enhancing and modernising the cash management and tax ... · pdf filemanagement and tax...

Enhancing and modernising the cash management and tax collection

processes and policies of government

Presenter: Joe Cosma | EY | 08 March 2016

Agenda

1

2

3

4

5

Setting the context for modernisation

Cash Management modernisation

Tax (Revenue) Collection modernisation

Conclusion

Select case studies

6 Appendix

Setting the context for modernisation

Macro-level challenges

* General government net borrowing (difference of Govt. revenue and expenditure)

Vulnerability to external factors/ events

•  Decline in commodity prices, slowdown of Chinese economy, and tightening global financial conditions are weighing on Africa’s growth.

•  Weak fundamentals, primarily over-reliance on natural endowments, combined with strong U.S. dollar, have kept currencies under pressure.

Declining growth •  Africa’s economic growth rate decreased from 5% to 3.8% during 2011-15, lowest since 2000.

Rising government deficit and debt levels

•  Government expenditure exceeds its earnings, with deficit* as a percentage of GDP nearly quadrupling from 1.1% to 4.2% during 2011-15.

•  Deficits have forced governments to borrow, resulting in an increase in gross debt (as % of GDP) from 27.4% to 34.3% during 2011-15.

Widening infrastructure gap

•  Region faces infrastructure financing gap of nearly US$50b annually, with electricity as the greatest challenge. Only 42% Africans have access to electricity, significantly lower than the developing nations (73%).

Governments in the region need to strengthen fiscal prudence measures to limit decline in revenue and attain long-term growth

Micro-level challenges

There is a need to improve coordination between fiscal and monetary policy to address these challenges

Treasury management (TSA) vs political

imperatives

Revenue leakages

Weak policy & institutional framework Competing

priorities Effective use of

IFMIS

Change management required

EY end-to-end PFM solution framework

Receipt of proposed budget; comprehensiveness of coverage and detail; legislative priorities; analytical support and capacity; deliberations, testimony and hearing; public comment and open review; amendment, adoption and

administrative discretion; execution reporting; midyear adjustment; audit and evaluation feedback

Government

Ministry of Finance/ Treasury

Ministries and agencies

Supreme audit institution

Planning

Long-term development

planning

Budget transmission

format/timetable

Long-term fiscal position

Debt management

Forecasting fiscal risk

analysis and rules

Capital budgeting

Operational budgeting

Program-based budgeting Performance-based budgeting

Public-private partnership

Revenue collection

Treasury and debt management

Effective tax administration

Program-based budgeting Performance-based

budgeting Public-private partnership

Cash and liquidity management

Cash and commitments control Financial risk management

Debt management

Single treasury account

Execution and accounting

Reporting Auditing Evaluation

Consolidated statements

Statistical reporting

Financial reporting

Performance reporting

GFSM 2001/ESA 2010 Public

reporting Independen

t audit

Internal audit and financial control

Financial audit

Performance audit

International Standards for Supreme Audit

Institutions

Internationally accepted accounting standards based on accrual (IPSAS)

Public expenditure and financial accountability framework (PEFA)

Analytical capacity

Centralized government financial management information systems

Budgeting

Medium-term planning (MTMF, MTFF, MTEF)

Effective resource management

Performance management Execution reporting

Accounting Efficient service delivery

Effective administration of other revenues

Current year

budget review

Budget development/preparation/ planning Execution Post-execution audit and

evaluation Legislative

review/ approval*

Management/

operations evaluation

Program evaluation

Objective and meaning of Cash Management

To have the right amount of funds in the right place, at the right time, to meet obligations in the most effective way

Cash Management: the basics

Adequate funds to cover Government liabilities and minimise financing costs

Efficient transfer mechanism between Revenue Authority and Treasury

Minimising idle cash in MDAs by centralising cash holdings

Efficient execution of budget

Cash surplus v/s investing (based on risks and costs involved)

Better planning and predictive analytics

Cash Management: regulatory framework

PFM Act must provide for the following:

Legislative and institutional framework

Clarity on expenditure and

revenue accounts

Extent of coverage of

MDAs, including local govts.

Guidelines which are

supported by IFMIS

Electronic data exchange between

Treasury and accredited banks*

Processes and timelines for

budget management

Roles, responsibilities and procedures for Cash Mgmt.

