HERRAMIENTAS DE EVALUACION FISCAL TADAT Y RA-FIT Enrique Rojas Conferencia Técnica del CIAT “La optimización de los recursos y los procesos en las ATs” 8 de octubre, 2014

Tax Administration Diagnostic Assessment Tool

A tool to provide an objective, standardized performance assessment of a country’s tax administration —Taking its cue from the PEFA* tool for Public Financial Management (PFM) to ensure close alignment. PEFA: Public Expenditure and Financial Accountability 3

The genesis for the project was the PEFA Steering Committee commissioning a feasibility study in 2011 that concluded: – A PEFA-like diagnostic tool for tax administrations would be highly desirable to many stakeholders and technically feasible. – The tool would have to meet several important criteria: Comprehensive yet straight-forward Able to be applied across different countries Evidence based – It’s wide use would depend on acceptance as an international standard by the main international organizations, major donors and countries. – Key challenges are to develop benchmarks and ensure simplicity. – IMF has taken the lead on the development of the tool but has actively involved other stakeholders.

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The TADAT framework views the outcomes achieved across 9 critical performance outcome areas (POAs) of tax administration, that: – Comprises a Set of 26 high-level indicators critical to tax administration performance, that: – Drills down to 52 measured and scored Dimensions (on a scale of A to D). 6

A framework that is designed to deliver objective assessments of the most critical outcomes of a tax administration A tool that allows for repeated measurement over time of the performance of a country’s tax administration A tool that will allow for some level of country comparison when sufficient applications of the tool have been completed A tool that is aligned with the design of the PEFA PFM tool and can be used by any agency with trained and accredited assessors A tool that focuses on performance of major national taxes: – Corporate and personal income tax – VAT – Employer and other withholding taxes 7

Better identification of the relative strengths and weaknesses in the tax administration Facilitating discussion towards a shared view among stakeholders Improvements in setting reform objectives, establishing priorities and implementation sequencing – and strengthening of design of tax administration reform initiatives Better coordination of external support for reforms – faster and more efficient implementation Provides a basis for monitoring and evaluating reform progress towards established targets through repeat assessments 8

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1.Taxpayers are included in the taxpayer registration base and the information held about them is accurate 2.The tax administration is clear about the risks to the tax system and is responding to them 3.Taxpayers have the necessary information and encouragement to voluntarily comply 4.Taxpayers file their tax returns as required by law 5.Taxpayers meet their payment obligations 6.The tax administration assesses the accuracy of reporting through verification 7.The dispute resolution process is independent and effective 8.The tax administrations operations are efficient and focus on the most important tax administration functions 9.The tax administration is transparent in the conduct of its activities and accountable to the government and the community 10

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Indicators – All have between 1 to 4 dimensions Each dimension is separately assessed Overall score for an indicator is based on the assessment of the dimensions related to that indicator: – Method 1 – Single dimension indicators – Method 2– Multiple dimension indicators Scores A B C D – 'A' is set as "internationally accepted good practice", with the lower grades increasing deviations from this Also a ‘No score’ category 12

Assessment will be undertaken by accredited assessors Assessors will use the indicator-led analysis and be supported by: – Initial training – Performance measurement framework – Comprehensive field guidelines A Performance Assessment Report will be prepared to formalize the findings. 13

Steering Committee – Officially formed February 2014 – Composition - Donors (including the EC), IMF and World Bank – Functions - Strategic guidance Secretariat – IMF Hosted, Comprising: Unit Head +3 Professionals +1 Support – Functions - Design & maintenance of the tool- Quality control - Program delivery- Financial arrangements - Results management- Evaluation - Accountability -Technical Advisory Group – Composition - International tax administrations and organizations – Functions - Technical support to the Secretariat 14

Pilot Assessment Missions across a wide-range of situations: – Level of Economic Development – Region, Language, and Heritage – Economic and Governance Characteristics November First Pilot in Zambia December Second Pilot in Norway June Third in South Africa Nov Fourth pilot in Paraguay 4 further pilot assessments possibly in: – Middle East – Asia Pacific Deliver Collaboratively with Regional Tax Admin Organizations 15

