The Tax Administration Diagnostic Assessment Tool (TADAT) Strategic Objectives, Emerging lessons from completed Assessments To- date and the Impact of Technology on tax administration Contributing to strengthened tax administration systems and domestic revenue mobilization efforts globally

Purpose and benefits of a TADAT assessment… The TADAT is a means to provide an objective and standardized assessment of the relative strengths and weaknesses of a country’s system of tax administration Mirrored on the Public Expenditure and Financial Accountability (PEFA) tool Assesses the performance outcomes achieved for the major national domestic direct and indirect taxes (core taxes) critical to central government budget outcomes core taxes (revenue streams) that contribute at least 70 percent of the country’s national domestic tax revenue, typically: corporate income tax (CIT); personal income tax (PIT); value added tax (VAT) or its indirect tax equivalent such as sales tax; and Pay As You Earn (PAYE) amounts withheld by employers; social security contributions (SSCs) may also be included in assessments where SSCs are a major source of government revenue Does not assess special tax regimes such as for natural resources; nor does it assess customs administration except insofar as customs administration collects domestic taxes (either directly or as an agent of the domestic tax administration)

Purpose and benefits of a TADAT assessment… Expected outcomes of a TADAT assessment: Identification of the relative strengths and weaknesses in a tax administration system Facilitating discussion towards a shared view of the tax administration’s health among stakeholders Strengthening the design of tax administration reform initiatives by improving the setting of reform objectives, establishing priorities and sequencing better implementation activities/interventions Better coordination of support for reforms and faster and more efficient implementation Creating a baseline for monitoring and evaluating reform progress towards established/targeted outcomes through repeat assessments

Emerging lessons from completed assessments… Figure 2. Distribution of Relatively Strong TADAT Scores at the Indicator Level for 32 Countries Circumstances vary widely across countries, but there are some emerging threads at the indicator level (see Figure 3)… Relative strengths: use of electronic payment methods; withholding tax systems in place; graduated dispute resolution mechanisms; relatively strong internal and external oversight; and publication of activities, results and plans.

Emerging lessons from completed assessments… Figure 3. Distribution of Relatively Weak TADAT Scores at the Indicator Level for 32 Countries Relative weaknesses: poor data quality which impacts compliance management in general; weak risk management approaches and implementation; underdeveloped electronic filing facilities; disputes take long to be resolved; and tax refund processes are onerous, especially for the value-added tax.

Impact of Technology on Tax Administration Overall poor data quality has pass through effect on a number of tax administration functions for it negatively impacts compliance management in general; weak risk management approaches and implementation. The absence of technology is responsible for underdeveloped electronic filing facilities. Notably increasingly, information and communications technology is playing a critical role in compliance management (e.g., through automatic gathering of third-party in-formation as a by-product of natural business processes; use of electronic invoices to facilitate real-time transaction monitoring and verification; and analysis of revenue risks).

Accuracy of reporting and third party data matching practices …findings for action that require use of technology and lessons for consideration Data inaccuracy remains a major problem … technology is key In some tax administrations, taxpayer registration databases observed to be inaccurate and unreliable On-time filing and payment outcomes still poor Revenue accounting reconciliation of taxpayer ledgers and in-transit items still a concern—suspense accounts Institutional risk arrangements and their impact on compliance risk management Accuracy of reporting and third party data matching practices Good voluntary compliance programs versus low taxpayers’ compliance response Taxpayer ledger accounting and reconciliation of remittances to government accounts Findings from the 37 TADAT assessments conducted to December 2016 (a total of 20 in CY 2016 alone)

Findings for action and potential areas for further research Data inaccuracy Resolving data inaccuracies remains a challenge that should be met resolutely Third party data-matching practices Accuracy of reporting and third party data-matching practices vary widely including across developed tax administrations—impact on exchange of information between tax administrations/ jurisdictions? Revenue accounting Revenue accounting reconciliation of taxpayer ledgers and in-transit items still a concern—unreconciled suspense accounts and potential fraud issues?

Thank you Questions or interventions?