This chapter looks at the tax assessment function, which includes all activities related to processing tax returns and payments. It examines the use of e-channels for filing and paying, outlines administrations’ efforts to provide pre-filled returns, and discusses the level of on-time return filing and payment.
Tax Administration 2024
Comparative Information on OECD and other Advanced and Emerging Economies
Tax Administration
Abstract
The tax assessment function includes all activities related to processing tax returns, including issuing assessments, refunds, notices and statements. It also includes the processing and banking of payments. These activities continue to be an area of significant change and focus as administrations look to take costs out of high-volume processes.
As reported in previous editions of this series, the widespread enabling of electronic filing and payment by taxpayers has helped administrations to reduce their costs and improve the services they provide. This trend continues with an increasing range of supporting services and options being made available.
Tax administrations are also managing an expanding range of data that administrations are collecting electronically, including from a growing number of third-party organisations. This is facilitating a shift towards more intelligent use of data, and more complete pre-filled returns, increasingly driven by the use of artificial intelligence and machine learning. This is also helping to create more upstream compliance approaches that can minimise or prevent errors in returns. As well as updating information on the channels used for filing and paying, this chapter will outline:
Administrations’ efforts to provide pre-filled returns for individual and corporate taxpayers, including the expansion of this approach by some into completely pre-filled returns for individuals and businesses;
The levels of on-time return filing and payment; and
Examples of how technology and the application of data sciences have improved filing, payment and refund processes.
To increase uptake in the use of e-filing and e-payment channels, many jurisdictions have also mandated the use of electronic channels for most taxpayers (or most employers in the case of employer withholding taxes). Table 4.1. shows that across the jurisdictions covered in this publication, e-filing and e-payment has been mandated more often for business taxpayers than for individuals. Around three-quarters of jurisdictions make the use of e-filing channels mandatory for corporate income tax (CIT), employer withholding tax (PAYE) and value added tax (VAT), whereas for personal income tax (PIT) this is only the case in half of the jurisdictions. Similarly, e-payment is mandatory for CIT, PAYE and VAT in around two-thirds of jurisdictions, and for PIT again in around half.
Percentage of jurisdictions
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Table B.30 Taxpayer gender recorded; and mandatory electronic filing and payment, https://data.rafit.org/regular.aspx?key=74180917 (accessed on 10 September 2024).
Despite mandating the use of e-channels, with digitalisation continuing to transform everyday life, it is unsurprising that the actual use of e‑filing and e-payment channels is significantly higher and continues to grow. As the high rates show, the implementation of those channels is now embedded across a wide range of administrations and as a result these rates are expected to remain stable with only incremental increases going forward.
Table 4.2. outlines average e-filing rates from jurisdictions that provided details of channels used by taxpayers to file for the years 2018 to 2022. Over that period, around 95% of business taxpayers filed their returns electronically. For personal income tax return filers this figure is around 90% as well. Also, it should be noted that for a significant number of administrations a 100% e‑filing rate is the reality across the main tax types (see Tables D.26 and D.27).
Note: The table shows the average e-filing rates for those jurisdictions that were able to provide the information for the years 2018 to 2022. The number of jurisdictions for which data was available is shown in parentheses. As regards Employer withholding (i.e. PAYE) return, the underlying question was introduced in ISORA 2023 and therefore data is only available for the year 2022.
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.26 Electronic filing: CIT and PIT, and D.27 Electronic filing: PAYE and VAT, https://data.rafit.org/regular.aspx?key=74180901 (accessed on 10 September 2024).
Looking at the evolution of e-filing rates over the period 2014 to 2022 shown in Table 4.3., it is clear that e-filing rates have increased significantly – between 17 and 23 percentage points – across the three main tax types. (It should be noted that the table only takes into account information from jurisdictions for which data was available for both years 2014 and 2022, which explains the differences in 2022 averages shown in Tables 4.2. and 4.3.)
Note: The table shows the average e-filing rates for those jurisdictions that were able to provide the information for the years 2014 and 2022. The number of jurisdictions for which data was available is shown in parentheses.
Sources: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.26 Electronic filing: CIT and PIT, and D.27 Electronic filing: PAYE and VAT, https://data.rafit.org/regular.aspx?key=74180901 (accessed on 10 September 2024), and OECD (2017), Tax Administration 2017: Comparative Information on OECD and Other Advanced and Emerging Economies, Table A.8., https://doi.org/10.1787/tax_admin-2017-en.
As for electronic payments rates, as can be seen in Table 4.4., around 90% of payments, measured by number and value, were made electronically in 2022. This represents a significant increase since 2018. The percentage of e-payments by value is slightly higher than the percentage of e-payments made by number, suggesting that particularly larger taxpayers make use of this payment channel. (Due to a change in the definition of the underlying survey question, comparisons that examine the evolution of e-payment rates since 2014 would not be reliable.)
Note: The table shows the average e-payment rates for those jurisdictions that were able to provide the information for the years 2018 to 2022. The number of jurisdictions for which data was available is shown in parentheses.
