Control as Key Management Function Topic 1.3: Implementation and evaluation of tax laws Claudino Pita Research and International Cooperation Director CIAT TECHNICAL CONFERENCE 2004 THE ROLE OF TAX ADMINISTRATION IN TAX LEGISLATION FEDERAL ADMINISTRATION OF PUBLIC REVENUES - ARGENTINA Amsterdam, The Netherlands October 4-7, 2004

Contents 1.Forms of evaluation of the legislation by the TA 2.Ex-post evaluation for implementation 2.1 Type of legal modification 2.2 Aspects to be considered 2.3 Adaptation of the organization 3.Analysis of impact by type of legal modification 4.Methodology of ex-post evaluation 4.1 Who begins the project and when? 4.2 How is it done? 5.Implementation of the new legislation at AFIP 6.Ex-ante evaluation 7.Conclusions

Two forms or times for evaluating the legislation by the TA may be differentiated: “Ex-post”: determine the needs and actions to adapt the organization for the effective implementation of the new legislation “Ex-ante”: determine the needs to adapt the legislation in order to complement and sustain the effective performance of the TA 1. Forms of evaluation of the legislation by the TA

Taxes –New tax –Modification of rates –Modification of structure Classification of rates, tax base or event, deductions, taxpayers, etc. Modification of treasury-taxpayer relationship Appeals, sanctions, powers of TA, etc. Internal structure Organizational structure, administrative career path, budget, etc. Laws with tax implication Creation of corporations and financial organizations, order of privilege of creditors in dissolution agreements and bankruptcy procedures, etc. 2. Ex-post evaluation for implementation 2.1 Type of legal modification

Legal Complementation Complementary and interpretative administrative acts Dissemination and information Public information media and AT portal Adaptation of the organization Effectiveness, single agency Costs of adaptation Efficiency, financial resources Costs of compliance Indirect tax burden for the taxpayers Effects on collection 2. Ex-post evaluation for implementation 2.2 Aspects to be considered

The strategy Plans and programs The organizational structure New specialized units, decentralization Human resources Training, updating, incorporation of officials Technological resources Computerized systems, programs and applications, acquisition of equipment Processes and procedures Integration or disaggregation of phases 2. Ex-post evaluation for implementation 2.3 Adaptation of the organization

HIGH NEW TAXES LOW RATE VARIABLE STRUCTURE OF TAXES TREASURY-TAXPAYER RELATIONSHIP ADMINISTRATIVE STRUCTURE LAWS WITH TAX IMPLICATIONS Transfer prices or deductible interests Transfer prices or deductible interests Administrative execution of debt or term to appeal Administrative execution of debt or term to appeal Indexation of economy or changes in trade registry Indexation of economy or changes in trade registry 3. Analysis of impact by type of legal modification Reestructuring or extinction of unit Reestructuring or extinction of unit

Coordinating specialized central unit, with the participation of normative and operational entities involved Need for timely forecast and projection of adaptation needs EP Initiative i n development of the bill LP Initiative in the parliamentary discussion phase of the bill 4. Methodology of ex-post evaluation 4.1 Who begins the process and when?

Predefined method and processes for automated, coordinated and synchronized identification Units in chargeActions and tasks to be undertaken Subsequent evaluation of adequacy achieved in the implementation of the new rules 4. Methodology of ex-post evaluation 4.2 How is it done?

Powers of the Federal Administrator of Public Revenues: National Decree 618/97 and its modifications  Organize and regulate the internal operation of AFIP in its structural, functional and staff management aspects and modify the organic-functional structure at lower levels than those approved by the EB  Issue obligatory general rules for officials in charge and third parties on the matters authorized by the laws  Interpret in general the legal rules that provide for, or govern the collection of taxes under AFIP’s responsibility, as obligatory general rules if they were not appealed 5. Implementation of the new legislation at AFIP

Project legal and technical rules and make interpretations DGI – DEP. GENERAL DIRECTORATE OF LEGAL AND TAX TECHNIQUE: taxation and tax penal issues DGA - DEP. GENERAL DIRECTORATE OF LEGAL AND CUSTOMS TECHNIQUE: customs issues DGRSS – DEP. GRAL. DIRECTORATE OF LEGAL AND SOCIAL SECURITY RESOURCES TECHNIQUE: social security issues Legal complementation: administrative, complementary and interpretative acts 5. Implementation of the new legislation at AFIP