Current priorities – Finalizing the detailed technical design (Field Guide) – Further piloting (further 4 pilots in 2015) – Developing an Accreditation & Training Strategy & Program September Steering Committee May Implementation in controlled roll out phase November Public release 16

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18 RA-FIT – Round 1 and Beyond Excel Workbook in 6 languages Launched in January 2012, (85 respondents) Responses from 72 % of sample, with average completion rate of 70% of survey Around 60 percent of respondents were LICs or LMICs Round 1 was a manual process – took most of 2013 to consolidate and format A draft report in respect of Round 1 has been prepared During 2013 a web-based platform was developed, tested and Round 2 launched in May 2014, deadline end-August (46 respondents) now extended Engaged in outreach activities (e.g. CIAT, WCO, RTACs, OECD, IOTA and Conferences)

19 RA-FIT Purpose (Recap) Gather revenue administration data Make data and analysis available to member countries Elevate importance of performance measurement, usefulness of baseline and profile data, volumetric, and other input information Establish key baselines (current state) Input into improving the quality of TA delivered Input into an RBM framework for revenue administration Input into other tools for calibration purposes (TADAT) Provide the platform for a single international data gathering tool

20 RA-FIT – Data Issues Key issues to consider: – Responder bias Not all countries responded to survey Some countries unable to provide responses to all questions Uncertainty regarding definitions of key concepts – Structural data issues Diversity of respondents, will affect summary findings at “overall” level, vs. income or regional levels Outliers in the response data

21 RA-FIT – On-time Filing Rates 2010

22 RA-FIT – Multi-dimensional Analysis

23 RA-FIT Round 2, Web-based Platform - LAUNCH RA-FIT Web-based Platform was launched on May 8, 2014 at a breakfast at CIAT’s 48 th General Assembly in Rio de Janeiro, Brazil. 107 countries had been issued with login credentials and can now access RA-FIT 49 percent of the country group are LICs or LMICs Currently developing the RA-FIT dissemination framework – “Canned” Queries, Ad hoc queries, and dashboard visualization

24 RA-FIT – Potential as Universal Data Gathering Tool Current Partners CIAT (37 members – 9 are also OECD members, and 5 of the latter are also IOTA members) WCO (177 members) Targeted Partners (Letter of Intent to be Signed in October between CIAT, IMF, IOTA and the OECD) IOTA (46 members – 24 are also OECD members, and 5 of the latter are also CIAT members) OECD (34 members – 5 of whom are also CIAT and IOTA members) Targeted Partners Next Steps MOU to be drafted, agreed and signed by * date. Design of Round Three of RA-FIT

25 RA-FIT Web-based Platform Clicking on each form listed will open the form and allow for input. Coordinators and correspondents can determine at a glance, the percentage of each form’s completion. The 2 nd iteration of RA-FIT makes provision for forms to be completed for 3 years, viz. 2011, 2012, and 2013.

26 RA-FIT Web-based Platform White cells indicate input is required, grey cells show computations, or data pulled-through from other forms.

27 RA-FIT Web-based Platform Input errors identified. Note that error cells are outlined in red and the reasons for errors are listed at the top of the page. GDP is pre- populated as soon as “Calculate” or “Save” is clicked. Empty cell detected. No minuses or commas. No selection made. Validation rules violated.

How RA-FIT Supports Improved TA Feed RBM Framework Provide input to TADAT Assessment Enhance pre- mission work Improve analytical work RA-FIT

Filing of Returns  Filing of tax returns is a principal means by which a taxpayer’s tax liability is established and becomes due and payable under the law. Filing performance has a direct impact on collections.  One performance indicators (with 4 measurement dimensions) are used to assess POA 4. 29

IndicatorDimensions to be measured On time filing rate  The number of CIT returns filed by the statutory due date in percent of the total number of returns expected from registered CIT taxpayers.  The number of PIT returns filed by the statutory due date in percent of the total number of returns expected from registered PIT taxpayers.  The number of VAT returns filed by the statutory due date in percent of the total number of returns expected from registered VAT taxpayers.  The number of PAYE withholding returns filed by employers by the statutory due date in percent of the total number of PAYE returns expected from registered employers. 30

31 RA-FIT Data – TADAT Total Filing Rate (VAT) Scoring <60 Upper Quartile Lower Quartile Mean Median Max Min Box and Whisker Plots

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