Key features of an effective
Compliance Strategy
Stan Shrosbree
Fiscal Affairs Department (PFTAC)
Revenue Administration
April, 2016
Questions to consider
• Do we really want to improve tax
compliance?
• What is a tax compliance program?
• What is the value of a tax compliance
program?
• What are the steps in developing a
taxpayer compliance program?
• Are we committed?
Some facts
• Improving tax compliance does not
happen overnight
• A Compliance Improvement Strategy
challenges your current business model
– It challenges how things are currently done
– It’s about prioritizing
– It will impact on staff
– It requires new skills
• It needs to be driven from the top
The reality
• Its not easy
• It takes leadership and courage
• Old processes and ways of doing things are
hard to change
• It may involved developing new skills
• Your structure may have to change
• A CIS can drive your modernization
• It has massive potential to increase revenues
• Contemplate whether you have the courage
Where to start
• Acknowledge ….
“The primary goal of a revenue authority is
to collect taxes payable in accordance with
the law. It is inevitable that some
taxpayers, due to ignorance or deliberate
evasion will fail to comply – therefore the
tax administrations should have strategies
in place to ensure that non-compliance is
kept to a minimum”
Compliance with what?
• The broad categories of taxpayer
obligations are
– Registration in the system
– Timely filing or lodgement of taxation
information
– Reporting of complete and accurate
information
– Payment of taxation obligations on time
Introducing the Process
Operating
Operating Context
Context
Identify
Identifyrisks
risks
Monitor
Monitor
performance
performance
against
againstplan
plan
Assess
prioritise
Assessand
andprioritize
prioritiserisks
risks
Analyze
Analyse
Analysecompliance
compliancebehaviour
behaviour
(causes,
(causes,options
optionsfor
fortreatment)
treatment)
Determine
Determinetreatment
treatmentstrategies
strategies
Plan
Planand
andimplement
implementstrategies
strategies
Evaluate
Evaluate
compliance
compliance
outcomes
outcomes
• • Registration
Registration
• • Filing
Filing
• • Reporting
Reporting
• • Payment
Payment
Shaping Internal Capability
• Key internal issues that will impact
heavily on managing risks
– Organizational culture
– Organizational structure
– Information technology
– Staff capabilities
Identifying the risks
Key points
• Top-down techniques
(macro-economic
analysis)
• Bottom up (risk
assessment systems)
• Segmentation
Key product
• A risk register
Assessing - prioritizing risk
Key points
• Size of the risk?
• How big a priority?
• Not all risks can be
addressed
• Balanced approach –
what can be done
now?
• Do we need to build
capacity?
Key Product
Register of risks
- Quantified
- Prioritized
- Documented priorities
included in the CIS
Data analysis is
crucial in this
exercise
Analyzing Compliance Behavior
Key points
• Understanding
compliance behavior –
more than guesswork
• Taxpayers respond
differently to the
demands of revenue
authorities
• Laws and administration
can have an impact
Key products
• Treatment strategies
that address noncompliant behaviors
• Products and tools to
support the treatment
strategies
Remember the
Compliance
Model?
Determining the Treatment Strategies
Key points
Key products
• Easy for those who want to
comply and enforcement for
those who don’t
• Acting with integrity, being fair
will encourage voluntary
compliance – community
confidence
• Treatment needs to address
drivers of compliance behavior
• Capacity to influence taxpayer
compliance behavior
• Influencing and changing
social and personal norms
• A compliance program
• Products and tools tailored for
clients to be targeted through
the compliance program
“Compliance
Marketing” –
getting
taxpayers to
do the right
thing
Applying the Strategies
Key points
Key products
• Strategy needs to be
effective – efficient use of
resources
• Involve those impacted
by the strategy – for
example Industry
Partnership
• Engage staff to support
the strategy
• Fair, consistent and
flexible treatment
reinforces credibility and
encourages compliance
• Business processes
describing the strategies
and intended impact
• Staff trained to carry out
the strategies
• Industry consultative
forums
• Project plan to guide
implementation
Evaluating the outcomes
Key points
• Success criteria and
measurement indicators
– was the correct
treatment strategy
applied?
• Treatment objectives
must look beyond
immediate outputs –
behavior takes time to
change
• Was the strategy
implemented effectively?
Key products
• Evaluation
methodology to
assess the impact
and what has been
learnt
• Governance reports
detailing efforts and
progress made
against the
compliance program
Conclusion
• Introducing a risk based Compliance
Improvement Strategy can be an exiting
and rewarding experience
• Seeing taxpayer behavior and compliance
trends improving is very rewarding
• It takes time and a lot of hard work but is
worth the effort
Take up the challenge!