Technical Notes and Manuals 10/08 | 2010 39
C. Organizational Considerations in Tax Administration
116. The revenue authority is concerned with organizational requirements for both tax and
customs administration. However, three issues are particularly relevant for tax administration:
functional structures; integration of all tax types; and administration based on taxpayer segment.
117. Modern tax administrations are organized along functional lines, with particular roles
assigned to headquarters and to operational units in regions or districts. For example, in a modern
tax administration, for each functional area (taxpayer services, registration, returns processing,
payment and accounting, arrears, audit, objections and appeals), a headquarters unit is responsible
for: (1) strategic and operational planning on a national level; (2) the development of national
programs; (3) the provision of technical advice and guidance to operational field units; (4) the
establishment of resource levels and performance targets and measurement systems; and (5) the
monitoring and evaluation of field operations.
118. For these responsibilities to be met, there need to be senior level “owners” of the key tax
administration functions, and these positions (or “position” in a small administration) should be
visible and clear in the organization structure. It will be noted that the headquarters units are not
to be involved in operations (i.e. casework), except in special circumstances.
119. International experience also shows that the existence of separate tax departments for VAT
and income tax perpetuates inefficiencies and duplication of staff, facilities, resources and effort,
and is not conducive to taxpayer compliance. With two separate tax departments, taxpayers may
be subject to multiple audits from the different departments, in the same year, and on occasion,
at the same time. Separate collection officers, exacerbated by the absence of a single taxpayer
account, may independently pursue the same taxpayer for different tax arrears. A taxpayer
applying for a refund for one tax may have liabilities for another. These characteristics are neither
efficient for tax administration operations, nor conducive to taxpayer compliance.
120. To address the duplication, with few exceptions, most countries (including most developing
economies) now provide one single organization for the administration of both direct and indirect
taxes at the national level, with a separate customs administration responsible for the collection of
VAT and excises on imports.
121. There are many advantages of the integrated approach to tax administration, including:
A single facility for a taxpayer to register for all current tax obligations and receive a single
•
identification number for all tax administration purposes that is recorded in a registration
system with a common database of taxpayer identification details.
A comprehensive approach to taxpayer services that provides all necessary information and •
support to meet taxpayer needs in one place, tailored according to the taxpayer segment being
catered to. Specialist staff can provide expert advice to complex queries with generalist officers
responding to routine issues.