Revenue Administration in Sub-Saharan Africa - International Tax ...

A. Organizational structures of revenue bodiesIntroductionRevenue bodies are typically organized on the basis of 3 models, that is: (1) tax-type;(2) functional; and (3) taxpayer segmentation. A detailed discussion of these models ispresented in Box 5.Box 5: How organizational structures of revenue bodies have evolvedOver the last 20-30 years, there has been a clear trend in the way the internalorganizational structures of national revenue bodies have evolved. In broad terms,this has entailed an evolution from an organizational model based on type of taxcriterion to one organized around tax administration functions‘. More recently, therehas been a trend towards a taxpayer segment model.The ‘type of tax’ model: The earliest organizational model employed by taxadministrators was based principally on type of tax criterion. Under this model,separate multifunctional departments were responsible for each tax and were largelyself-sufficient and independent of each other. While this model served its purpose, itwas eventually seen to have a number of shortcomings, including:1) With its inherent duplication of functions, it was inefficient and overly costly;2) Taxpayers with multiple tax dealings (e.g. businesses) were inconvenienced as theyhad to deal with different departments on similar issues (e.g. debt issues);3) There were complications, both to revenue bodies and taxpayers, in managing andco-coordinating compliance actions across different taxes;4) Separation increased the likelihood of uneven/inconsistent treatment of taxpayers;5) The arrangements impeded the flexible use of staff whose skills were largelyconfined to a particular tax; and6) This approach to structuring tax operations unnecessarily fragmented themanagement of the tax system, thus complicating organizational planning and coordination.Faced with these shortcomings, many revenue bodies decided torestructure their organizational arrangements, concluding that a model based largelyon functional criteria would help to substantially improve overall operationalperformance.The ‘functional’ model: Under the functional model, staffs are organized principallyby functional groupings (e.g. registration, accounting, information processing, audit,collection, appeals, etc.,) and generally work across taxes. This approach to organizingtax work permits greater standardization of work processes across taxes, therebysimplifying computerization and arrangements for taxpayers, and generally improvesoperational efficiency. Compared to the tax type model, the functional model hascome to be seen as offering many advantages and its adoption has led to manydevelopments aimed at improving tax administration performance (e.g. single pointsof access for tax inquiries, the development of a unified system of taxpayerregistration, common approaches to tax payment and accounting, and more effectivemanagement of tax audit and debt collection functions.) However, a number ofrevenue bodies have taken the view that this model is not entirely appropriate for thedelivery of compliance-related activities across different segments of taxpayers giventheir differing features, behaviors and attitudes to tax compliance.29