INTER-AMERICAN CENTER OF TAX ADMINISTRATIONS
ON THE INTEGRAL MANAGEMENT MODEL AND THE INFORMATION SYSTEMS MODEL
INTEGRAL MANAGEMENT MODEL FOR THE TAX ADMINISTRATIONS IMM-TA INTRODUCTION The essential mission of the Tax Administrations (TA) is to control taxpayer compliance with their obligations for which purpose they permanently develop new forms of improving institutional performance by increasing the effectiveness of tax control and affording taxpayers services whereby they may better comply with their tax obligations. The complexity of the mission of the tax administrations and dispersion and multiplicity of their different activities in a permanently changing environment call for establishing integral management models that may guide their administrative processes, as a whole, toward the fulfillment of their mission. If there is no adequate integral management model that may guide and ensure the performance of the organization toward achieving its objectives and which may in turn, allow it to fulfill its strategies and mission, it will be impossible to achieve results that may be coherent with the purposes sought and, likewise, it will be difficult to ensure control and adequate service levels to the taxpayer.
THE INTEGRAL MANAGEMENT MODEL CONCEPT.
The new challenges to be faced call for the development and strengthening of tax management through more structured operational concepts and more systematic processes based on a series of essential instruments for supporting and carrying out its tasks. In simple terms, the concept of tax control that represents the mission of the tax administrations is to ensure that all taxpayers pay the corresponding taxes in keeping with the provisions of the tax regulations. To this end, the tax administration must be capable of doing whatever may be necessary so that everyone will comply, namely: offering mechanisms for facilitating voluntary compliance, up to enforcing compliance by those who voluntarily fail to do so.
The tax administration carries out its activities and operations within a legal tax framework, through a series of functions, processes and procedures, within an organizational scheme with managerial, hierarchical and supervisory responsibilities, using human, physical, financial, technological and information resources and applying administrative, budgetary, accounting, hiring and staff management standards. CONTEXT OF THE TAX ADMINISTRATION Integrated Tax Control System
Managerial Support System Planning Organization
Administrative/Financial System Recovery
Administrative & Budgetary Autonomy
Technology and informatic Function Information Systems
Information Processing Communication
Tax Computerization Area
Financial and Budgetary Administration
Tax Communication & Dissemination
Human Resources System Human Resources Management
Special Administrative Career
Staff Evaluation & Incorporation
This series of measures must be coherent in its operation, integrality and be based on an operational model. This has been called the integral management model (IMM-TA).. The adoption of an integral management model (IMM-TA) is a critical success factor for the adequate functioning of the tax administration and begins with the definition of the strategy for controlling taxpayer compliance with their obligations and the strategy for providing those taxpayers services that, while facilitating compliance with their obligations may be aimed at the control needs. GENERAL VISION OF THE IMM-TA. Beginning with an adequate integrated analysis (I.A.) that combines the analysis of the external environment (analysis of external factors -AEF) and the analysis of the internal capabilities (analysis of institutional capacity AIC), one
must explicitly determine the administration's control and taxpayer service strategies. This implies clearly establishing: · Taxpayer sectors or egments on which it will act. · Actions it will undertake to effectively control the sector with the highes level of noncompliance · The optimum use of the resources for exercising the controls. · Actions it will undertake to improve its institutional apability and accordingly, its control capability. · Types of taxpayer service and assistance it will provide.
DIAGRAM OF THE INTEGRAL MANAGEMENT MODEL IMM-TA A.F.F RESULTS
A. A I. I
ESTRATEGIAS CONTROL DE CONTROL T. AND TAXPAYER Y SERVICE SERVICIO
INFORMATION SYSTEMS SISTEMAS DE INFORMACION
A.I.C OBJETIVOS OBJECTIVESYAND PLANES ACTION DE ACCION PLANS ESQUEMA ORGANIZATION DE ORGANIZACION SCHEME
• COMPLIANCE IMPROVEMENT • EVASION REDUCTION • COLLECTION INCREASE • USER SERVICES • TAXPAYER ASSISTANCE
RECURSOS HUMAN, PHYSICAL HUMANOS/FISICOS/FINANCIEROS AND FINANCIAL RESOURCES
PROCESOS OPERATIVOS/PROCEDIMIENTOS OPERATIVE PROCESSES/PROCEDURES
FLUJOS INFORMATION DE INFORMACION FLOWS
SPECIFIC ACTIONS • CONTROL • SERVICES
Tax Administration Legal Tax Framework
The IMM-TA must ensure that these strategies and the objectives in turn, may result in measurable and achievable objectives and in concrete action plans; that these action plans may be carried out through management processes and that the processes be controlled and evaluated.