MoU with the central bank

and commercial banks

*for both deposits and payments

TSAs can be grouped into three broad categories

Cash Management: Treasury Single Account (TSA)

I. TSA and centralised accounting controls

II. Passive TSA consisting of one central account

III. Passive TSA including several sub accounts

Most African countries have adopted the first category of TSA

Cash Management: TSA

Centralized and decentralized treasury systems

CB pays govt. creditors directly thru transfer to

their bank accounts Treasury

HQ

Sub-Treasury

office

Treasury system

Spending units

Spending unit sends payment request to

Treasury office

Central Bank (CB)

TSA

Commercial bank HQ

Treasury checks for controls through the

systems and instructs CB to pay

CB informs Treasury of daily

receipts and payments

Commercial bank transfers

govt. receipts to TSA

Commercial bank

branch

Govt. creditor Tax payer

Tax payers deposit tax at designated commercial bank branch for deposit into TSA

Centralized Model Zero Balance Accounts (ZBA) Model

Treasury HQ

Spending unit

Treasury system Spending units are directly connected to the system and process transactions requests on the system

Central Bank (CB)

TSA

Commercial bank HQ

(ZBA)

Spending unit processes payment request using the system. The system checks for controls and then instructs commercial bank to pay from ZBA.

CB informs Treasury of daily

receipts and payments

Commercial bank recoups

expenses and transfers

deposits to TSA

Commercial bank

branch (ZBA)

Govt. creditor Tax payer

Tax payers deposit tax at commercial bank

Cash Management: TSA

Treasury business architecture

Forecasting system

Ban

k sy

stem

s

Market data systems

Confirm

ation system

s

Risk management system Accounting system Reporting system

Finance

Interest rate risk

FX risk

Credit risk

Commodity

Liquidity management

Cash management

Treasury control & reporting

Back-office

Treasury accounting

Treasury Management System

Cash Management: issues and best practices

Underdeveloped/ underutilized banking systems

Limited tracking of governments daily cash balances, resulting in idle funds

Unnecessary borrowing costs

Absence of adequate planning mechanisms

Key challenges faced by African governments

Cash Management systems of African governments are highly fragmented, with lack of integration, low ICT usage and poor coordination between government agencies. The governments could

address these challenges by implementing key learnings from other countries.

Best practices

Setting up a TSA to improve funds management

Regular forecast of cash requirements and prudent

management of excess cash

Dedicated cash management division

Efficient payment systems and mechanisms


Solu

tion

Ben

efits

•  Vast number of bank accounts operated by multiple agencies across the country resulted in inefficient funds management, including existence of significant unremunerated balances.

•  Hybrid TSA structure was implemented, with ‘top’ account established in the central bank and several zero-balance accounts set up in commercial banks. Establishing a TSA included:

•  Consolidating government cash balances into a single account

•  Setting up commercial bank accounts

•  Recording receipts on a daily basis

•  Receiving remunerations for surplus cash

•  Implementation of TSA and the decision to remunerate central bank balances generated US$200-400m for the government annually.

Case study 1: Indonesia

Issu

es


Solu

tion

Ben

efits

•  Government agencies were operating multiple accounts for collection and spending, despite a law mandating transfer of all funds into a consolidated fund. This resulted in corruption and inefficient management of public finances.

•  Pilot scheme involving 217 ministries was introduced in 2012, wherein the central bank opened a

consolidated revenue account to receive all government revenue and effect payments.

•  Ministries were directed to maintain a zero balance at day end and transfer all funds to the consolidated account.

•  All MDAs* were directed by the President to open and operate a TSA in the central bank (2015).

•  Adoption of electronic payment as part of the TSA helped the federal government save about US$2.5b in 2014.

Case study 2: Nigeria

*MDA: Ministries, departments and agencies

Issu

es

Capacity to administer the system

Modern revenue administration system on an IT platform linked to Treasury and MDAs

Tax Collection: a successful model

A successful tax collection system combines:

Sound revenue collection systems, taking into account the current scenario and potential needs of the future

Strong link should exist between the Treasury and

Revenue Authorities for both tax policy and revenue

administration

Tax Collection: a successful model

Modernisation and success is measured by:

Clear tax administration processes and procedures

Robust IT platform and infrastructure

Use of electronic services in tax administration: efficient e-filing

and payments system

Legislated administrative frameworks for tax

administration

South African Revenue Authority has become a model of modernised Tax Collection entity

Tax Collection: issues and best practices

Presence of large informal economy

Limited tax base, including inefficient taxation of extractive industries

Problems of tax evasion, including transfer pricing by multi-nationals

Administrative capacity constraints

Key challenges faced by African governments

SSA struggles with poor tax collections, indicated by low tax revenue as a percentage of GDP (13.7%) in comparison to the OECD average (33.8%). Governments in the region could adopt

certain best practices to address its challenges and strengthen tax mobilization.

