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

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ForewordThis report has been prepared by the International Tax Dialogue (ITD) which is a jointinitiative of the European Commission (EC), Inter-American Development Bank (IDB),International Monetary Fund (IMF), Organisation for Economic Development and Cooperation(OECD), United Kingdom Department for International Development (UK-DFID) and World Bank Group.The report is based on a survey of countries in Sub-Sahara Africa (SSA). It wasprepared on a pilot basis to test the process and to scope the information included inthe survey. The survey was issued to over 20 countries selected to achieve a balanceof regional representation, level of development, government structure and size ofcountry as well consideration of availability of data. Fifteen countries completed thesurvey: Benin, Ethiopia, Botswana, Ghana, Kenya, Malawi, Mauritius, Rwanda,Senegal, Sierra Leone, South Africa, Tanzania, Uganda and Zambia.The survey was modelled in part on the OECD “Tax Administration in OECD andSelected non-OECD Countries: Comparative Information Series (2008)” which 43countries contributed to. In addition, the survey seeks to compare, for illustrationpurposes only, approaches and practices across SSA and OECD countries. By usingthis model we aim to contribute to building a picture of tax administrations acrossregions and levels of development. Our objective is to facilitate dialogue amongst taxofficials and other key stakeholders worldwide and provide an opportunity to identifygood practice and pursue common objectives in improving the functioning of nationaltax systems.We welcome feedback on this report. Is it useful? How could it be expanded? Whatother information should be included? This can be sent to the ITD Secretariat atitd@itdweb.org.The ITD would like to thank the participating countries, the African TaxAdministration Forum (ATAF), and the report author Dr Samuel Bwalya.We would also like to thank the Revenue Administration Division of the IMF for theirwork in reviewing, editing and updating the report, the OECD for making theirComparative Information Series survey available and DFID for their generous supportof this project.5
Executive summaryRevenue administration has, in the last two decades, become a focal area of fiscalreform in a number of Sub-Saharan African (SSA) countries and various reforms arecurrently being undertaken to improve operational efficiency and modernize revenueadministration. This comparative information series reviews key aspects of revenueadministration in a sample of 15 SSA revenue bodies. 1 The following is a summary ofeach of the chapters and its key findings.Chapter I reviews institutional arrangements put in place to conduct revenueadministration operations. The chapter observes that the majority of surveyedcountries’ institutional arrangements are based on the unified semi-autonomousrevenue body model. Under this model, revenue bodies indicated that they hadsignificant powers to interpret tax laws, allocate resources, design internal structuresand implement appropriate human resource management strategies, and wereresponsible for tax, customs, and non-tax revenue operations. It was also noted thatonly 3 countries have, to some extent, or are in the early stages of integrating thecollection of social security contributions with tax operations.Chapter II analyzes the organizational arrangements of revenue bodies. It is observedthat the majority of revenue bodies’ organizational structures are hybrid in nature,that is, they exhibit features attributable to two organizational models. In line withcurrent practice in tax administration, a number of revenue bodies have set up aheadquarters function to provide operational policy guidance to field delivery. Thereview also notes that all revenue bodies (except Botswana) have set up a largetaxpayers’ office (LTO) to administer all tax affairs of a small number of largeenterprises and individuals (in some countries).Chapter III provides information on practices commonly used by revenue bodies toprepare and publish business/strategic plans and performance reports. The chapternotes that all revenue bodies develop and disseminate 3 to 5-year business/corporateplans using established planning frameworks. A review of selected corporate/businessplans also indicates that the mission statements, visions and objectives of revenuebodies are well articulated and a number of actions identified for each goal orobjective. It is also observed that strategic planning and performance managementsystems vary across revenue bodies—in terms of scope, content and application.Chapter IV examines information on resource allocation. It observes that themajority of revenue bodies are funded through parliamentary appropriations,meaning that they develop budget proposals and bid for funding just like any othergovernment department/agency. Unique practices are noted: revenue bodies that aremandated to deduct and retain a portion of revenue collection; and countries thatprovide their revenue body with a performance bonus (a percentage of thecollections). It is observed that cost of collection figures vary widely in the region (1-4%) while salary and related expenditures account for the largest portion (60-80%) ofthe budget. Also, in most of the surveyed countries, investment in informationtechnology (IT) accounts for less than 2% of total administrative expenditure.1Benin, Ethiopia, Burundi, Botswana, Ghana, Kenya, Malawi, Mauritius, Rwanda, Senegal, Sierra Leone, South Africa,Tanzania, Uganda, and Zambia. The term revenue body is used in this document to comprise both independentrevenue administration entities and those set up within the ministry of finance.6
Page 1 and 2: INTERNATIONALTAXDIALOGUE2010Revenue
Page 3 and 4: Table 12: Total cost of collection
Page 5: PCCAPAYEPITPSVRAGBRRARTSASACUSARSSS
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 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
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Table 15: Revenue collection data f
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Domestic tax return filing, assessm
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A. Taxpayer registration and design
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VAT• All the surveyed countries h
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C. Taxation of small and micro-busi
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D. Use of modern electronic applica
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Table 18: PIT filing, assessment an
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CountryHow is the final annual PIT
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Table 20: VAT filing, assessment an
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CountryTable 21: Taxation of small
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CountryBasis used todeterminetaxMal
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Use of electronic application in ta
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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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