The administrative process (planning, organization, management, execution and control) will be inserted in the IMM-TA, by establishing workflows and information that may operate horizontally through the different key areas of the business and concluding with specific taxpayer service or control actions. In this way, the entire series of operations is immersed as part of the flow of a process and not as isolated entities, to ensure their integration and consistency with superior objectives and strategies. The integration of the administrative process by means of flows of processes and information constitutes the basis for undertaking effective actions in relation to control and for providing adequate services that may respond to the taxpayer needs. Now then, establishing an IMM-TA is a necessary although not sufficient condition for achieving effective performance. The different models used have not been capable of guaranteeing that departmental and individual performances coincide with the needs for global performance. Control in achieving the objectives calls for developing performance measures to compare them with expected behaviors at various levels. Nevertheless, up till now, information systems have not provided sufficient aid for detailed measurements at inferior organizational levels, on the basis of which one may consolidate the different levels of performance. For this reason, in addition to the formulation and use of an IMM-TA, it is necessary to propose as well an information systems model that on being integral and integrated may follow up all the managerial activities.
CONCLUDE It is important to point out that by establishing an IMM-TA, the tax administration has a better opportunity for operating adequately, given that the management processes, which result in taxpayer control and service actions, provide information flows for management control. These flows, while providing feedback to the same processes for undertaking the corresponding adjustments, also provide feedback to the objectives and action plans determined, whose corrections accordingly result in adjustments to the processes. Feedback is also provided to the control and service strategies that will result in adjustments to the objectives and action plans.
There is thus a permanent cycle that always results in ever more effective actions, better management control actions and permanent improvements in compliance, reduction of evasion and certainly increases in collection.
CIAT AND THE IMM -TA.
As part of its mission, CIAT promotes and supports the tax administrations in the establishment and improvement of their management models and processes and considers this the means through which the TAs will achieve tangible results as regards efficiency and effectiveness in management, will significantly improve their results with respect to taxpayer voluntary compliance and the struggle against evasion, will be in a better position for preventing acts of corruption and will have greater capability for detecting irregular events and applying the necessary corrective actions. Likewise, CIAT carries out its technical assistance activities within the context of the IMM-TAs already existing in the various member countries, and also provide technical assistance for the formulation and implementation of integral management models in those tax administrations requiring it.
INFORMATION INFORMATION SYSTEMS SYSTEMSMODEL MODELFOR FORTHE THETAX TAX ADMINISTRATIONS ADMINISTRATIONSISM-TA ISM-TA INTRODUCTION INTRODUCTION administrations have permanently faced difficulties having available TheThe tax tax administrations have permanently faced difficulties for for having available reliable, timely relevant data on the different activities carried reliable, timely andand relevant data on the different activities thatthat areare carried outout internally having access to adequate information on the external internally andand for for having access to adequate information on the external environment. environment. Many of the efforts made administrations compiling, Many of the efforts made by by thethe tax tax administrations for for compiling, validating consolidating information managerial activities have been validating andand consolidating information on on thethe managerial activities have been based information systems integrated flows processes based on on information systems notnot integrated to to thethe flows of of processes andand information therefore results have been sufficiently satisfactory. information andand therefore thethe results have notnot been sufficiently satisfactory. overcome or replace a clear other hand, no technological may by itself overcome or replace a clear On On thethe other hand, no technological tooltool may by itself control strategy based on systematic information analysis processes thatthat may guide control strategy based on systematic information analysis processes may guide thethe activities toward thethe most relevant cases of greater relative noncompliance andand activities toward most relevant cases of greater relative noncompliance which is accompanied by abygood operational planning system for for prioritizing thethe which is accompanied a good operational planning system prioritizing different workloads. different workloads. Technology cancan neither substitute an an adequately structured organization, with Technology neither substitute adequately structured organization, with simple andand orderly procedures thatthat may leadlead to operational effectiveness, thatthat simple orderly procedures may to operational effectiveness, counts on good planning, with sufficient information for for knowing thethe taxpayer andand counts on good planning, with sufficient information knowing taxpayer analyzing his his behavior; with communication channels between thethe different teams analyzing behavior; with communication channels between different teams to share data andand relevant experiences andand with an adequate information base. to share data relevant experiences with an adequate information base. Accordingly, thethe incorporation of of information technology to to thethe Accordingly, incorporation information technology management processes must be undertaken on the basis of an systems management processes must be undertaken on the basis of information an information systems model thatthat may be formulated andand be part of the institutional management model. model may be formulated be part of the institutional management model. This information systems model must be adapted to the needs of the management This information systems model must be adapted to the needs of the management model which are are determined by characteristics of its such as the management model which determined by characteristics of own its own such as the management style used, thethe levels of authority, thethe level of performance of the managerial andand style used, levels of authority, level of performance of the managerial executive body. executive body. ForFor thisthis purpose, it isit necessary to to determine thethe keykey areas andand factors of of purpose, is necessary determine areas factors management andand determine for for each one,one, which is the most relevant information management determine each which is the most relevant information thatthat willwill allow for for following thethe pace andand measuring thethe raterate of its andand allow following pace measuring ofperformance its performance thethe timeliness andand frequency with which it will be required. timeliness frequency with which it will be required.
