PROFILE OF THE TECHNICAL PROGRAM FOR THE 2009 CIAT GENERAL ASSEMBLY IN THE DOMINICAN REPUBLIC The Assembly’s technical program is the result of the Executive Secretariat’s inquiry to all member countries and associate member countries regarding the top priority topics which in their opinion are worthy of a joint analysis and exchange of experiences. After receiving the answers the Executive Secretariat prepares a draft agenda which endeavors to cover most of the topics suggested by the member countries, and thus arrive at structuring a coherent and integrated technical program. The draft agenda prepared by the Executive Secretariat is then submitted to a Topics Committee formed by representatives of member countries chosen by the CIAT Executive Council. This Committee examines, modifies or approves the Executive Secretariat’s draft which is then submitted to the General Assembly of members that ultimately approves or modifies the draft agendas that will comprise the technical program for the following year’s General Assembly and Technical Conference. The topics for the technical program of the Dominican Republic’s General Assembly originate from the CIAT member countries’ decision made at the General Assembly held in 2008 in the city of Antigua Guatemala.
“A MODERN VISION OF THE TAX ADMINISTRATION”
The evolution of technology and its application by the tax administration has allowed for developing new approaches in relation to the behavior and selection of taxpayers to be audited. It has also permitted the optimization of the support processes, as key elements in achieving greater levels of efficiency and effectiveness and being able to measure such levels for the constant analysis and adjustment by our organizations. Information and communications technology as key aspect at the service of tax administration is currently an indisputable tool for optimizing information not only in terms of its storage and possibilities for use, but of security and reliability as important qualities of said information. Although these tools have undeniable conditions, there are several issues that must be considered in their design and implementation, such as their planning and development at the level of use of the information for exercising massive controls, as well as the assistance services offered the taxpayer through communication possibilities via Internet. On the other hand, a long standing issue, although with a new approach are the strategies for promoting spontaneous compliance by the taxpayer, the application of the “subjective benefit” that arises as a result of the taxpayer behavior and the symmetry of response or control orientation by the tax administration. The administration has
understood that vis-a-vis different behaviors from the taxpayers, it should be capable of acting or responding accordingly; not only from a negative, but from a positive standpoint as well. This also means that one should include within such differentiation and action the taxpayers who traditionally and in a broad sense comply with their tax obligations and therefore, must expect that the administration may highlight, strengthen and encourage such positive behavior, not only in the hope that they will continue to act so, but also to generate through a real â€œsubjective benefitâ€? an incentive to encourage other taxpayers to act likewise. Within this modern vision an analysis will be made for improving management of the support processes for strengthening the tax administration in such areas as human resources training, follow up of the performance of the work, including measurement indicators, not only in relation to quantity but also quality, commitment to the organizational values and the impact of all these elements in achieving the strategic objectives. In this sense, the use of technology is important for greater coverage at lower costs, in terms of technical training, the systematization of the financial and budgetary information, ease of handling, but mainly for its transparent control and follow-up to allow the organization permanent, updated and timely accountability. Finally, in keeping with the changing environment, one must necessarily consider the economic and financial circumstances that currently impact and will continue to impact the countries and obligatorily the tax administrations. The role which they should play vis-Ă -vis such conditions is also an important factor to be analyzed and considered, in order to identify key aspects that will successfully contribute to adapt our organization to such changes and challenges. 1.
The Information and Communication Technologies-ICTs at the service of the tax administration.
The tax administration began some years ago, to take advantage of the services afforded by technology and even more recently the benefits of communications with the taxpayer and other areas of the same organization as well as with other public and private organizations. It is evident that ICTs are tools at the service of the administration that facilitate and optimize the use of resources as well as of information and the development of the processes, with significant benefits in terms of productivity, integrity and transparency. In developing this topic, it is recommended that the following aspects be taken into account: -
General description of the framework of opportunities offered by ICTs to the tax administration, considering that the former are at the service of the administration and not otherwise.
The current environment for the development of ICTs: challenges, success conditions, key factors to be taken into account for their greater effectiveness; the market offers which may benefit the tax administrations (“open source” or free source). The trends and challenges for the tax administrations in relation to Technology and Communication and the way of effectively implementing them in the organizations with the limitations and conditions that currently exist or may come to exist.