Automation of tax collection processes

Improving processes to

increase compliance

Strengthening of transfer

pricing framework

Establishment of dedicated units

for segments like SMEs

Introduction of tax amnesty

programs

Best practices

Automation of tax collection processes So

lutio

n B

enef

its

•  Mexico generates majority of its income from consumption taxes such as VAT. But using paper-based invoicing was resulting in fraud and tax evasion by many companies.

•  In 2014, Mexico automated its tax collection processes through mandated e-invoicing. It now requires all accounts payable and receivable transactions to use e-invoicing.

•  Organizations generating more than MXN250,000 annually (~US$24,000 ) must comply with the requisite

fiscal legislation* for all outgoing customer invoices, validate all incoming supplier XML, and sign all payroll slips.

•  Mexico increased tax collections by 34% in the first wave of its e-invoicing rollout, and generated a total of US$5.1t through auditing, during the first half of 2014.

Case study 1: Mexico

*CFDI - Comprobante Fiscal Digital

Issu

es

Automation of tax collection processes So

lutio

n B

enef

its

•  Tanzania faces multiple challenges such as high rates of tax evasion and avoidance, complex procedures and criteria for tax rulings and tax decisions, high costs of collecting taxes.

•  The country has been implementing various programs to improve tax collections and compliance, such as a new

electronic tax collection model called “Local Government Collection Information System

(LGRCIS) or “i-Tax”, electronic tax register (ETR) machines, an electronic revenue collection system called “Max – Malipo” and Electronic Fiscal Devices (EFDs).

•  Since implementation of Max-Malipo, tax payer compliance has increased by 27% a month.

•  Tanzania Revenue Authority reported a 40% increase in its VAT collection in 2011-12, with the implementation of EFDs.

Case study 2: Tanzania

Issu

es

Conclusion

Conclusion Comprehensive TSA encompassing all cash resources (budgetary and extra-budgetary)

Essential requirements of a modern treasury

system include:

An efficient Govt. payment system

A linked, treasury-managed IFMIS

Cash flow forecasting system, with ability to project short-term cash inflows and outflows requirements

Comprehensive analytical capability

Active cash management

Conclusion

Need for a comprehensive policy framework

Robust modern IT system

Capacity and skills development

Change management in MDAs

Political override

I

Do not underestimate these factors

II

III

IV

V

Select case studies – Cash Management

Dedicated cash management division So

lutio

n B

enef

its

•  Responsibility for both, setting short-term interest rates and managing government finances, vested with the

Bank of England (BoE), highlighting a need for clearer accountability for policy functions and allocation of responsibilities.

•  To clearly define responsibilities and establish accountability, the Debt Management Office (DMO) took over the cash management responsibility from BoE in 1998.

•  A stand-alone treasury function is operated by the DMO to manage outstanding short-term assets and liabilities, while simultaneously working to minimize day-to-day net cash flows.

•  DMO helps to neutralize changes in the aggregate cash position of the Exchequer across the Government’s accounts at the BoE.

Case study 1: United Kingdom

Issu

es

Dedicated cash management division So

lutio

n B

enef

its

•  Before 2004, Indonesia had a single Directorate for Budgetary Affairs, under the Ministry of Finance (MoF) for both budget and cash management.

•  Indonesia’s MoF was reorganized in September 2004 by splitting the erstwhile Directorate for Budgetary Affairs

into the Directorate General for State Treasury (DG Treasury), and the Directorate for Budgetary Affairs and Fiscal Balance.

•  Additionally, DG Debt Management was established in 2007, for the management of foreign and domestic loans.

•  This restructuring helped in creating a check and balance system, as the planner and executor of the state budget was not kept in the same directorate.

Case study 2: Indonesia

Issu

es

Regular forecast of cash requirements and prudent management of idle cash

Solu

tion

Ben

efits

•  For 11 consecutive years, starting from 1997-98, the government generated large fiscal surplus that could have

created a liquidity shortage for private sector in case of no action by the Central Bank.

