tax administration diagnostic assessment too l poa 6: accurate reporting in declarations
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Tax Administration Diagnostic Assessment Tool
POA 6: ACCURATE REPORTING IN DECLARATIONS
Desired Outcome of POA 6
Taxpayers report complete and accurate information in their tax declarations.
• Tax systems rely heavily on taxpayers filing complete and accurate declarations.
• Tax administrations need to regularly monitor the revenue losses from evasion, avoidance and other cases of inaccurate reporting.
• For non-business taxpayers, withholding tax at source and systematic use of third party information ensures a high level of compliance.
• For business taxpayers, the tax administration needs to take a range of verification actions to improve compliance including audit, intelligence, third party information cross-matching.
• These measures need to be supplemented with proactive initiatives and cooperative compliance.
POA 6: Good Practice in Ensuring Accuracy of Reporting
Good Practice in Ensuring
Accuracy of Reporting
Well designed and managed tax audit
program – both corrective and
deterrent actions Well functioning taxpayer
assistance program (POA 3)
Pursuing high compliance risk cases effectively
(POA2)
Imposing appropriate
penalties/fines for misreporting
Intelligence gathering to
identify emerging compliance risks
Systemic cross-checking of third party information
Issuing binding rulings to provide
taxpayers with certainty on how to apply tax laws
Undertaking cooperative compliance
approaches to address risks of inaccurate
Monitoring the level of inaccurate
reporting through standard methods of
tax gap analysis
Performance Indicators: P6 - Ensuring Accuracy of Reporting
Dimensions
High Level Indicators
P6-16: Scope of verification actions to detect/deter inaccurate reporting
M2
Nature and scope of tax
audit program to detect and
deter inaccurate reporting
Extent of large-scale automated cross-checking
to verify information
reported in tax declarations
P6-17: Extent of proactive initiatives to encourage accurate
reportingM1
Nature and scope of
cooperative compliance and other proactive
initiatives undertaken to
encourage accurate reporting
P6-18: Monitoring the extent of inaccurate
reporting M1
Soundness of the method(s)
used to monitor the extent of inaccurate reporting
Scoring P6-16-1: Nature and Scope of Tax Audit Program
A
Audit program covers all core
taxes
Covers key taxpayer segments weighted towards
large tax payers and high risk
sectors
Selects audit cases centrally based on
assessed risks
Audit program uses a range of audit
types and methodologies
(direct and indirect methods)
Routinely evaluates the impact of audits on level of taxpayer
compliance
Scoring P6-16-1: Nature and Scope of Tax Audit Program
B
Audit program covers ALL core
taxes
Covers key taxpayer segments
weighted towards large taxpayers
Selects audit cases centrally based on
assessed risks
Audit program uses a range of audit
types and methodologies
(direct and indirect methods)
Routinely evaluates the impact of audits on level of taxpayer
compliance
Scoring P6-16-1: Nature and Scope of Tax Audit Program
C
Audit program covers ALL core
taxes
Covers key taxpayer segments
Selects audit cases based on assessed
risks but in a decentralized
manner
Audit program uses a range of audit types but
not indirect methods)
Routinely evaluates the impact of audits on level of taxpayer
compliance
Scoring P6-16-2: Extent of Large-scale Automated Cross-checking to Verify Information on Returns
A
For income taxes (PIT and CIT) there is
automated cross-checking with
information from bank/financial
institutions
Automated cross-checking with
salary information from employers
Automated cross checking with
VAT declarations
Automated cross-checking with more than two
government agencies – e.g., customs, public procurement,
registrar of companies, registrar of property, anti
money laundering agency, etc.
Automated cross-checking with
stock market and shareholders
registries
Automated cross- checking
with social security agency
Automated cross-checking
with online vendors
Scoring P6-16-2: Extent of Large-scale Automated Cross-checking to Verify Information on Returns
B
For income taxes (PIT and CIT) there is automated
cross-checking with information from
bank/financial institutions
Automated cross-checking with
salary information from employers
Automated cross checking with
VAT declarations
Automated cross-checking with more than two
government agencies – e.g., customs, public procurement,
registrar of companies, registrar of property, anti
money laundering agency, etc.
Automated cross-checking with
stock market and shareholders
registries
Automated cross- checking
with social security agency
Automated cross-checking
with online vendors
Scoring P6-16-2: Extent of Large-scale Automated Cross-checking to Verify Information on Returns
C
For income taxes (PIT and CIT) there is automated
cross-checking with information from
bank/financial institutions
Automated cross-checking with
salary information from employers
Automated cross checking with
VAT declarations
Automated cross-checking with more than two
government agencies – e.g., customs, public procurement,
registrar of companies, registrar of property, anti
money laundering agency, etc.
Automated cross-checking with
stock market and shareholders
registries
Automated cross- checking
with social security agency
Automated cross-checking
with online vendors
Scoring P6-17: Nature and Scope of Proactive Initiatives to Encourage Accurate Reporting
A
A system of public binding
rulings is in place
A system of private binding
rulings is in place
Cooperative compliance
arrangements or horizontal monitoring, e.g., advance pricing
agreements, are entered with qualified
taxpayers
Scoring P6-17: Nature and Scope of Proactive Initiatives to Encourage Accurate Reporting
B
A system of public binding
rulings is in place
A system of private binding
rulings is in place
Cooperative compliance
arrangements or horizontal monitoring, e.g., advance pricing
agreements, are entered with qualified
taxpayers
Scoring P6-17: Nature and Scope of Proactive Initiatives to Encourage Accurate Reporting
CA system of
public binding rulings is in
place
A system of private binding
rulings is in place
Cooperative compliance
arrangements or horizontal monitoring,
e.g., advance pricing
agreements, are entered with
qualified taxpayers
Scoring P6-18: Soundness of Methods Used for Monitoring the Extent of Inaccurate Reporting
A
Methodology for monitoring
inaccurate reporting
covers VAT and at least one
other core tax
Methodology is applied at least
every TWO years
Results independently
reviewed, subject to
credibility tests, and made
public
Results are used in designing tax administration
interventions to improve
accuracy of reporting
Scoring P6-18: Soundness of Methods Used for Monitoring the Extent of Inaccurate Reporting
B
Methodology for monitoring
inaccurate reporting
covers at least VAT
Methodology is applied at least
every FOUR years
Results independently
reviewed, subject to
credibility tests, and made
public
Results are used in designing tax administration
interventions to improve
accuracy of reporting
Scoring P6-18: Soundness of Methods Used for Monitoring the Extent of Inaccurate Reporting
C
Methodology for monitoring
inaccurate reporting
covers at least VAT
Methodology is applied at least every FIVE years
Results independently
reviewed, subject to
credibility tests, and made
public
Results are used in designing tax administration
interventions to improve
accuracy of reporting
Table 20 of the Field
Guide
Checklist of Questions and Evidence for POA 6
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