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

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A. Enforcement powers of revenue bodiesIntroductionThere is anecdotal evidence that tax arrears are a growing problem in most SSAcountries. Yet, more often than not, revenue bodies seem helpless in dealing with thisproblem. The survey sought to review powers available to revenue authority to enforcepayment of tax, gather information and impose penalties and interest.Survey resultsDebt management (Table 25)• All the surveyed revenue bodies indicated they have sufficient powers toenforce payment of tax, including the powers to:(1) engage the taxpayers and agree on a reasonable payment schedule;(2) use tax clearance certificates to bar debtors from undertaking businessactivities with government agencies;(3) place a lien over debtors’ assets;(4) collect the debt from third parties that are doing business with the debtor;and(5) seize debtors’ assets.• About half of the revenue bodies surveyed have powers to publish names of taxdefaulters, initiate bankruptcy and/or asset liquidation proceedings to recovertax arrears, and restrict defaulting taxpayers from traveling overseas (especiallynon-resident debtors).• Four revenue bodies have the powers to deny debtors access to certaingovernment services.Information gathering (Tables 26 and 27)• The extent of powers given to revenue officials to enter and search businesspremise and taxpayer’s dwellings without a court warrant varies acrosscountries—only half of surveyed revenue bodies reported having such powers.The other half have to apply for a search warrant from the courts or otherrelevant government departments.• In a few countries, revenue officials must be accompanied by a designatedindependent official (such as a police official) when conducting a search. Theserestrictions are meant to ensure taxpayers’ rights and privacy is safeguarded inthe course of conducting tax investigations at taxpayers’ premises anddwellings.• All revenue bodies surveyed have sufficient powers to obtain information fromthe taxpayer and third parties for the purpose of executing tax administration81
functions. These powers are also common in a majority of revenue bodies indeveloped countries and countries in transitions (OECD, 2009). 114• Third party information from informers can be useful in tax administration andsome revenue bodies have designed procedures to receive, process anddisseminate this information. In addition, 9 countries reported they havepowers to provide incentives/rewards to informers to encourage provision ofcredible tax information.Penalties and interest (Tables 28, 29 and 30)• Almost all revenue bodies impose both interest charges and administrativepenalties on non-filers, late filing, late payment of taxes, and incorrectdeclaration of tax liabilities across PIT, CIT and VAT.• The design of administrative penalties is based on a combination of both fixedand ad valorem rates in some countries.• Interest and penalty regimes differ for the same offence across tax-type andspecifically for CIT and PIT on one hand and VAT on the other. 115Key observationsEffective utilization of enforcement powers available to revenue bodies can go a longway in addressing the revenue arrears and evasion challenges they face. The surveyindicates that all countries have sufficient powers to enter a business premises and/ortaxpayers dwelling, seize documents, gather information from third parties such asfinancial institutions, and generally enforce payment of tax. The survey also indicatesthat all countries have penalty regimes that prescribe sanctions that apply to noncomplianttaxpayers. 116 However, interest and penalties are not uniformly appliedacross taxes. 117114 However, in Zambia, the recent Banking and Financial Services Act restricts Zambia Revenue Authority’s access tothird party information from commercial banks and other financial institutions. Tax officials have to obtain high levelcourt warrants to access such third party information and this is usually granted in serious investigations of tax fraudand other criminal transactions. It is important that third party information from commercial banks is easily accessiblefor tax officials to enable them to enforce tax laws effectively.115 In Zambia for instance, penalties are more punitive under the VAT than PIT and CIT. Consequently, the penaltyregime is currently being reviewed and harmonized as part of the on-going modernization.116 Overall, the fundamental features of an effective penalty regime are that they should be sufficiently punitive to deternon-compliance and uniform for similar offences across all taxes. The penalty regime should also be perceived to befair and commensurate with the tax offence. In addition, the penalty regime should be progressive, providing for higherpenalties for gross omissions and repeat offenders. These issues were not fully accessed due to the poor nature ofavailable data.117 This is typically addressed by undertaking a comprehensive review of interest and penalty regimes, preferably aspart of a larger harmonization of administrative procedures exercise—enactment of a TPC.82
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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
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Institutional arrangements for reve
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• All unified semi-autonomous rev
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B. Scope of revenue bodies’ respo
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C. Relative autonomy of revenue bod
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Survey results (Table 3)• All rev
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Key observationsRevenue administrat
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You are entitled to expect SARS:Box
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Box 4: An example of a codified set
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Table 2: Tax and non-tax revenues a
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Table 4: Decision making structures
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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 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: Legal and administrative powers of
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
Page 115 and 116: GRAMissionVisionValuesTo supervise
Page 117 and 118: Source: ECRA• Cross cutting issue
Page 119 and 120: MalawiType of taxRevenue collected
Page 121 and 122: GhanaTax categoryRevenue collection
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