Although the spectrum for analysis appears to be very broad, three fundamental aspects in the use of these technologies will be discussed in this segment; namely: strategic planning versus the dilemmas and challenges posed by the current environment; the promotion of massive control activities, such as filing and payment; and the promotion of taxpayer services. 1.1.
Strategic planning of the ICTs: Dilemmas posed by the current environment
Information and communication technologies are issues in constant evolution and change. Although this may be an advantage it may also become a difficulty by rendering the long term planning process more complex. It may be a dilemma for the tax administrations to try to establish the correct strategy within short, medium and long term, in keeping with the challenges and problems posed by the current environment and its capacity for providing a timely, organized, coordinated and coherent response. In this regard, strategic planning of the ICTs arises as a fundamental aspect for guaranteeing such soundness and security, while being sufficiently flexible for adapting to the dilemmas of the current environment and reinforcing its capacity of response and service to the objectives of the organization. Such planning should take into account varied aspects as, for example: the availability of resources, determination of priorities in relation to requirements and, of course, the internal and external context of the organization. It must be noted that such plan must be obligatorily harmonized with the institution’s strategic plan and respond to the latter’s objectives. The following aspects should be considered in developing the case study: -
Brief description of the strategic plan of the ICTs in the tax administration, the dilemmas considered and how they are taken into account in said plan. Strategic plan review procedure and intervening areas. Main obstacles arising and the strategies designed and developed for overcoming them. The promotion of massive control activities (filing and payment).
Among the functions of the tax administration, the efficient and timely control of compliance with formal obligations such as the filing of the tax return and payment of the assessed amount is undoubtedly one of its main challenges. It is not only a matter of ensuring that the taxpayer may have actually filed and paid, but also that he will have done so correctly. That is one reason why currently information systems are undoubtedly an important tool for a speedier and more effective control. However, this first level of verification by the tax organizations can be further reinforced through optimum use of the information available and the application, for example, of discriminating functions and information crosschecks. Obviously such optimization will depend on many factors, several of them related to the quality of the information available. This calls for having a reliable taxpayer file, not only with respect to the data included therein, but also the soundness, accessibility and availability of the information. Equally important is the effective participation of the financial system linked to the collection process in order to count on successful control activities. The timeliness and quality of the information reported to the tax administration may make the difference in the greater or lesser effectiveness of control. Massive control is not only a means of avoiding unnecessary and untimely administrative drain, but rather its effective management generates a greater subjective risk on being effectively and timely performed by the tax administration and perceived by the taxpayers as an example of said administrationâ€™s control capacity. Some of the aspects suggested for consideration in this case study are: -
Conditions considered or being considered by the tax administration for ensuring the quality of the information. Brief description of the massive control procedure, legal framework, coverage, execution time, selection criteria and administrative structure required for developing it. Results achieved up till now, indicators used in the measurement, obstacles arising and strategies developed and implemented for overcoming them. The promotion of taxpayer services
Taxpayer assistance acquires ever greater relevance. Not only because it has been understood that increased spontaneous compliance calls for providing greater and better taxpayer facilities, but also because as part of the transformation and evolution being experienced for some years, by the concept of quality of services, it has also been extending to public organizations which no longer only give priority to
constitutional and legal duties but are also concerned about the quality with which they are fulfilled. Initially, services provided to the taxpayer merely consisted of informative orientations regarding the dates of payment and forms of compliance, to continue through inquiry interactions until arriving at providing the taxpayer payment facilities for actually complying with his obligations and/or receiving the refund of taxes, to the point that the tax administration became a virtual office. At present, tax administrations provide multiple alternatives so that the citizens may be informed, update themselves and carry out the appropriate transactions derived from compliance with tax obligations. Some of the diversity of services which the tax administrations make available to the taxpayers are: the call centers which not only provide basic information, but allow for making technical inquiries for clarifying doubts; filing as well as paying via Internet; electronic invoicing; obtaining filing and payment forms electronically or by mail; the provision of virtual facilities at the tax administration headquarters for those taxpayers who lack the necessary equipment and connections for accessing the on-line services afforded by the administration; the administrationâ€™s preparation of the return and administrative assessment, based on already existing information on the taxpayer and which only requires the latterâ€™s confirmation, if he agrees with it, to make it definitive; the deposit of refund amounts in the taxpayerâ€™s banking accounts in ever shorter time spans. These services can be further increased through technology. The challenge for the administrations will be to determine which ones and how to do so, while guaranteeing juridical security, reliability of the information, tax secrecy, operational capacity and quality of the very services offered, anywhere in the country, increasing coverage and facilities to the largest possible number of citizens, according to their needs, as well as those of the tax administration. Some of the aspects suggested for consideration in this case study are: -
Factors considered or being considered by the tax administration to promote taxpayer services. Brief description of the services implemented, legal framework, coverage, execution time, resources required (human and financial), and administrative structure required for developing them. Results achieved up till now, specifying whether customer satisfaction surveys have been carried out; which have been the main obstacles faced and strategies developed and implemented for overcoming them.
