ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Tax Administration in OECD and Selected Non-OECD Countries: Comparative Information Series (2006) Prepared by the February 2007 Forum on Tax Administration CENTRE FOR TAX POLICY AND ADMINISTRATION 1 TABLE OF CONTENTS FOREWORD ............................................................................................................................................. 5 1 INTRODUCTION ............................................................................................................................... 6 Background ........................................................................................................................................................ 6 Countries covered by the information series ................................................................................................... 7 Structure of the information series................................................................................................................... 7 2 INSTITUTIONAL AND ORGANISATIONAL ARRANGMENTS FOR TAX ADMINISTRATION OPERATIONS .......................................................................................................... 8 Introduction ....................................................................................................................................................... 8 Key observations and trends ............................................................................................................................. 8 The institutional arrangements for revenue administration ........................................................................ 10 The extent of revenue body autonomy ............................................................................................................ 11 Boards of management .................................................................................................................................... 12 Responsibility for the collection of social contributions ................................................................................ 14 The placement of customs administration ...................................................................................................... 16 Internal organisational structure of revenue administration bodies ............................................................ 16 Types of organizational structures for revenue administration .................................................................................. 16 Large taxpayer operations ............................................................................................................................... 24 Tax fraud investigation function ..................................................................................................................... 26 Office networks for tax administration .......................................................................................................... 26 3 ASPECTS OF MANAGEMENT APPROACHES AND PRACTICES ........................................................ 36 Introduction ..................................................................................................................................................... 36 Key observations and trends ........................................................................................................................... 36 Context—Enhancing public sector performance in general .......................................................................... 36 Planning and management approaches in the public sector ...................................................................................... 37 Performance budgeting and performance management ............................................................................................. 37 Future challenges ........................................................................................................................................................... 38 Planning and management approaches of national revenue bodies ............................................................ 40 Taxpayers’ rights and charters, and service delivery standards ................................................................... 49 Taxpayers’ rights and charters ...................................................................................................................................... 49 Are you being served? The emergence of service delivery standards in tax administration ...................................... 53 4 RETURN FILING, PAYMENT, AND ASSESSMENT REGIMES FOR THE MAJOR TAXES ................. 56 Introduction ..................................................................................................................................................... 56 Key observations and trends ........................................................................................................................... 56 Personal Income Taxes and Social Contributions ........................................................................................................ 56 Corporate Income Taxes................................................................................................................................................ 57 Value Added Taxes......................................................................................................................................................... 57 Administrative assessment versus self-assessment procedures ................................................................... 58 Collection of income taxes by regime of advance/instalments and end-of-year assessments .................... 59 Design of personal income tax arrangements for employee taxpayers ........................................................ 59 Information Reporting .................................................................................................................................... 60 The use of pre-filled tax returns to assist taxpayers meet their return filing obligations .......................................... 61 5 SELECTED ADMINISTRATIVE POWERS OF REVENUE BODIES ..................................................... 84 Introduction ..................................................................................................................................................... 84 Key observations and trends ........................................................................................................................... 84 Advance Rulings ............................................................................................................................................................ 84 Information Access and Search Powers of Tax Officials .............................................................................................. 84 Powers to Enforce Tax Debt Collections ....................................................................................................................... 85 Penalties and Interest for Non-compliance .................................................................................................................. 85 2 Provision of tax rulings on the application of tax laws .................................................................................. 86 Control and search powers of tax authorities ................................................................................................ 86 Enforced collection of tax debts ...................................................................................................................... 86 Interest and penalties ...................................................................................................................................... 87 6 TAX REVENUE COLLECTIONS .......................................................................................................... 98 Introduction ..................................................................................................................................................... 98 Key observations and trends ........................................................................................................................... 98 7 OPERATIONAL PERFORMANCE INFORMATION ............................................................................. 101 Introduction .................................................................................................................................................... 101 Key Observations and trends ......................................................................................................................... 101 Ratio of Administrative Costs to Revenue Collections ................................................................................ 102 International Comparisons of Cost of Collection Ratios ............................................................................. 103 Relative Staffing Levels of Revenue Bodies ................................................................................................. 104 Staff Resources Devoted to Verification and Related Functions ................................................................ 106 Tax Audit Activities ....................................................................................................................................... 106 Tax arrears inventories...................................................................................................................................107