Abstract : Modern tax administrations seek to optimize tax collections while minimizing administration costs and taxpayer compliance costs. Experience shows that voluntary compliance is best achieved through a system of self-assessment. Many tax administrations have introduced self-assessment principles in the income tax law but the legal authority is not being consistently applied. They continue to rely heavily on “desk” auditing a majority of tax returns, while risk management practices remain largely underdeveloped and/or underutilized. There is also plenty of opportunity in many countries to enhance the design and delivery of client-focused taxpayer service programs, and better engage with the private sector and other stakeholders.
? While most countries claim they prepare these plans after assessing the requirements identified in the operational areas, it is not clear that credible systems exist to help systematically identify, assess, and prioritize the critical risks presented.
? It is also not clear that adequate thought has been given to TPS strategies centered on mitigating compliance risks.
? In all the countries, use of risk analysis is either non-existent (audit selection is based instead on the judgment of senior officials) or very rudimentary (manual and complex to apply).
? Audits need to be driven by an objective determination of the risk of non-compliance.
? This is particularly a problem in countries that are not implementing universal self-assessment.
? The changes implemented by the Australian Tax Office (ATO) and Treasury Department to address problems that the administration identified with the self assessment arrangements.
? The team will be responsible for identifying the issues, preparing the agenda, following up action, and reporting on progress.
? These activities must be seen by the private sector as a genuine effort to address the issues they face in complying with the tax law.
? However, in practice, most countries rely predominantly on comprehensive audits, and in some cases, issue oriented audits tend to escalate without justification into comprehensive audits.
• Business taxpayers must, however, keep records explaining all transactions relevant for tax purposes, including sales and expense invoices and receipts, wages records, cash register tapes, bank account statements, and details of debtors, creditors, trading stock and depreciable assets.
• The geographic distribution of the taxpayers may also be different, tax at the capital or major cities and customs at the border points.
• The development of a TPS, with robust internal processes for managing it, is therefore critical.
• A TPS strategy will set out the tax administration’s vision, guiding principles, and high level objectives for taxpayer service and describe its operational delivery plans
? Most countries do not maintain or track performance indicators outside of the number of audits carried out and the additional assessments raised.
? Implementation of taxpayer self-assessment, coupled with other compliance enforcement measures, could lead to better revenue performance.
? A TPS strategy will set out the tax administration’s vision, guiding principles, and high level objectives for taxpayer service and describe its operational delivery plans.
? It will also explain how the tax administration will measure performance and judge success.
? The measures by which the tax administration will assess its performance and judge success.
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