1. Introduction
Over numerous editions, a recurring theme of the OECD’s Tax Administration Series (TAS) has been the way tax administrations have evolved to respond to the relentlessly changing environment in which they operate. This 2023 edition is no different, and provides further insight into how tax administrations are:
Adapting new working practices introduced during the pandemic for the post pandemic world;
Investing in their staff as part of their wider drive to digital transformation;
Transforming their operating models to deliver new services;
Becoming more collaborative and integrated with wider government;
Exploiting the opportunities that enhanced data sets bring to provide new services to taxpayers and address compliance issues; and
Using advanced technology to drive efficiencies and improve taxpayer compliance.
The resilience and adaptability of tax administrations that allows them to adapt successfully to these changes have been facilitated and enabled by the wider technological changes taking place across the economy, including the expansion of social media, mobile platforms, cloud computing, big data technologies and advanced analytics techniques. These technologies helped tax administrations respond effectively to the COVID-19 pandemic, and are expected to have an ongoing impact on the operating models of tax administrations.
These impacts can be characterised by a more system-wide compliance management approach in which tax administrations try to closely engage with the evolving natural systems that taxpayers use to manage their business, undertake transactions and communicate in order to reduce errors, minimise burdens and increasingly build-in tax compliance.
This is starting to be reflected in the data collected through the 2022 version of the International Survey on Revenue Administration (ISORA). In particular, many tax administrations are making greater use of machine learning and artificial intelligence to deliver new services to taxpayers and ‘embed’ tax administration processes, traditionally carried out within the tax administration’s own systems, into the services that third parties, such as software suppliers, provide to taxpayers. Partnerships and collaborations in this way can allow tax compliance to be increasingly moved upstream, closer to taxable transactions, helping to build in compliance and reduce burdens.
Alongside the ISORA survey, the tax administrations covered in the TAS were also invited to provide examples of innovative practices that they are undertaking to help achieve their objectives. They have provided a rich source of over 100 examples, covering a wide range of topics. While these examples do not form a basis for comparison across tax administrations in the same way as the ISORA data points can, they do add more colour to the data, and tell a forward-looking story of the strategic direction of travel of tax administration.
Furthermore, this edition of the TAS also uses information from the Inventory of Tax Technology Initiatives (ITTI) (OECD et al., 2023[1]). ITTI collects data on the digital transformation and digitalisation work of tax administrations from across the globe, and this rich source of data can provide further insight into the developments taking place in tax administration, facilitating mutual learning and collaboration.
Something that does remain constant however is the core objective of a tax administration, namely the timely and accurate collection of tax revenues to fund public services. Chapter 2 explores this topic in more detail, and provides statistics on the range and value of taxes that administrations are responsible for.
Central to achieving this objective is the work of tax administrations to ensure that all relevant taxpayers are registered and can be identified, as necessary, both quickly and securely. Chapter 3 sets out the work of tax administrations in this field, and tax administrations are increasingly involved in whole of government plans on digital identity.
Chapter 4 looks at the tax assessment function, which includes all activities related to processing tax returns and payments. This chapter examines the use of e-channels for filing and paying, and outlines administrations’ efforts to provide pre-filled returns, and the levels of on-time return filing and payment.
Chapter 5 highlights how tax administrations are using sophisticated technological approaches to encourage ‘self-service’ by taxpayers. This is part of a more fundamental change whereby tax administration becomes a seamless process, with non-compliance and administrative burdens increasingly “designed out”. Chapter 6 explores this further and picks out how compliance approaches are changing, with the use of data and new technology tools to identify and take targeted enforcement action against those who fail to meet their obligations.
Chapter 7 explores how tax administrations manage the collection of outstanding debt, and examines the features of a modern tax debt collection function. These functions are essential to maintaining high levels of voluntary compliance and citizens’ confidence in the overall tax system. This chapter also provides examples of approaches applied by administrations to minimise or even prevent debt being incurred.
However, inevitably, disputes between taxpayers and tax administrations do arise, and Chapter 8 considers those processes that safeguard taxpayer rights and ensure appropriate checks and balances exist on the exercising of tax powers by administrations.
Underpinning all of this work are the resources that are available to tax administrations. Chapter 9 provides information on the resources that tax administrations have at their disposal, and picks out a number of trends that can be observed in the data over time.
Finally, Chapter 10 of this edition of the TAS contains a special feature which explores the trends in digital transformation journeys that are being undertaken by tax administrations.
References
[1] OECD et al. (2023), Inventory of Tax Technology Initiatives, https://www.oecd.org/tax/forum-on-tax-administration/tax-technology-tools-and-digital-solutions/ (accessed on 22 May 2023).