1. Key features of an effective Compliance Strategy
Stan Shrosbree
Fiscal Affairs Department (PFTAC) Revenue Administration
April, 2016

2. Questions to consider Do we really want to improve tax compliance?
What is a tax compliance program?
What is the value of a tax compliance program?
What are the steps in developing a taxpayer compliance program?
Are we committed?

3. Some facts Improving tax compliance does not happen overnight
A Compliance Improvement Strategy challenges your current business model
It challenges how things are currently done
It’s about prioritizing
It will impact on staff
It requires new skills
It needs to be driven from the top

4. The reality Its not easy It takes leadership and courage
Old processes and ways of doing things are hard to change
It may involved developing new skills
Your structure may have to change
A CIS can drive your modernization
It has massive potential to increase revenues
Contemplate whether you have the courage

5. Where to start Acknowledge ….
“The primary goal of a revenue authority is to collect taxes payable in accordance with the law. It is inevitable that some taxpayers, due to ignorance or deliberate evasion will fail to comply – therefore the tax administrations should have strategies in place to ensure that non-compliance is kept to a minimum”

6. Compliance with what? The broad categories of taxpayer obligations are
Registration in the system
Timely filing or lodgement of taxation information
Reporting of complete and accurate information
Payment of taxation obligations on time

7. Introducing the Process
Assess and prioritise risks
Analyse compliance behaviour
(causes, options for treatment)
Determine treatment strategies
Plan and implement strategies
Identify risks
Monitor
performance
against plan
Operating Context
Evaluate
compliance
outcomes •
Registration
Filing
Reporting
Payment
Assess and prioritize risks
Analyze compliance behaviour

8. Shaping Internal Capability
Key internal issues that will impact heavily on managing risks
Organizational culture
Organizational structure
Information technology
Staff capabilities

9. Identifying the risks Key points Top-down techniques
(macro-economic analysis)
Bottom up (risk assessment systems)
Segmentation
Key product
A risk register

10. Assessing - prioritizing risk
Key points
Size of the risk?
How big a priority?
Not all risks can be addressed
Balanced approach – what can be done now?
Do we need to build capacity?
Key Product
Register of risks
Quantified
Prioritized
Documented priorities included in the CIS
Data analysis is crucial in this exercise

11. Analyzing Compliance Behavior
Key points
Understanding compliance behavior – more than guesswork
Taxpayers respond differently to the demands of revenue authorities
Laws and administration can have an impact
Key products
Treatment strategies that address non-compliant behaviors
Products and tools to support the treatment strategies
Remember the Compliance Model?

12. Determining the Treatment Strategies
Key points
Easy for those who want to comply and enforcement for those who don’t
Acting with integrity, being fair will encourage voluntary compliance – community confidence
Treatment needs to address drivers of compliance behavior
Capacity to influence taxpayer compliance behavior
Influencing and changing social and personal norms
Key products
A compliance program
Products and tools tailored for clients to be targeted through the compliance program
“Compliance Marketing” – getting taxpayers to do the right thing

13. Applying the Strategies
Key points
Strategy needs to be effective – efficient use of resources
Involve those impacted by the strategy – for example Industry Partnership
Engage staff to support the strategy
Fair, consistent and flexible treatment reinforces credibility and encourages compliance
Key products
Business processes describing the strategies and intended impact
Staff trained to carry out the strategies
Industry consultative forums
Project plan to guide implementation

14. Evaluating the outcomes
Key points
Success criteria and measurement indicators – was the correct treatment strategy applied?
Treatment objectives must look beyond immediate outputs – behavior takes time to change
Was the strategy implemented effectively?
Key products
Evaluation methodology to assess the impact and what has been learnt
Governance reports detailing efforts and progress made against the compliance program

15. Conclusion
Introducing a risk based Compliance Improvement Strategy can be an exiting and rewarding experience
Seeing taxpayer behavior and compliance trends improving is very rewarding
It takes time and a lot of hard work but is worth the effort
Take up the challenge!