The eighth edition of the OECD’s Tax Administration Series published last week shows how tax administrations are increasingly moving to e-administration and using a range of technology tools, data sources and analytics to increase tax compliance.

Commenting on the report, Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration said:

“Tax administrations, much like tax policy makers, are exposed to rapid change through the digitalisation of the economy and the emergence of new business models and ways of working. The data and examples contained in Tax Administration 2019 show how the availability of new technologies, new data sources, and increasing international cooperation are providing new opportunities for tax administrations to better manage compliance, protect their tax base and reduce administrative burdens.”

The Tax Administration Series, first published in 2004, provides wide-ranging comparative information on the performance of 58 advanced and emerging tax administrations as well as an analysis of the major trends and developments in tax administration. Its purpose is to assist administrations, governments, taxpayers and other stakeholders in considering how and where improvements can be made in the efficiency and effectiveness of tax administration. Together the 58 tax administrations participating in Tax Administration 2019 collected net annual revenues of EUR 11.4 trillion while dealing with the tax affairs of around 810 million personal income tax and corporate taxpayers.

As noted by Hans Christian Holte, Chair of the OECD Forum on Tax Administration and Head of the Norwegian Tax Administration:

“The Tax Administration Series is an invaluable resource in helping to frame the significant challenges and opportunities facing tax administrations. It contains a rich set of comparative information on the functions and performance of tax administrations which assists us at both the national and global level in understanding our strengths and weaknesses, and helps identify where we can enhance our performance individually and collectively through working together.”

Some interesting facts from the publication:

  • Increasing e-administration: There has been a significant shift towards e-administration with increasing options for online filing of tax returns as well as online payments. On average, e-filing rates for personal income tax are now above 70% and those for corporate income tax are around 85%. Digital contact channels (online, email, digital assistance) continue to increase (e.g. email contacts are up 20%) while traditional channels continue to decrease (e.g. in-person contacts are down 15%). More than 40 administrations are using or planning to use artificial intelligence.
  • Growing use of behavioural insights as a compliance tool: Many tax administrations now report the use of behavioural insights and analytics to better understand how and why taxpayers act and to use these insights to design practical policies and interventions. More than 10 administrations are employing behavioural researchers and more than 35 administrations have data scientists.
  • Smarter compliance risk management: Tax administrations are taking an increasingly proactive approach to compliance risk management, where possible seeking to intervene at earlier stages rather than after tax returns have been filed. In almost two-thirds of the administrations, formal co-operative compliance approaches for large taxpayers exist or are planned. This is particularly important as data indicates that in most jurisdictions between 35% and 60% of total net revenue, including withholding payments on behalf of employees, was received from taxpayers covered by their large taxpayer programmes.
  • Introduction of compliance by design: The increasing availability and sharing of data is now allowing compliance by design approaches to cover a variety of sources of income, including through the prefilling of tax returns which is done by close to 70% of the administrations covered by the report. A number of tax administrations are now looking to introduce systemic approaches for other classes of taxpayer, including working with software developers on the integration of accounting systems and tax rules, and through the introduction of secure chains of information, for example through e-invoicing and the use of secure electronic cash registers. More than 20 administrations report having in place electronic invoice systems for tax purposes.
  • Tax administration workforce is aging: Since 2014, the percentage of staff older than 54 years grew in two-thirds of the administration able to provide data. This confirms earlier observation that in many administrations the average age of staff is at a level where it is already or soon will create challenges to manage. To further complicate this challenge, most administrations are facing on-going organisational change with a need to acquire the new skills to operate a heavily data driven modern tax administration while retaining key intellectual knowledge.

(Source: OECD Tax)

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