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

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Key observationsIn most countries, PIT and CIT systems are administered on the basis of selfassessmentprinciples. 95 VAT has also been implemented in all countries as a selfassessedtax. Self-assessment obligates taxpayers to assess tax liability, file returns,and pay taxes.The revenue body, on the other hand, is required to:(1) assist the taxpayer to voluntarily comply by providing timely and quality serviceand education; and(2) quickly identify and punish non-compliance.Modern tax administrations have embraced self-assessment systems over the lasttwenty years as a way to:(1) efficiently utilize scarce resources;(2) provide for early collection of revenues;(3) differentiate in treatment of compliant and non-compliant taxpayers;(4) target enforcement activity only on those taxpayers who are not compliant; and(5) reduce disputation.Conditions necessary for an effective self-assessment system are recognized asdevelopment of:(1) simple legislative framework, including the enactment of a tax procedures code(TPC);(2) visible taxpayer service, assistance and education programs;(3) effective filing and payment 96enforcement programs;97(4) comprehensive audit programs based on risk-management principles; and(5) effective debt management strategies.Revenue bodies, with technical support from various development partners, areconstantly refining their systems to address these key issues.94 Thirty and 60 days for large, and medium and small taxpayers respectively in South Africa and Mauritius.95 A number of revenue bodies also indicated they rely on administrative assessment systems which are generallybelieved to be ineffective.96 Preferably through the banks.97 Majority of the revenue bodies indicated they implement risk –based audit programs. However, experience indicatesthat audit selection in most revenue bodies is done based on local knowledge and third party information—credible andautomated risk assessment systems have not been developed in most countries (except South Africa).63
C. Taxation of small and micro-businessIntroductionThis section reviews taxation regimes and administrative arrangements in place in thesurveyed countries to enforce compliance with tax laws across small and microtaxpayers.Survey results (Tables 21 and 22)• All revenue bodies, except Botswana and Mauritius, have implemented aspecialized presumptive taxation regime for small and micro enterprises.• Six revenue bodies (Benin, Burundi, Kenya, Sierra Leone, Senegal and Zambia)have also set up dedicated units responsible for administering the presumptiveregime.• In most countries, incorporated businesses are excluded from the presumptiveregime 98 as these are assumed to have the capacity to prepare and maintainfinancial records, a requirement of the national business registration office.• Defined services (such as professional services) are also excluded from thepresumptive regime in some countries.• In some countries lower 99 and upper thresholds 100 have been established foreligibility under the presumptive regime.• Five countries (Benin, Mauritius, Sierra Leone, Senegal and South Africa) haveestablished a one-stop-business registration process/office that also handlesregistration for tax purposes.• All revenue bodies (except Botswana) require taxpayers in this segment toperiodically file returns and pay taxes, but the filing requirements vary acrosscountries and sub-categories of small and micro businesses (including the selfemployed).101• Information on number of taxpayers and revenue collection by taxpayersegment was scanty and not readily available in most revenue bodies surveyed.However, available information indicates that taxation regimes for small andmicro business and self-employed individuals account for about 3% of totalrevenue collections (Benin - 3.5%, Tanzania - 2.5%, and Zambia - 3%).98 Only South Africa, Rwanda and Zambia have presumptive regimes that are also available to incorporated businessesthat meet the criteria for registration under the presumptive regime.99 Harmonized with the grossed up threshold for PIT.100 Commonly the VAT registration threshold.101 For instance, taxpayers in this segment in Ethiopia, Rwanda and Sierra Leone file returns and pay presumptivetaxes annually, while taxpayers in the rest of the countries (except Zambia) file their returns quarterly. In Zambia,those on turnover tax file and pay their taxes monthly, while those on presumptive tax for public transporters and taxispurchase daily tickets from appointed agents at bus stations and taxi ranks. Most revenue administrations apply asingle fixed rate of between 1 and 4% on gross turnover to determine the tax liability. South Africa and Tanzania havemultiple rates.64
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INTERNATIONALTAXDIALOGUE2010Revenue
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Table 12: Total cost of collection
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PCCAPAYEPITPSVRAGBRRARTSASACUSARSSS
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Executive summaryRevenue administra
Page 9 and 10:
Institutional arrangements for reve
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• 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 and 30: The organization of revenue bodiesC
Page 31 and 32: The ‘taxpayer segment’ model: A
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: VAT• All the surveyed countries h
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
Page 83 and 84: functions. These powers are also co
Page 85 and 86: Table 26: Information gathering pow
Page 87 and 88: CountryTable 28: Interest and admin
Page 89 and 90: CountryTable 29: Interest and admin
Page 91 and 92: CountrySouth AfricaTanzaniaUgandaZa
Page 93 and 94: CountryMalawiMauritiusRwandaSierraL
Page 95 and 96: AnnexesAnnex 1: Organization struct
Page 97 and 98: KRABoard of DirectorsCommissionerGe
Page 99 and 100: ZRABoard of DirectorsCommissionerGe
Page 101 and 102: ERCADirector GeneralAdvisory BoardE
Page 103 and 104: MauRABoard ofDirectorsInternal Audi
Page 105 and 106: Clarify SARS’operatingmodel,strea
Page 107 and 108: Enhancethe URAcorporateimageLevel o
Page 109 and 110: KRAMissionVisionValuesTo promote co
Page 111 and 112: ZRAMissionVisionValuesTo maximize a
Page 113 and 114: 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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