flexible payment arrangements to taxpayers who voluntarily self-correct.

  • Conduct a follow-up audit program of the industry with wider coverage and targeting taxpayers who have failed to self-correct and are assessed as high risk; and prosecute the worst offenders.

  • Publicize results of audits and prosecutions highlighting how data matching and other new approaches facilitated detection of high risk taxpayers, and using representative case studies to show how informal economy participants were identified and dealt with.

  • Measure the effectiveness of the project, e.g., by tracking the number of voluntary disclosures received and the overall change in tax paid by taxpayers in the target industry, and surveying the industry and practitioners to test for observed changes in compliance behavior.

Potential Approach for a Risk-Based Value-Added Tax Refunds Examination

The taxpayer is green flagged (i.e. approved large refund claimer): consistency desk examination

  • The claim is consistent with the usual refund pattern and the compliance level is high: instant refund.

  • One of the above conditions is not met: further examination.

The taxpayer is not green flagged

  • Low risk (small amount or closing enterprise) and average or unknown compliance: desk examination

    • ⚪ The credit situation is consistent with the industry norms and with the taxpayer credit pattern: instant refund.

    • ⚪ The credit situation is inconsistent with the industry norms or credit profile but originates in reported operations (exports, investment): written request for supportive documents (copy of invoices, export statements). If unanswered or documents do not support the claim: desk assessment.

    • ⚪ The credit situation is unexplained: request for a list of supplies. If anomalies (insufficient gross margin ratio, expenses presumably not related to the business):

      • ⚪ Potential high assessment: field audit.

      • ⚪ No prospect of high assessments: refund, desk assessment when possible.

  • Medium risk (medium amount, average compliance): desk examination

    • Good solvency prospect (i.e., ability to repay future assessments).

    • ⚪ The credit situation is consistent with the industry norms and with the taxpayer credit pattern: instant refund.

    • ⚪ The credit situation is inconsistent with the industry norms or credit profile but originates in reported operations (exports, investment, and rate differentiation): written request for supportive documents (copy of invoices, export statements). If request unanswered or documents do not support the claim: desk assessment, refer for future field audit.

    • ⚪ The credit situation is unexplained: request for a list of supplies. If anomalies detected (insufficient gross margin ratio, expenses presumably not related to the business):

      • ⚪ Prospect of high assessments: comprehensive field audit.

      • ⚪ No prospect of high assessment: Refund and refer for future audit.

    • Bad or unknown solvency prospect:

    • Request for supportive documents and list of supplies.

      • ⚪ Claim fully substantiated (see above): refund.

      • ⚪ Claim not fully substantiated and origin of the credit known: issue oriented field audit.

    • Claim not fully substantiated and origin of the credit unknown: full scope field audit.

  • High risk (large amount, high risk ratio)

    • Good compliance history and good solvency prospect: desk examination.

    • ⚪ Credit explained: refund, refer for future audit.

    • ⚪ Credit unexplained or tax fraud suspected: comprehensive field audit.

    • Bad compliance history or solvency prospect: Instant comprehensive audit, consider precautionary enforcement measures.

  • Unknown compliance history: instant comprehensive field audit, consider demanding guarantees.

108. In the case of CIT, the main initiative should be the establishment of a genuine LTO. Pending the establishment of the LTO, the senior officer in MOF assigned to review the CIT risk should liaise with the Gambling Control, Tax Inspection, and Customs Control Department to centrally select a range of genuinely large taxpayers based on risk and coordinate the delivery of audits by the provincial tax offices.

D. Recommendations

A new compliance model for medium-term implementation

  • Include the development of a modern CRM approach as a medium-term reform goal.

  • Develop a more integrated strategy for managing the informal economy.

  • Undertake targeted compliance improvement projects for high risk industries.

Compliance management initiatives for immediate implementation

  • Establish a specialist investigation capability within the tax administration to deal with VAT fraud.

  • Strengthen the control framework around VAT registrations.

  • Develop a much stronger revenue and quantitative risk analysis capability for VAT.

Republic of Poland: Technical Assistance Report-Tax Administration-Modernization Challenges and Strategic Priorities
Author: International Monetary Fund. Fiscal Affairs Dept.