Strategies for promoting compliance, the “subjective benefit” in the tax administrations
Considering the taxpayers’ appropriate tax behavior, the tax administration must develop strategies aimed at the expansion and consolidation of such positive behaviors that may allow it to focus its control efforts to a greater extent on the really important and critical sectors. In this sense, it is important to promote compliance through reaffirmation of the taxpayers’ positive or compliant behaviors. Although it is known that compliance with tax duties is provided in the constitutions and laws and accordingly, must be fulfilled, it is also true that some or many taxpayers do not do so in a timely and correct manner. Therefore, it is convenient for the tax administration to develop strategies that may contribute to increase the spontaneous compliance indexes by expressly recognizing those taxpayers who do their best to act correctly. It is somehow, a way of establishing a balance, as regards the fact that the administration is not always only concerned about those who fail to comply, but that it also respects and recognizes good citizens. The following are some of the aspects worth discussing under this topic: -
Description of compliance promotion strategies that have been designed or may be considered at the “subjective benefit” level. Criteria or attributes whereby a taxpayer or group of taxpayers may be entitled to the “subjective benefit”. Results expected and indicators that could be used for measuring those results. Trends that could be taken into account towards the future in relation to this issue. Criteria for orienting examination on the basis of taxpayer behavior.
Treating all taxpayers alike, regardless of their good or bad behavior, in addition to being inequitable, results in an administrative drain for the organization. In addition to wasting the scarce resources generally available for exercising control, it is perceived by the traditionally compliant taxpayers as an unfair organization, which shows little or no concern about the taxpayers’ good or bad tax behavior. To some extent, if no differentiation is made regarding the type of taxpayer behavior when exercising the examination power, this may result in reactions that are contrary to those desired, and may even promote those of an evasive nature. In view of the tax administration’s greater availability of resources for establishing “typical behaviors” and “tax behavior trends” or “types of taxpayers”, as they are classified by Klaus Tipke according to their actions or omissions with respect to their tax
obligations in his work 1 “Tax Morality of the State and the Taxpayers”, it is easier to determine objective criteria that may allow for orienting examination according to the behavior shown in a given period. Some of the guiding criteria for planning and carrying out the control actions could be: noncompliance with main formal obligations: - filing and payment in one or several fiscal periods, - noncompliance with duties and obligations as withholding agent,noncompliance with the terms and deadlines of payment arrangements, non-provision of information, - failure to invoice or defective or fraudulent invoicing; noncompliance with additional formal obligations: provision of third party information for identifying tendencies toward noncompliance; - data records; etc. Some of the aspects worth considering in this case study are: -
Brief description of criteria designed and implemented according to taxpayer behavior, legal framework, procedure used in their application, coverage, execution time and administrative structure required for developing them. Results achieved up till now, (mention the indicators used for measuring those results), which have been the main obstacles and the strategies developed and implemented for overcoming them. Incentive and compliance facilitation mechanisms based on the behavior of taxpayers.
On the other hand, positive tax behaviors, that is, the taxpayer whose constant and regular optimum tax behavior does not require a control effort from the tax administration should be entitled to some sort of incentive or “differential treatment” to easily and permanently continue with his exemplary behavior. Some of these incentives may be: ease of access to the administration’s information, less complex and spread out control activities, verification with the taxpayer prior to undertaking more burdensome control activities and prevalence in granting payment facilities or agreements whenever necessary and requested by the taxpayer himself before incurring in noncompliance, among others. Some of the aspects suggested for consideration in this case study are: -
Brief description of the incentives designed and implemented, considering the taxpayer’s behavior, legal framework, application conditions and procedure. Results achieved up till now, (mention the indicators used in measuring those results), which have been the main obstacles faced and strategies developed and implemented for overcoming them.