•  A portion of the fiscal surplus (present with the treasury) were invested in a cost-effective manner through

auctions with private sector financial institutions.

•  Since February 1999, when Canada's electronic funds transfer system, the Large Value Transfer System, was implemented, the cash balances have been allocated to bidders twice daily administered by the Bank of Canada.

•  During 2007-09, with low yield on T-bills, prudent management of cash by the government resulted in

a gain of carrying cash of US$27.9m.

Case study 1: Canada

Issu

es

Regular forecast of cash requirements and prudent management of idle cash

Solu

tion

Ben

efits

•  In 2005, Japanese government embarked on a series of measures to reduce its cash balance.

•  Reduction of timing mismatch between cash receipts and disbursements by:

•  Matching the dates of the payments to SNs for ordinary tax-sharing arrangement and the receipts of tax and pension premium

•  Matching the payment dates of grants to national universities to the receipts of tax and pension premium

•  Matching issuance dates of two-year JGBs are matched to pension benefits payment dates

•  Actively using two-month finance bills

•  Compressed the cash balance from US$77.2b (2004) to US$39.6b (2006).

•  Assuming the balance would be otherwise financed by long-term bonds, these measures incurred

cost savings of US$600m.

Case study 2: Japan

Issu

es


Solu

tion

Ben

efits

•  High levels of cash dealing and inefficiencies in consolidating receipts across the nation resulted in delays in getting a snapshot of overall government finances.

•  Nigeria adopted Payments System Vision 2020 in 2007 and which was revamped in 2013. Key features include:

•  Implementation of Nigeria Uniform Bank Account Number

•  Deployment of real time gross payment system

•  Introduction of Cheque Truncation

•  Deployment of the scripless Securities Settlement System

•  As at August 2013, about 300 MDAs made salaries, pensions, suppliers and taxes payments directly into beneficiary accounts.

Case study 1: Nigeria

Issu

es


Solu

tion

Ben

efits

•  Mexico’s old payment systems were characterized by inefficiencies in dealing and delay in transfers.

•  Mexico has implemented multiple high value payment systems to facilitate government transactions and transfers. These include Account-Management System Banco de Mexico (SIAC), Deposit System, Administration and Settlement (DALI), Electronic Payment System Expanded Use (SPEUA) and Electronic Interbank Payment System (SPEI).

•  In October 2008, the central bank facilitated the connectivity between national treasury (TESOFE) and its real-time gross settlement system, SPEI.

•  By March 2012, the total number of Government-to-Business (G2B) and Government-to-Person

(G2P) payments processed through SPEI surpassed 8 million per month.

Case study 2: Mexico

Issu

es

Select case studies – Tax Collection

Improving processes to increase compliance

Solu

tion

Ben

efits

•  Taxpayer surveys indicated dissatisfaction among tax paying community due to time-consuming and unfair tax-related procedures.

•  Taxpayer Life Cycle project was instituted to reduce the number of visits to revenue authority (SII*) by people starting an activity, obtaining tax identification number, among others.

•  Maximum Waiting Time project was implemented which established a maximum 30-minute wait time in tax offices. SII was obligated to complete the documents and send them to taxpayer’s address, if this time limit was not met.

•  Total waiting time reduced from three days to less than one hour.

•  Surveys highlighted enhanced taxpayer satisfaction, thereby increasing tax compliance.

Case study 1: Chile

*SII - Internal Revenue Service

Issu

es

Improving processes to increase compliance

Solu

tion

Ben

efits

•  At the start of 2001, Russia’s rates of personal income taxation (PIT) were 12%, 20% and 30%, owing to which

taxpayer compliance was a problem. At the same time, the corporate tax rate was at 35%,

which was pushing businesses into the informal economy.

•  In 2001, Russia dramatically reduced its higher rates of PIT, establishing a single marginal rate at a low level of 13%.

•  Also, the corporate tax rates were reduced from 35% to 24%, and a simplified tax scheme was implemented which further lowered the rates for small businesses.

•  In 2002, revenue from the PIT increased by about 46% (about 26% in real terms) and during

2002-05, the tax revenue from corporates increased by an annual average of 14%. This new revenue was generated due to increased compliance.

Case study 2: Russia

Issu

es

Introduction of tax amnesty programs So

lutio

n B

enef

its

•  In 2013, approximately US$193b (BRL415b) of tax was evaded, accounting for roughly 13.4% of the GDP.

