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7 Takeaways From OECD Tax Administration 2015 Report

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Sep 8th 2015
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Busy season is still months away, so here's a chance to read up on the latest information about how dozens of other countries handle tax issues.

Tax Administration 2015, a report produced by the Organization for Economic Cooperation and Development (OECD) Forum on Tax Administration, presents tax information and strategies from 56 advanced and emerging economies, including OECD, European Union, and Group of Twenty (G20) member countries.

Why do this? Because “revenue bodies” are always asked to improve their performances, the report states. That can be by cost cuts, a lighter burden on businesses, and addressing noncompliance issues. “Making it easier for taxpayers to do what they need to do, while also making noncompliance harder, is allowing governments to finance important programs that benefit their citizens,” the report states.

Here are seven highlights of the 384-page report, now in its sixth edition.

1. Significant organizational change. Forty percent of the surveyed administrations said they're handling more business while being combined with other government service providers as consolidation continues. Sixty percent reported staff cutbacks, especially in Australia, the United Kingdom, and the United States.

2. Digitalization increases. Administrators are increasing budget expenditures for “on-the-go” services because customers want them and workloads require them. The average IT line item as a percentage of total budgets remains at 9.5 percent. But Austria, Finland, Singapore, and Norway sock away 25 percent for IT costs.

Almost all respondents (95 percent) allow tax returns to be filed electronically, but more needs to be done to integrate assessments, amendments, and payments.

3. Tax debt collections. Total tax debt for OECD countries rose from about 22 percent in 2011 to a bit more than 24 percent in 2013. But that ratio is affected by what the report describes as “outliers” that, when removed from the calculations, decreases the results from 12.7 percent in 2011 to 11.1 percent in 2013. Estonia, Ireland, Japan, Korea, Norway, Sweden, and Switzerland have a collection-to-debt ratio of less than 5 percent. Improvements in collections are chalked up to better analytics tools, wide use of electronic payment systems, IT investments, and extensive use of tax withholding at source arrangements.

4. Better management of large taxpayers. More than 85 percent of tax administrators have adopted the OECD's recommended “cooperative compliance model” with the biggest taxpayers. One-third use similar strategies to manage high-net-worth individuals.

5. Tax gap measurement on the increase. Almost half (43 percent) of administrators said they use or are researching estimates of the aggregate tax gap for some or all of the major taxes administered. (The tax gap is the difference between what should be and what is assessed.)

6. Disclosures, compliance, and improved tax revenues. Less than half of OECD members encourage taxpayers to use voluntary disclosures, even though most legally permit them. “With the imminent implementation of automatic exchange of financial account information, it is expected that there will be greater interest in these programs,” the report states.

7. Growing use of electronic matching of value-added tax invoices. Concerns about noncompliance and value-added tax (VAT) are rising, and many administrators are processing VAT invoice data to detect fraud and manage compliance risk.

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