AFIP –DEPARTMENT OF INSTITUTIONAL COMMUNICATIONS AFIP – DEP.GENERAL DIRECTORATE OF SYSTEMS AND TELECOMMUNICATIONS – INTERNET DEPARTMENT Administration of Internet and Intranet “sites” Dissemination Dissemination and information: public information media and TA portal 5. Implementation of the new legislation at AFIP

AFIP – DEP. GENERAL DIRECTORATE OF PLANNING AND ADMINISTRATION Administration of financial and material resources AFIP – DEP. GENERAL DIRECTORATE OF PLANNING AND ADMINISTRATION – DEPARTMENT OF COORDINATION AND PROCEDURES Allocation of economic resources and formulation of recommendations for optimization of expenditures Evaluation of costs of adaptation: efficiency, financial resources 5. Implementation of the new legislation at AFIP

Evaluation of the impact on the organization: strategy - effectiveness, plans and programs- 5. Implementation of new legislation at AFIP AFIP – DEPUTY GENERAL DIRECTORATE OF PLANNING AND ADMINISTRATION Involvement in planning, management, administration and organizational functions

Evaluation of the impact on the organization: organizational structure -new specialized units, decentralization- 5. Implementation of new legislation at AFIP AFIP – DEPUTY GENERAL DIRECTORATE OF PLANNING AND ADMINISTRATION – DEPARTMENT OF COORDINATION AND PROCEDURES Involvement in projects dealing with organizational design

Evaluation of the impact on the organization: human resources –training, updating, incorporation of new officials - 5. Implementation of nw legislation at AFIP AFIP – DEP.GEN. DIRECTORATE OF HUMAN RESOURCES Human resource programs and actions Design training strategies

Evaluation of impact on the organization: technological resources –databases, information systems, programs and applications, equipment acquisition- 5. Implementation of new legislation at AFIP AFIP – DEP. GEN. DIR. SYSTEMS & TELECOMMUNICATIONS Design and develop computerized systems Define and administer base software and hardware and telecommunications

Evaluation of impact on the organization: processes and procedures -redesign of processes and procedures, integration or disaggregation of phases- 5. Implementation of new legislation at AFIP AFIP – DEP. GEN. DIR. OF COLLECTION Collection of internal taxes and customs duties AFIP – DEP. GEN. DIR. OF EXAMINATION Examination of internal taxes and customs duties DGRSS – DEP.GEN. DIR. OF COLLECTION AND EXAMINATION OF SOCIAL SECURITY RESOURCES Collection, examination and computerized procedures of social security resources. Propose and evaluate plans and processes related to:

AFIP – DEP.GEN. DIR. OF COLLECTION Rules for the application of taxes and services to the taxpayers Evaluation of compliance costs: indirect tax burden for taxpayers 5. Implementation of new legislation at AFIP

AFIP – DEP. GEN. DIR. OF PLANNING AND ADMINISTRATION – DIRECTORATE OF STUDIES Estimate annual performance of taxes and perform ex-post analysis Evaluation of effects on collection 5. Implementation of new legislation at AFIP

Follow-up and identification of variations in the environment Test of adaptation of the rules and organization to the new circumstances Determination of normative and administrative changes required for adaptation to the environment 6. Ex-ante evaluation Adaptation to the environment

Know and analyze the environment Based on accumulated institutional experience seek corporate solutions through: Organization of interdisciplinary teams Transversal review of the processes and structural aspects of the organization Participation in elaboration of proposals and search for internal and external consensus Promote normative changes that may complement and sustain the organization’s adaptation to the environment 6. Ex-ante evaluation Application of the method used for the formulation of the Anti-evasion Plan

It would seem convenient that the evaluation task, for the implementation of the new legislation (“ex- post”) as well as for the adaptation of the legislation (“ex- ante”), be incorporated as a permanent action and that there be available for said purpose: A central coordinating unit A method and predefined processes 7. Conclusions