Tax Administration Diagnostic Assessment Tool POA8: Efficient Revenue Management

النتيجة المرجوة من المجال الثامن (POA8) Tax revenue collections are: fully accounted for; monitored against expectations; and analyzed to inform government revenue forecasting. Legitimate refunds are paid promptly Background Although the primary responsibility of revenue forecasting and tax revenue estimation rests with the Ministry of Finance, tax administrations are normally expected to provide input to this government budgeting process. Tax administration provides the data and analytical inputs to this process. A tax administration’s performance is judged by its ability to contribute to enhancing the quality of forecasts and revenue analysis.

International Good Practice in Efficient Revenue Management POA 8 Revenue analysis capability within a specialist unit. Analysis of - revenue trends, - tax expenditure, - payment behavior, - yield from audits Regular monitoring and reporting to government of core tax collections Early detection of deviations from forecast and identification of causes Using automated revenue accounting system to minimize errors and fraud, and ensure timely posting Routinely reconciling tax administration’s ledger to government’s revenue accounts Conducting regular internal audit of revenue accounting system to ensure controls are followed Paying out legitimate tax refunds promptly

Performance Indicators: P8 –Operational Efficiency and Effectiveness Dimensions High Level Indicators P8-22: Contribution to government tax revenue forecasting process The extent of tax administration input to government revenue forecasting and estimating P8-23: Adequacy of tax administration’s revenue accounting system Adequacy of tax administration’s tax revenue accounting system P8-24: Adequacy of tax refund processing Adequacy of the VAT refund system Time taken to process or offset VAT refund claims

Scoring P8-22: Contribution to Government Tax Revenue Forecasting Process A Gathers data on revenue collection and economic conditions as input to government budgeting process Monitors tax revenue collections against budgeted revenue forecasts and reports finding to government Forecasts VAT refund levels to ensure that sufficient funds are available to meet all legitimate refund claims Monitors and reports cost to revenue of tax expenditures Monitors and reports on stock of tax losses carried forward by taxpayers that may be offset against future tax liabilities

Scoring P8-22: Contribution to Government Tax Revenue Forecasting Process B Gathers data on revenue collection and economic conditions as input to government budgeting process Monitors tax revenue collections against budgeted revenue forecasts and reports finding to government Forecasts VAT refund levels to ensure that sufficient funds are available to meet all legitimate refund claims Monitors and reports cost to revenue of tax expenditures Monitors and reports on stock of tax losses carried forward by taxpayers that may be offset against future tax liabilities

Scoring P8-22: Contribution to Government Tax Revenue Forecasting Process C Gathers data on revenue collection and economic conditions as input to government budgeting process Monitors tax revenue collections against budgeted revenue forecasts and reports finding to government Forecasts VAT refund levels to ensure that sufficient funds are available to meet all legitimate refund claims Monitors and reports cost to revenue of tax expenditures Monitors and reports on stock of tax losses carried forward by taxpayers that may be offset against future tax liabilities

Scoring P8-23: Adequacy of Tax Revenue Accounting System A Tax administration has automated accounting system that meets government IT and accounting standards Tax administration’s accounting system interfaces with the Ministry of Finance’s revenue accounting system All tax payments received are posted to the tax administration’s accounting system within ONE business day Regular external and internal audits ensure that accounting system aligns with tax laws and government accounting standards

Scoring P8-23: Adequacy of Tax Revenue Accounting System B Tax administration has automated accounting system that meets government IT and accounting standards Tax administration’s accounting system interfaces with the Ministry of Finance’s revenue accounting system All tax payments received are posted to the tax administration’s accounting system within TWO business day Regular external and internal audits ensure that accounting system aligns with tax laws and government accounting standards

Scoring P8-23: Adequacy of Tax Revenue Accounting System C Tax administration has automated accounting system that meets government IT and accounting standards Tax administration’s accounting system interfaces with the Ministry of Finance’s revenue accounting system All tax payments received are posted to the tax administration’s accounting system within THREE business day No regular external and internal audits ensure that accounting system aligns with tax laws and government accounting standards

Scoring P8-24-1: Adequacy of the VAT Refund System A Risk-based verification, e.g., (i) screening refund claims using risk assessment software; (ii) pre-refund audit of high risk cases; (iii) post-refund audit of low risk cases Budget allocated to meet legitimate refund claims when they occur Offsetting of excess VAT credits against tax arrears, except in cases of genuine disputes Fast-track refund to risk-screened taxpayers, including exporters with good compliance history Payment of interest on delayed refunds

Scoring P8-24-1: Adequacy of the VAT Refund System B Risk-based verification, e.g., (i) screening refund claims using risk assessment software; (ii) pre-refund audit of high risk cases; (iii) post-refund audit of low risk cases Budget allocated to meet legitimate refund claims when they occur Offsetting of excess VAT credits against tax arrears, except in cases of genuine disputes Fast-track refund to risk-screened taxpayers, including exporters with good compliance history Payment of interest on delayed refunds

Scoring P8-24-1: Adequacy of the VAT Refund System C Risk-based verification, e.g., (i) screening refund claims using risk assessment software; (ii) pre-refund audit of high risk cases; (iii) post-refund audit of low risk cases Budget allocated to meet legitimate refund claims when they occur Offsetting of excess VAT credits against tax arrears, except in cases of genuine disputes Fast-track refund to risk-screened taxpayers, including exporters with good compliance history Payment of interest on delayed refunds

Scoring P8-24-2: The time taken to process VAT refund claims A At least 90 percent of VAT refund claims (by number of cases and value) are processed (paid, offset or declined) within 30 calendar days B At least 80 percent of VAT refund claims (by number of cases and value) are processed (paid, offset or declined) within 30 calendar days C At least 70 percent of VAT refund claims (by number of cases and value) are processed(paid, offset or declined) within 30 calendar days D The requirements for a ‘C’ rating are not met. OR the information available to the TADAT assessors is insufficient

Table 26 of the Field Guide Checklist of Questions and Evidence for POA 8