•  The country was also burdened with huge informal economy and a highly inefficient tax system.

•  Brazilian Tax Recovery Program* was launched to raise federal tax collection. It allowed defaulters to pay their dues to the federal government in instalments with reduced fines and penalties.

•  Estimated 30,000 companies participated in the 2013 program, including at least 75 financial institutions and 55 multinationals.

•  Latest round of REFIS program helped the government collect US$8.6b in back taxes in November 2013 alone.

Case study 1: Brazil

*REFIS - Rules for the Federal Tax Amnesty Program

Issu

es

Introduction of tax amnesty programs So

lutio

n B

enef

its

•  Portugal lost more than US$17b in tax revenue due to shadow economy, equivalent to 23% of country’s total tax income and 15.5% of government spending (2009).

•  ‘Exceptional and temporary’ regime was approved for the regularization of tax debts and amount owed by taxpayers (2013).

•  Program offered incentives such as waiver of penalty interest, administrative costs and a reduction in fine.

•  Similar amnesty programs called Regime Excepcional de Regularização Tributária (RERT I, II and III) were undertaken in 2005, 2011 and 2012.

•  The program helped to collect ~US$1.7b in government revenue, surpassing the initial target of US$0.9b in 2013.

Case study 2: Portugal

Issu

es

Strengthening of transfer pricing framework

Solu

tion

Ben

efits

•  Large number of MNCs in Vietnam have been reporting losses, despite expansion of operations, in order to

avoid paying taxes. In 2008, 50% of the firms in Ho Chi Minh City declared losses.

•  Tax audits and inspections became a focus area for government post 2010:

•  The 2012-15 National Action Plan on transfer pricing provided for covering 20% of the annual tax audits as transfer price audits.

•  A separate Office for Transfer Pricing Inspection was set up to support the tax department in information collection and inspection.

•  In 2014, tax agencies reduced losses of US$259.1m at inspected firms and identified tax

arrears of US$75.5b on account of showing incorrect losses.

Case study 1: Vietnam

Issu

es

Strengthening of transfer pricing framework

Solu

tion

Ben

efits

•  Many Portuguese MNCs made use of letterbox companies in Netherlands, to take advantage of its friendly tax regime for reducing tax liability.

•  Out of country’s 20 largest listed companies, 19 had letterbox companies in Netherlands in 2011.

•  ‘Transfer pricing legislation’ was enacted in December 2000 to check transfer of funds from the country.

•  Advance pricing agreements were introduced in 2008 to enable taxpayers to significantly reduce their transfer pricing risk.

•  Tax authorities increased transfer pricing audits.

•  Penalties were levied for failure to present transfer pricing documentation on time.

•  Enactment of regulations enabled strict implementation of arm’s length principal, which were hardly put into practice earlier due to lack of clarity and supporting regulations.

Case study 2: Portugal

Issu

es

Establishment of dedicated units for segments like SMEs

Solu

tion

Ben

efits

•  The vast number of SMEs and their undocumented, cash-based business transactions posed significant challenge to the tax administration.

•  Revenue Authority introduced the Block Management System (BMS) in 2005 to increase tax compliance within the SMEs .

•  The BMS is designed to manage tax affairs of individuals and SMEs by demarcating the areas in which they conduct business into sizeable and manageable blocks.

•  Each block is mandated to operate all the key tax administration functions of registering, assessing, collecting and accounting for revenue collected.

•  Between the financial year 2010-11 and 2012-13, the population of SME taxpayers grew from

372,600 to 493,714 and the revenue collected during these two periods increased from US

$500m to US$900m.

Case study 1: Tanzania

Issu

es

Establishment of dedicated units for segments like SMEs

Issu

es

Solu

tion

Ben

efits

•  The taxation structure in Africa is such that small taxpayers (80-90% of taxpayers), generate 5-10% tax revenue; less than 1% of large enterprises generate over 70% of tax revenue; and medium-sized enterprises (10-20% of taxpayers), generate 20-30% of tax revenue.

•  Starting 2004, the government introduced segmentation of tax operational offices, by creating:

•  A large taxpayer directorate (DGE) for the large enterprises

•  Seven medium-size taxpayer offices (MTOs)

•  A number of specialized offices for small businesses (with turnover below the VAT threshold)

•  The population of medium-size taxpayers witnessed a steep rise from 1,600 to 11,000 enterprises.