Tipke, Klaus, Tax Morality of the state and the Taxpayers,, Translation by Pedro M. Herrera Molina, Editorial Marcial Pons, Madrid, 2002, p.22. 1
3. Strategies and instruments for improving management in the Tax Administrations Tax Administrations and, in general, any organization, have as their main objective the permanent improvement of management, not only as regards the updating and adjustment of strategies and mechanisms that may lead them to achieve institutional goals directly related to their business, but also as regards the control of processes, the application of indicators measuring their own performance, human resources strengthening and the transparent and efficient administration of their financial and budgetary resources. The design of such strategies and the implementation of mechanisms or tools for improving management, as regards their identification, selection criteria, implementation and evaluation must be the subject of permanent analysis. Aspects suggested for consideration under this topic are: -
Brief description of strategies designed and implemented for improving management of the tax administrations; Brief description of the instruments that contribute to improve management; criteria to be taken into account for their implementation, implementation procedure, obstacles that may arise and strategies for overcoming them. Results expected and/or achieved up till now, (mention the indicators for measuring the results). Management control and the indicators for measuring the performance of the Tax Administrations.
Follow-up of management by the organizations not only allows for knowing how the processes are carried out, but mainly for anticipating any situation that affects or may affect their development and correct compliance, identifying the reasons or origin, and determining the necessary adjustments for duly directing them. It also allows for optimizing the use of the financial and human resources available in the organization, establishing performance and impact indicators so that the organization may determine whether the objectives are being fulfilled and how they are being fulfilled, not only in terms of quantity but also of quality. Some of the aspects worth considering in this case study are: -
Brief description of the management control system used in the tax administration, highlighting: the main characteristics, legal framework, strategy designed for its implementation, administrative structure responsible therefor. Results achieved from the operation of the internal control system, which have been the main obstacles, as well as the strategies developed and implemented for overcoming them.
Description of management indicators applied in the administration according to type: performance, quality ad/or impact. Considerations taken into account in their application, evaluation and interpretation of results. Human Resources management: training, strategies, platforms and tools that facilitate e-learning.
Training is one of the most important aspects in multiplying capacity and increasing human resources efficiency level. However, training and keeping the staff of any organization updated under the traditional modalities, such as training with personal participation involves a high cost with limited benefits for the administration. Such complex factors as the areas to be covered, number of staff members, globalization of economic operations and accordingly, the reconsideration of the scope of the functions of a tax administration do not allow for rendering the traditional methods or strategies sufficiently effective. Without discarding the modalities found within the training activities, organizations have resorted to the possibilities currently afforded by virtual at-a-distance training. E-learning is then a valid alternative with proven successful experiences that allow the Tax Administrations to achieve broader institutional objectives at lower costs. Nevertheless, like any tool, its strategy, design, planning, development and execution must respond to clear concepts and especially be the result of a firm institutional will and support. Some of the aspects worth considering in this case study are: -
Brief description of the e-learning strategy applied in the organization and reasons that led to its implementation. Key factors to be considered for implementing the modality. Results achieved up till now. Which have been the main obstacles faced and the strategies developed and implemented for overcoming them. Description of indicators for measuring the modalityâ€™s success. Trends and future issues to be considered.
The technological tools in financial and budgetary management for timely and effective accountability.
As has been previously mentioned, appropriate financial and budgetary management in a tax administration guarantees the organizationâ€™s welfare. The administration must not only collect taxes owed, but also ensure that the resources allocated for its operation be used in a rational, transparent and efficient manner.
At present there are several tools at the service of the organizations which, based on adequate computerized systems allow for timely, publicly and integrally informing citizens about the tax administrationâ€™s management. Some of the aspects worth considering in this case study are: -
Brief description of the technological tools used for financial and budgetary management; criteria used in their selection; Implementation procedure and areas involved therein. Results achieved up till now. Which have been the main obstacles faced and strategies developed and implemented for overcoming them.