THE INFORMATION SYSTEMS
In addition to being valuable assets, whereby one identifies, obtains, processes and reports information, which is in addition another very valuable assets, it serves to know: (i) the way in which resources are being used, (ii) the way operations are being carried out and objectives are being fulfilled, (iii) data leading to the analysis of risks and their management, and (iv) data on the external environment which, in addition to strengthening the analysis of risks, allows for adjusting the strategies and reorienting the objectives. Adequate information systems allow for knowing with a high level of precision and great timeliness how each of the resources is being used, how each operation is being carried out, what is the performance of each official, what is happening with each of the cases being investigated, and at the aggregate level, establishing the levels of performance of the working groups, units, administrations, regional management offices, dependencies at the central level and the entity as a whole.
THE IMPACT OF TECHNOLOGY IN THE MANAGEMENT OF TAX ADMINISTRATIONS New technologies afford new opportunities, provide greater speed for obtaining and using information and assists in reducing errors associated to its generation and provision. The massive development of systems operating in real time, will allow immediate interconnection with different data bases and the immediate crosscheck of transactions for tax verification loading or accreditation. Currently TAs can provide services which were previously impossible. Locating taxpayer assistance offices in any part of the world where there is a PC connected to Internet. Services are available to any persons without the need for physically visiting the geographical offices. Taxpayers may file their returns or make their payments from their own homes 24 hours a day, 7 days a week, and operational costs for providing this service are minimal compared to the traditional operation schemes. Technology, its use and increasing possibilities for obtaining structured information on economic, commercial and financial operations allow ever more opportunities for knowing details about each taxpayer and administering that information for offering them personalized services and likewise specialized and specific controls.
The quality of information on the transactions carried our by the taxpayers with the tax administration improves significantly. Data may be captured from the source generating them and in addition, one may offer programs that may assist taxpayers in generating those data, elaborating their returns, assessing their taxes and in general, complying with their tax obligations. The expansion of the means for receiving massive information from the taxpayers and information agents, significantly reduces the time for processing and having available such information. Many of the controls that were traditionally applied through subsequent massive processes are now interactively applied on line. It is now easy to capture more and better information from the external environment wherein the administrations interact. There are also increasing possibilities for capturing internal information. In addition to the evident advantages related to contact with the taxpayers, the internal benefits are very important. First of all, it is possible to maintain direct, online and interactive contact with all the dependencies and officials. Dissemination of information to officials at all levels is simplified, either through the publication of the information in the internal portals or the simple use of electronic mail.
Now it is possible to have a dynamic interaction between the different organizational levels and the officials comprising them. New mechanisms are being created for carrying out the work in group by means of interactive virtual connections. It is easy to create information flows, processes and chains of activities that cross over the barriers of the organizational structure. Officials may perform their tasks through information systems in flows of integrated processes that connect different organizational levels and different geographical sites. In administrations with incipient levels of development and less structured management processes, it is easy to rapidly install services for capturing in all dependencies information on their management or activities if they were not integrated to the processes network or for loading the information on nonintegrated activities. The interconnection of new systems with previous systems allows for consulting on-line, former databases for extracting information that is combined with that originating from new information systems. All of the information required by an official is within reach of a personal computer screen through a local network or a public wireless network.