Case study 2: Cameroon

Appendix

Treasury systems

Core functional processes, Information flows, Transaction types and Systems modules

Budget mgmt. and fiscal reporting

Core functional processes and Information flows Transaction types System modules External agencies

Commitment mgmt.

Payment mgmt.

Receipt mgmt. Bank reconcl. Cash mgmt.

MoF loads approved budget by economic classifications apportioned over time

Line ministries specify detailed budget allotments for spending units

MoF enters budget release/ warrant data

MoF/ spending ministries enter authorized transfers, supplementary allocations

MoF/ line ministries monitor budget execution

Line ministries and spending units enter commitments

Line ministries and spending units enter payment requests related transactions

Treasury enters payment requests, reviews requests and releases payments

Treasury monitors receipts, performs bank reconciliation and cash management

Budget apportionments

Budget allotments

Warrants/ releases

Transfers/ supplementary allocation

Fiscal/ budget execution reports

Direct commitment Purchase order contracts

Goods receipts invoices Payroll/ pension

transactions Direct payments

Receipts and bank reconciliation info., bank

balances

Fiscal reporting

Budget management

General ledger

Treasury systems

Procurement

Commitment

Payroll/ Pensions Payments

mgmt.

Receipts mgmt., bank reconciliation, cash

management

Vendors Employees Pensioners

TSA Bank

Tax Payers

Donors

Tax Dept.

Payments

Loans Grant Receipts

Information on tax receipts, bank balances

Taxes and Duties

EY end-to-end PFM solution framework

Receipt of proposed budget; comprehensiveness of coverage and detail; legislative priorities; analytical support and capacity; deliberations, testimony and hearing; public comment and open review; amendment, adoption and

administrative discretion; execution reporting; midyear adjustment; audit and evaluation feedback

Government

Ministry of Finance/ Treasury

Ministries and agencies

Supreme audit institution

Planning

Long-term development

planning

Budget transmission

format/timetable

Long-term fiscal position

Debt management

Forecasting fiscal risk

analysis and rules

Capital budgeting

Operational budgeting

Program-based budgeting Performance-based budgeting

Public-private partnership

Revenue collection

Treasury and debt management

Effective tax administration

Program-based budgeting Performance-based

budgeting Public-private partnership

Cash and liquidity management

Cash and commitments control Financial risk management

Debt management

Single treasury account

Execution and accounting

Reporting Auditing Evaluation

Consolidated statements

Statistical reporting

Financial reporting

Performance reporting

GFSM 2001/ESA 2010 Public

reporting Independen

t audit

Internal audit and financial control

Financial audit

Performance audit

International Standards for Supreme Audit

Institutions

Internationally accepted accounting standards based on accrual (IPSAS)

Public expenditure and financial accountability framework (PEFA)

Analytical capacity

Centralized government financial management information systems

Budgeting

Medium-term planning (MTMF, MTFF, MTEF)

Effective resource management

Performance management Execution reporting

Accounting Efficient service delivery

Effective administration of other revenues

Current year

budget review

Budget development/preparation/ planning Execution Post-execution audit and

evaluation Legislative

review/ approval*

Management/

operations evaluation

Program evaluation

Sources

Sources (1/5) Setting the context for modernisation

Macro-level challenges •  IMF database •  Economic Brief: An Integrated Approach to Infrastructure Provision in Africa, African Development Bank, 2013 •  Africa’s Pulse, World Bank, 2015


Cash Management: issues and best practices

•  “Public Resource Mobilisation and Aid,” African Economic Outlook website, http://www.africaneconomicoutlook.org/en/theme/public-resource-mobilisation-and-aid/, accessed 25 February 2016.

•  Domestic Resource Mobilization across Africa: Trends, Challenges and Policy Options, AFDB, 2010 •  External financial flows and tax revenues for Africa, AFDB, 2015

Cash Management: TSA; Centralized and decentralized treasury systems and Treasury business architecture

•  EY PFM solution area 4: Treasury modernization and reform


Tax Collection: issues and best practices

•  “Public Resource Mobilisation and Aid,” African Economic Outlook website, http://www.africaneconomicoutlook.org/en/theme/public-resource-mobilisation-and-aid/, accessed 25 February 2016.

