A Comparative Analysis of Tax Administration in Asia and the Pacific

2018 Edition

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• Publisher: Asian Development Bank
• Year: 2018
• Print ISBN:
  9789292612825
• eBook ISBN:
  9789292612832
• Topic: Law
• Subtopic: Public Finance
• Index: Law

This report analyzes the administrative frameworks, functions, and performance of revenue bodies in 28 economies in Asia and the Pacific. It is the third in a series of publications that aims to share knowledge about important developments and trends in tax administration practice and performance. Governments and revenue officials are also encouraged to identify opportunities to enhance the operation of tax systems. The series is part of ADB's regional capacity development technical assistance project for Strengthening Tax Policy and Administration Capacity to Mobilize Domestic Resources.

VI. Tax Administration Operations

This chapter provides a summary of recommended and observed features of key aspects of revenue body operations, including the use of electronic services. Some limited performance-related data are also provided. All quantitative data referring to program outputs are set out in tabulations in the Appendix, and are also referenced in the text. The recommended guidance provided in this chapter has been adapted from the IMF’s Field Guide that supports tax administration officials in the use of the Tax Administration Diagnostic Assessment Tool (TADAT) and is presented in abbreviated form.⁵⁸

A. Processes of Tax Administration

Regardless of the taxes or the economy in which they are levied, there is a fairly common set of functions that must be undertaken by revenue bodies to fully carry out their mandate (Figure 11). The conduct of these functions is increasingly being supported by modern technology systems.

Figure 11: Functions of Tax Administration

Source: Author.

B. Registration and Taxpayer Identification

The identification and registration of taxpayers, both individuals and entities, are fundamental to a revenue body’s system of managing all aspects of taxpayers’ tax affairs. The systematic recording of taxpayers’ identifying and updating of details, and the allocation of a unique high-integrity taxpayer identifier enable the efficient conduct of all downstream administration processes. A summary of practical guidance for an effective system of taxpayer registration and identification is in Box 12.

Box 12: Good Practices in Taxpayer Registration and Identification

The use of a taxpayer identification number, ideally all numeric and with a check digit, enables routine and systematic identification of taxpayers for all administrative actions.

The availability and operation of an information technology system support all aspects of registration and identification, and related administrative processes.

The establishment of risk assessment processes ensures that non-authentic applications for registration as a taxpayer are detected and actioned upon as needed.

Maintenance of a database of sufficient, accurate, and reliable identifying information (e.g., name, address, contact details, nature of business activity, and tax obligations by tax type).

The establishment and operation of processes identify and flag dormant registrations (e.g., taxpayers temporarily residing in other countries), and keep the database clean of inactive (i.e., deceased persons and defunct businesses), invalid, and duplicate records.

Source: Adapted from International Monetary Fund. 2015. TADAT: Tax Administration Diagnostic Assessment Tool Field Guide. Washington, DC.

Observations and Findings

Revenue bodies reported a limited amount of information on their systems of taxpayer registration and these are in Tables 40 and 41, and in the Appendix, Table A.15. The following are important observations and findings:

(i)	With minor exception, all revenue bodies reported the use of a taxpayer identification number (TIN) for their main taxes. However, a small number of revenue bodies (e.g., the PRC; Singapore; Taipei, China; and Thailand) reported that issue of the TIN for some or all the main taxes is the responsibility of another body suggesting that the TIN has other uses (e.g., as a national identification number or business registration number), and is not primarily in place for tax administration purposes.
(ii)	Most revenue bodies reported that businesses are able to register for multiple taxes simultaneously, which can be expected to ease their compliance burden.
(iii)	Around 25% of revenue bodies reported that limited or no use has been made of the TIN in systems of third party reporting to the revenue body (Table 41). These include Hong Kong, China; the Lao PDR; Myanmar; the Republic of Korea; and Viet Nam. This implies that these revenue bodies make little use of such data in the administration of the tax system, and most likely relates to how some categories of income are taxed at source on a final (noncreditable) basis (e.g., interest and dividend income).
(iv)	Information concerning the numbers of registered taxpayers for the major tax types (i.e., all registrations and active registrations) were highly variable, making it difficult to draw many conclusions. For example, the number of taxpayers registered for value-added tax (VAT) is influenced by the level of the VAT registration threshold; across the economies included in this series that administer a VAT, the level of registration threshold varies considerably. On the other hand, the vast majority of revenue bodies were unable to report any registration data concerning employers withholding obligations. However, one area that can be drawn to attention concerns the numbers of taxpayers registered for personal income tax (PIT).
	PIT systems vary enormously across the economies included in this series. In many developing economies, the withholding arrangements in place are designed to eliminate the need for most employees to file annual tax returns. In addition, there may be a relatively high threshold on annual income before tax is payable. As a result, in many of these economies, most employees are not registered with the revenue body. By way of contrast, in advanced economies such as Australia and Singapore, where annual tax returns are required for just about all employees, a record of taxpayer registration must exist. In these economies, the registration of all employees deriving employment income provides an important means of tracking citizens whose circumstances may change over time, as well as using tax-related information for other government purposes (e.g., welfare entitlements checks). The difference between these two approaches to personal tax administration is evident from the data in Figure 12, which displays the number of PIT registrations reported as a proportion of each economy’s estimated labor force, used here as a proxy for the potential personal income taxpayer population.
	Table 41 shows an enormous variation in the ratios computed across economies. There are also many economies where a relatively small proportion ...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Tables, Figures, and Boxes
• Acknowledgments
• Abbreviations
• Executive Summary
• I. Introduction
• II. Tax Revenues and Tax Structures
• III. Institutions, Organization, and Governance
• IV. Managing Taxpayers’ Compliance
• V. Human Resource Management
• VI. Tax Administration Operations
• VII. Operating Budgets, Staffing, and Related Matters
• Appendix: Selected References, and Country Data and Survey Tabulations
• References
• Back Cover