New technologies are revolutionizing the work of auditors. Not only because they allow them access to better sources of information which results in better operational planning of their activities, but because during the audits, specialized software products interactively guide them in performing their field work. Information crosschecks and the validation of data â€œin situâ€? allow for making better decisions. The information available and with which they feed the systems is the best element for guaranteeing the effectiveness of their action, while also permitting the measurement of their work. Thus, for example, from the global analysis of tax returns, third-party information and relevant data on the economy, one may establish patterns and trends for dynamically defining tax control programs, that are executed in real time, with the selection of cases to be verified, examined or audited. In this same sense, information systems are used for assigning these cases to the officials, according to their workloads and professional profiles. From there on, the system guides the official through the steps he should take for specifically controlling each case that has been assigned to him, until obtaining the end results of his performance.
THE INFORMATION SYSTEMS MODEL (ISM-TA).
The concept of the information systems model integrated to a management model is based on the proposal whereby good information is that which is obtained directly from the source generating it, but it is better if during the generation of information, relevant data which should be known at other levels, are extracted and simultaneously stored; and it is even better if during the generation of the information, the latter is stored in such a way that the relevant data may be extracted at any time by the level requiring it. The purpose of the information systems model is to put in operation computerized components whereby the tax administration may establish horizontal work and information flows through the different key areas of the organization, involving all operational tasks as part of the flow of processes. If all operational tasks, including the most simple task used in controlling taxpayers are carried out with the help of modern technology which, while storing its information also feeds the following task in the sequence of the process of which they are a part, all the information required will be instantaneously available, but mainly, value is added to the productive chain
through the use of technology, while at the same time, substantially increasing the results. The existence of an ISM-TA, implemented through adequate computerized components, allows for knowing at all times, what is happening with every task, process, determined objective or planned strategy. It allows for comparing the result of the previous month vis-a-vis the current one, yesterday versus today and even at the most detailed level possible. When an ISM-TA is implemented, the management information is the result of processes and not the result of executing an additional operational task such as filling out a form or preparing a report. Management information is a natural product of the execution of processes, it is a value added obtained during their execution. Additionally, this information is an essential element of management, direction, planning and control. In this way, as one goes up in the organizational pyramid, one obtains an ever more structured vision of management and more aggregate controls, with more timely, reliable and precise information. Management may promote permanent change and the adaptation of processes through speedy changes in the work and information flows that are dynamically incorporated and promote the automatic follow-up.
AND THE ISM-TA
CIAT considers that the implementation of information systems models (ISMTA), structured as part of integral management models (IMM-TA) guarantees the adequate functioning of the tax administrations, given that the integration of processes that result in taxpayer control and service actions allow for the provision of permanent flows of information that provide feedback to the very processes for making the corresponding adjustments and likewise provide feedback to the objectives and action plans determined, whose modifications may accordingly result in adjustments to the processes. Feedback is also provided to the formulation of control and service strategies that will bring about adjustments to the objectives and action plans. In this way there is a permanent cycle that always results in ever more effective
actions, better control actions and permanent improvements in compliance, evasion of reduction and certainly increases in collection. CIAT's experience and its knowledge about best practices in tax administration, allow it to offer specialized technical assistance services for the formulation and implementation of Information Systems Models (ISM-TA) and Integral Management Models (IMM-TA). CIAT has available an integral information systems model (ISM-TA) which consists of several components developed on the basis of the highest quality standards whose operation has been proven in several international tax environments.
STRATEGIC COMPONENTS CONTROL COMPONENTS BASIC COMPONENTS EXTERNAL COMPONENTS
The model includes three levels of components that respond to different management needs. These are: basic components, control components and strategic components. Each of them is capable of interacting with other systems of an administrative or tax nature, which in the ISM-TA are defined as external components. The basic components are aimed at solving the primary needs of any tax administration, such as the taxpayer file, the receipt of returns, management of collection and taxpayer services.
Control components include functions for improving the performance of the administration such as the current account, management of third-party information, control of invoicing, among others. Strategic components include more sophisticated tools for the automation of processes, for the selection of cases, management and consultation of information between different systems of the entity and support to management. The external components are all the systems available in a tax administration that are not part of the TMS, but which may interact with it, whether they be of an administrative financial or human resources nature. The concept also includes other systems that respond to tax functions and which may be integrated to the TMS through the Applications Information Manager. All the modules comprising the different components of the CIAT ISM-TA include the most important functions required by any tax administration, as a result of CIAT's knowledge of the best practices of the member countries. Even so, every component is specifically adapted to the requirements of each tax situation, within the framework of its management processes. The ISM-TA responds to the needs of the tax administrations for having available information systems that may effectively support their processes and taxpayer control and service strategies.