•  Domestic Resource Mobilization across Africa: Trends, Challenges and Policy Options, AFDB, 2010 •  External financial flows and tax revenues for Africa, AFDB, 2015

Sources (2/5) Select case studies - Cash Management modernisation

Setting up a TSA to improve funds management: Case study 1 (Indonesia)

•  Cash Management Reform in Indonesia, World Bank, 2014

Setting up a TSA to improve funds management: Case study 1 (Nigeria)

•  “FG saves N500bn through implementation of Single Treasury Account,” Vanguard website, http://www.vanguardngr.com/2015/01/fg-saves-n500bn-through-implementation-of-single-treasury-account/, accessed 22 February 2016.

•  “Implications of TSA on Banking sector of Nigeria and economy as a whole,” Naira project website, http://nairaproject.com/projects/1089.html, accessed 22 February 2016.

Dedicated cash management division: Case study 1 (UK) •  International Government Cash Management Practices, Storkey & Co, 2001

Dedicated cash management division: Case study 2 (Indonesia)

•  Cash Management Reform in Indonesia, World Bank, 2014

•  Indonesia Cash Management, Ministry of Finance of The Republic of Indonesia, 2013

Regular forecast of cash requirements and prudent management of idle cash: Case study 1 (Canada)

•  Debt Management Report, Canada Department of Finance, 2009 •  “Fiscal Surplus and Fiscal Deficit: Everything’s Quiet on the Monetary Front,” Library of Parliament website, http://www.lop.parl.gc.ca/

content/lop/ResearchPublications/2010-24-e.htm, accessed 23 February 2016. •  “Debt Management Report 2011–2012 - Part 1,” Canada Department of Finance website, http://www.fin.gc.ca/dtman/2011-2012/dmr-

rgd1201-eng.asp, accessed 23 February 2016.

Regular forecast of cash requirements and prudent management of idle cash: Case study 2 (Japan)

•  Cash Flow Forecasting and Cash Balance Management, World Bank, 2013

Sources (3/5) Select case studies - Cash Management modernisation

Efficient payment systems and mechanisms: Case study 1 (Nigeria)

•  “Benefits of PSV 2020 initiative, by CBN,” Ngr guardian news website, http://www.ngrguardiannews.com/2015/02/benefits-of-psv-2020-initiative-by-cbn/, accessed 24 February 2016.

•  Payments System Vision 2020, Central Bank of Nigeria, 2013

Efficient payment systems and mechanisms: Case study 2 (Mexico)

•  General Guidelines for the Development of Government Payment Programs, World Bank, 2012

•  Payment, clearing and settlement systems in Mexico, Committee on Payment and Settlement Systems, 2011

•  “Payment Systems,” Bank of Mexico website, http://www.banxico.org.mx/sistemas-de-pago/index.html, accessed 25 February 2016.

Select case studies - Tax (Revenue) Collection modernisation

Automation of tax collection processes: Case study 1 (Mexico)

•  “The Surprising Nations Leading E-Invoice Adoption,” Pymnts website, http://www.pymnts.com/in-depth/2015/the-surprising-nations-leading-e-invoice-adoption/, accessed 26 February 2016.

•  “Mexico CFDI & eContabilidad,” invoicewareint website, http://www.invoicewareint.com/learn/requirements/electronic-invoicing-country-regulations/mexico-cfdi-factura-electronica, accessed 26 February 2016.

•  “Business to Government Compliance: Latin America Turns to Automation for Tax Collection,” invoicewareint website, http://www.invoicewareint.com/blog/business-to-government-compliance-latin-america-turns-to-automation-for-tax-collection, accessed 26 February 2016.

Automation of tax collection processes: Case study 2 (Tanzania)

•  “Challenges Faced by Government in the Collection of Taxes,” Fortune of Africa website, http://fortuneofafrica.com/tanzania/challenges-faced-by-government-in-the-collection-of-taxes/, accessed 26 February 2016.

•  “Technology curbs tax evasion in Tanzania,” Techmoran website, http://techmoran.com/technology-curbs-tax-evasion-in-tanzania/, accessed 26 February 2016.

•  “Max - Malipo Increases Compliance Levels Among Tax Payers,” Corporate Digest website, http://www.corporate-digest.com/index.php/max---malipo-increases-compliance-levels-among-tax-payers, accessed 26 February 2016.

•  “State improves revenue collection system,” Daily News website, http://dailynews.co.tz/index.php/home-news/46232-state-improves-revenue-collection-system, accessed 26 February 2016.

•  “The fiscal devices improve the VAT tax collection,” Daisy Technology website, http://en.daisy.bg/the-fiscal-devices-improve-the-vat-tax-collection.html, accessed 26 February 2016.

