TAX ADMINISTRATION DIAGNOSTIC ASSESSMENT TOOL Module 10 POA 8 EFFICIENT REVENUE MANAGEMENT DESIRED OUTCOME OF POA 8 TAX REVENUE COLLECTIONS ARE: • Fully accounted for; monitored against expectations; and analyzed to inform government revenue forecasting. • Legitimate refunds are paid promptly • Although the primary responsibility of revenue forecasting and tax revenue estimation rests with the Ministry of Finance, tax administrations are normally expected to provide input to this government budgeting process. • Tax administration provides the data and analytical inputs to this process. • A tax administration’s performance is judged by its ability to contribute to enhancing the quality of forecasts and revenue analysis. Revenue analysis capability within a specialist unit. Analysis of - revenue trends, - tax expenditure, - payment behavior, - Stock of tax losses, Regular credits/refunds monitoring and Paying out carried forward legitimate tax reporting to refunds promptly government of core tax collections International Good Practice in Conducting Efficient regular internal Revenue Early detection of audit of revenue Management deviations from accounting POA 8 forecast and system to ensure identification of controls are causes followed Routinely Using automated reconciling tax revenue administration’s accounting ledger to system to government’s minimize errors revenue accounts and fraud, and ensure timely posting PERFORMANCE INDICATORS: P8 – REVENUE MANAGEMENT High Level Indicators P8-26: Contribution to P8-27: Adequacy of P8-28: Adequacy of tax government tax tax administration’s refund processing revenue forecasting revenue accounting process system The extent of tax Adequacy of tax Adequacy of the Time taken to administration administration’s VAT refund process or offset input to tax revenue system VAT refund government accounting claims revenue system forecasting and estimating Dimensions SCORING P8-26: CONTRIBUTION TO GOVERNMENT TAX REVENUE FORECASTING PROCESS Monitors tax revenue A Gathers data on revenue Forecasts VAT refund Monitors and reports on collections against collection and economic levels to ensure that Monitors and reports cost stock of tax losses carried budgeted revenue conditions as input to sufficient funds are to revenue of tax forward by taxpayers that forecasts and reports government budgeting available to meet all expenditures annually may be offset against finding to government at process legitimate refund claims future tax liabilities least once a month Monitors tax revenue Gathers data on revenue Forecasts VAT refund B collection and economic conditions as input to government budgeting process collections against budgeted revenue forecasts and reports finding to government at least once a month levels to ensure that sufficient funds are available to meet all legitimate refund claims Monitors tax revenue C Gathers data on revenue collections against collection and economic budgeted revenue conditions as input to forecasts and reports government budgeting finding to government at process least once a month SCORING P8-27: ADEQUACY OF TAX REVENUE ACCOUNTING SYSTEM Regular EXTERNAL and Tax administration has Tax administration's accounting All tax payments received are A automated accounting system that meets government IT and accounting standards system interfaces with the Ministry of Finance's revenue accounting system posted to the tax administration's accounting system within ONE business day INTERNAL audits ensure that accounting system aligns with tax laws and government accounting standards All tax payments received are Tax administration has Tax administration's accounting Regular INTERNAL audits ensure B automated accounting system that meets government IT and accounting standards system interfaces with the Ministry of Finance's revenue accounting system posted to the tax administration's accounting system within TWO business day that accounting system aligns with tax laws and government accounting standards All tax payments received are Tax administration has Tax administration's accounting C automated accounting system that meets government IT and accounting standards system interfaces with the Ministry of Finance's revenue accounting system posted to the tax administration's accounting system within THREE business day SCORING P8-28-1: ADEQUACY OF THE VAT REFUND SYSTEM Risk-based verification, e.g., (i) screening refund claims A Offsetting of excess VAT Fast-track refund to risk- using risk assessment Budget allocated to meet credits against tax arrears, screened taxpayers, Payment of interest on software; legitimate refund claims except in cases of genuine including exporters with delayed refunds (ii) pre-refund audit of when they occur disputes good compliance history high risk cases; (iii) post-refund audit of low risk cases Risk-based verification, e.g., (i) screening refund claims B Offsetting of excess VAT using risk assessment Budget allocated to meet credits against tax arrears, software; legitimate refund claims except in cases of genuine (ii) pre-refund audit of when they occur disputes high risk cases; (iii) post-refund audit of low risk cases Risk-based verification, e.g., (i) screening refund claims C using risk assessment software; (ii) pre-refund audit of high risk cases; (iii) post-refund audit of low risk cases SCORING P8-28-2: THE TIME TAKEN TO PROCESS VAT REFUND CLAIMS A B C D • At least 90 • At least 80 • At least 70 • The percent of VAT percent of VAT percent of VAT requirements for refund claims (by refund claims (by refund claims (by a ‘C’ rating are number of cases number of cases number of cases NOT met. and value) are and value) are and value) are • OR the processed (paid, processed (paid, processed(paid, information offset or offset or offset or available to the declined) within declined) within declined) within TADAT assessors 30 calendar days 30 calendar days 30 calendar days is INSUFFICIENT CHECKLIST OF QUESTIONS AND EVIDENCE FOR POA 8 Table 26 of the Field Guide