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

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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
The ‘taxpayer segment’ model: A more recent development among a small number ofdeveloped countries (e.g. United States) has been to organize service and enforcementfunctions principally around segments of taxpayers (e.g. large businesses,small/medium businesses, individuals, etc.). The rationale for organizing thesefunctions around taxpayer segments is that each group of taxpayers has differentcharacteristics and tax compliance behaviors and, as a result, presents different risksto the revenue. In order to manage these risks effectively, the revenue body needs todevelop and implement strategies (e.g. law clarification, taxpayer education, improvedservice, more targeted audits) that are appropriate to the unique characteristics andcompliance issues presented by each group of taxpayers. Revenue bodies also need astructured approach to researching and understanding what these compliance issuesare. Proponents of the taxpayer segment type of structure contend that grouping keyfunctional activities within a unified and dedicated management structure increasesthe prospects of improving overall compliance levels. While application of thetaxpayer segment model is still in its early stages of use, many countries have createddedicated large taxpayer divisions/units.Source: OECD (2009)Survey results (Tables 6, 7 and Annex 2)•Revenue bodies are implementing a wide range of organizational andinstitutional reforms with the aim of strengthening revenue mobilization,enhancing operational efficiency, and improving compliance andeffectiveness .36I n line with international practice, none of the surveyedrevenue bodies is organized predominantly by tax-type (except Ghana untilrecently).The most common model in the surveyed countries is hybrid, that isa model that contains a combination of features associated with two or moremodels—mostly a combination of functional-based and taxpayer segmentationfeatures .37• Domestic tax administration has been integrated into a single department thatis organized on the basis of function/taxpayer segment—a recent keydevelopment in a number of countries such as Malawi, Kenya, Uganda,Rwanda and Zambia and is planned in Ghana. 38 Customs administration is alsocommonly organized on the basis of key functions—trade facilitation,technical (origin, valuation, classification and advance rulings), complianceand enforcement, and international and regional coordination.• In most revenue bodies (except Ethiopia), tax and customs administrationremain distinct departments, only sharing common support functions.• However, in a number of countries (Kenya, Rwanda, Tanzania, and Uganda),tax and customs departments also share common revenue administrationfunctions in investigations and taxpayer services.36 Uganda was the first country in the region to set up a unified semi-autonomous revenue body in 1991. Ghana andBurundi are currently in the early phases of establishing a semi-autonomous revenue body.37 Detailed organizational charts for selected revenue bodies are presented in Annex 1.38 Key domestic tax administration functions include: taxpayer service; return processing, tax accounting andpayment; collection enforcement; audit; and policy and legislation.30
Page 1 and 2: INTERNATIONALTAXDIALOGUE2010Revenue
Page 3 and 4: Table 12: Total cost of collection
Page 5 and 6: PCCAPAYEPITPSVRAGBRRARTSASACUSARSSS
Page 7 and 8: Executive summaryRevenue administra
Page 9 and 10: Institutional arrangements for reve
Page 11 and 12: • All unified semi-autonomous rev
Page 13 and 14: B. Scope of revenue bodies’ respo
Page 15 and 16: C. Relative autonomy of revenue bod
Page 17 and 18: Survey results (Table 3)• All rev
Page 19 and 20: Key observationsRevenue administrat
Page 21 and 22: You are entitled to expect SARS:Box
Page 23 and 24: Box 4: An example of a codified set
Page 25 and 26: Table 2: Tax and non-tax revenues a
Page 27 and 28: Table 4: Decision making structures
Page 29: The organization of revenue bodiesC
Page 33 and 34: Key observationsSurvey results indi
Page 35 and 36: Box 6: The common characteristics o
Page 37 and 38: C. Office network and staffingIntro
Page 39 and 40: Table 7: Selected features of the o
Page 41 and 42: Table 9: Number of staff and distri
Page 43 and 44: A. Strategic planning and managemen
Page 45 and 46: Key observationsThe corporate plann
Page 47 and 48: Table 10: Selected management pract
Page 49 and 50: A. An overview of funding mechanism
Page 51 and 52: B. Revenue administration expenditu
Page 53 and 54: Table 13: Share of total wage bill
Page 55 and 56: Revenue performance 76Chapter VKey
Page 57 and 58: Table 15: Revenue collection data f
Page 59 and 60: Domestic tax return filing, assessm
Page 61 and 62: A. Taxpayer registration and design
Page 63 and 64: VAT• All the surveyed countries h
Page 65 and 66: C. Taxation of small and micro-busi
Page 67 and 68: D. Use of modern electronic applica
Page 69 and 70: Table 18: PIT filing, assessment an
Page 71 and 72: CountryHow is the final annual PIT
Page 73 and 74: Table 20: VAT filing, assessment an
Page 75 and 76: CountryTable 21: Taxation of small
Page 77 and 78: CountryBasis used todeterminetaxMal
Page 79 and 80: Use of electronic application in ta
Page 81 and 82:
Legal and administrative powers of
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functions. These powers are also co
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Table 26: Information gathering pow
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CountryTable 28: Interest and admin
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CountryTable 29: Interest and admin
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CountrySouth AfricaTanzaniaUgandaZa
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CountryMalawiMauritiusRwandaSierraL
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AnnexesAnnex 1: Organization struct
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KRABoard of DirectorsCommissionerGe
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ZRABoard of DirectorsCommissionerGe
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ERCADirector GeneralAdvisory BoardE
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MauRABoard ofDirectorsInternal Audi
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Clarify SARS’operatingmodel,strea
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Enhancethe URAcorporateimageLevel o
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KRAMissionVisionValuesTo promote co
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ZRAMissionVisionValuesTo maximize a
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MauRAMissionVisionValuesTo continua
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GRAMissionVisionValuesTo supervise
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Source: ECRA• Cross cutting issue
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MalawiType of taxRevenue collected
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GhanaTax categoryRevenue collection
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