Sources (4/5) Select case studies - Tax (Revenue) Collection modernisation

Improving processes to increase compliance: Case study 1 (Chile) •  Improving Tax Collection, J-Intersect, 2009

Improving processes to increase compliance: Case study 2 (Russia)

•  Paying Taxes: The global picture, World Bank, 2006 •  Russia’s ‘flat tax’, London School of Economics, 2005

Introduction of tax amnesty programs: Case study 1 (Brazil)

•  Tax for the common good: A study of tax and morality, Christian Aid, 2014 •  “Brazil: Rules For The Federal Tax Amnesty Program (“Refis Da Crise”) And Other Special Installment Plans,” Tozzini Freire news

website, http://www.tozzinifreire.com.br/en/news/brazil-rules-for-the-federal-tax-amnesty-program-refis-da-crise-and-other-special-installment-plans/, accessed 27 February 2016.

•  “Corporate Tax Review,” Tax news website, http://www.tax-news.com/features/Corporate_Tax_Review__571293.html, accessed 27 February 2016.

Introduction of tax amnesty programs: Case study 1 (Portugal)

•  “Portugal's "Exceptional" Tax Amnesty Surpasses Expectations,” Tax news website, http://www.tax-news.com/news/Portugals_Exceptional_Tax_Amnesty_Surpasses_Expectations____63251.html, accessed 27 February 2016.

•  “Portugal: New Exceptional And Temporary Regularization Regime Of Tax And Social Security,” Mondaq website, http://www.mondaq.com/x/272374/tax+authorities/New+Exceptional+And+Temporary+Regularization+Regime+Of+Tax+And, accessed 27 February 2016.

•  “The New Special Regime for Tax Regularisation (RERT III),” World Services Group website, http://www.worldservicesgroup.com/publications.asp?action=article&artid=4312, accessed 27 February 2016.

•  “Tax evasion in Portugal is around 12.3 billion euros and would pay 63.1% Health,” Publico website, http://www.publico.pt/economia/noticia/evasao-fiscal-em-portugal-ronda-os-123-mil-milhoes-de-euros-e-pagaria-631-da-saude-1576435, accessed 27 February 2016.

Strengthening of transfer pricing framework: Case study 1 (Vietnam)

•  “Transfer pricing office opens in bid to mitigate tax fraud,” Vietnam news website, http://vietnamnews.vn/economy/277739/transfer-pricing-office-opens-in-bid-to-mitigate-tax-fraud.html, accessed 28 February 2016.

•  “Firms evade taxes with transfer pricing ruse,” Vietnam news website, http://vietnamnews.vn/Economy/234040/firms-evade-taxes-with-transfer-pricing-ruse.html, accessed 28 February 2016.

•  “Tax office probes transfer price deceptions,” Vietnam news website, http://vietnamnews.vn/print/213212/tax-office-probes-transfer-price-deceptions.htm, accessed 28 February 2016.

•  Transfer pricing and developing countries: Vietnam, EU, 2011

Sources (5/5) Select case studies - Tax (Revenue) Collection modernisation

Strengthening of transfer pricing framework: Case study 1 (Portugal)

•  “Portuguese ‘letterbox companies’ in the Netherlands,” EU website, http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+WQ+E-2012-000499+0+DOC+XML+V0//EN, accessed 28 February 2016.

•  “Avoiding Tax in Times of Austerity,” SOMO website, http://www.somo.nl/publications-en/Publication_3987, accessed 28 February 2016.

Establishment of dedicated units for segments like SMEs: Case study 1 (Tanzania)

•  Taxation Of SMEs in Africa: Good Practices and Lessons Learned, African Tax Administration Forum, 2014

Establishment of dedicated units for segments like SMEs: Case study 2 (Cameroon)

•  “Limbe’s Medium size Taxpayers’ office launched,” The Median website, http://themedianpaper-yde.blogspot.in/2015/03/limbes-medium-size-taxpayers-office.html, accessed 28 February 2016.

•  Tax Administration Reform in the Francophone Countries of Sub-Saharan Africa, IMF, 2013

Appendix

Treasury systems •  EY PFM solution area 4: Treasury modernization and reform

EY end-to-end PFM solution framework •  EY PFM solution

Presenter: Joe Cosma | EY Contact number: +27 11 772 5416 | Email: [email protected]

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