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Table D.40 Electronic payment proportions and third party withholding, https://data.rafit.org/regular.aspx?key=74180902 (accessed on 10 September 2024).
There remain a number of jurisdictions where the volume of returns filed using paper as well as payments through non-electronic means remains high. Among those jurisdictions that provided data, more than 70 million returns (for PIT, CIT, PAYE and VAT) were still filed on paper (see Tables A.48, A.52, A.56 and A.61).
It is to be expected that this figure will further decline over time as more administrations take steps to encourage more taxpayers to use electronic platforms where possible. This will not only lower administration costs but could also reduce the administrative burden on taxpayers over time.
Canada – Underused Housing Tax webform
The Underused Housing Tax (UHT) is an annual 1% tax on the value of the property of vacant or underused housing in Canada. The tax is expected to largely apply to non-resident, non-Canadian owners.
Previously, the Canada Revenue Agency (CRA) did not have electronic filing options available for non-residents unless they were set up in one of CRA’s digital portals. To encourage and facilitate electronic filing of the UHT return, a webform was developed to allow electronic filing using a Digital Access Code (DAC). This filing method is more efficient than filing by paper and represents a pathfinder initiative for the CRA, as the webform data links directly to the processing system without the necessity for manual data capture.
Individuals and corporations can instantly obtain a DAC online by providing specific information. If the taxpayer has any difficulty, they are prompted to call a help desk specifically set up to handle these enquiries. If all pre-determined system checks are met, the return can be automatically assessed with no manual intervention required.
As of November 2023, the CRA has received approximately 30 000 returns using this filing method.
Spain – Single European Payment Area Direct Debits
Spain have introduced measures to make it easier for taxpayers to comply with their payment obligations to the Spanish Tax Agency (AEAT) when living abroad.
Regulatory and technical advances have been made so that taxpayers can pay their taxes by direct debit from accounts located in their jurisdictions of residence, provided that the entity is located within the Single Euro Payments Area (SEPA). This has resolved the issue of needing to have a bank account in Spain.
For further information, please see here:
https://sede.agenciatributaria.gob.es/Sede/en_gb/ayuda/consultas-informaticas/pago-impuestos-deudas-tasas-ayuda-tecnica/aplazamiento-fraccionamiento-deudas.html (accessed on 10 September 2024).
Sources: Canada (2024) and Spain (2024).
One of the significant innovations in tax return process design over the last two decades has been the development of pre-filled tax returns, often for personal income taxpayers. The pre-filled approach involves administrations “pre-populating” the taxpayer’s return or on-line account with information from third parties. The pre-filled return can be reviewed by the taxpayer and either filed electronically or in paper form. (Table 4.5. shows that an increasing number of administrations are pre-filling PIT returns.)
As the extent of pre-population is generally determined by the range of electronic data sources available to the administration, it is critical to this approach that the legislative framework provides for extensive and timely third-party reporting covering as much relevant taxpayer information as possible. The complexities of the legal frameworks governing tax can be a barrier to more automated tax calculations, and to help overcome this some tax administrations are exploring the use of machine-readable legislation which can help automate the calculation process through the use of algorithms. This is leading to reduced errors and reduced burdens for taxpayers.
Percentage of administrations that pre-fill PIT returns
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Table A.99 Pre-fill of PIT returns: Income information - Personal information, and wage and salary, https://data.rafit.org/regular.aspx?key=74180896 (accessed on 10 September 2024).
Advocates of pre-filling initially encouraged its use with individual tax regimes that allowed relatively few deductions and credits, and where they could be verified with third party data sources. Advances in rules-based technologies, information-reporting requirements and the application of data science techniques mean that the approach can now be considered more widely. For example, survey responses show that in many jurisdictions PIT returns are pre-filled with different income information and deductible expenses such as donations, school and university fees and insurance premiums (see Table 4.6. and Table 4.7.).
As a percentage of administrations that pre-fill PIT returns
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables A.99 Pre-fill of PIT returns: Income information - Personal information, and wage and salary, A.100 Pre-fill of PIT returns: Income information - Pension, interest, and dividends, and A.101 Pre-fill of PIT returns: Income information - Capital gains / losses, and other income, https://data.rafit.org/regular.aspx?key=74180896 (accessed on 10 September 2024).
As a percentage of administrations that pre-fill PIT returns
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables A.102 Pre-fill of PIT returns: Expense information - Donations, school and university fees, and childcare expenses, A.103 Pre-fill of PIT returns: Expense information - Insurance premiums, health and medical expenses, and retirement contributions, and A.104 Pre-fill of PIT returns: Expense information - Interest, and other expenses https://data.rafit.org/regular.aspx?key=74180896 (accessed on 10 September 2024).
In a growing number of jurisdictions, this concept now goes as far as totally pre-filling PIT returns, which the taxpayer then has to either agree (which may be by deemed agreement after a certain period of elapsed time) or provide further information which may lead to an upwards or downwards adjustment (see Table A.53). In their most advanced form, complete pre-filled returns are being generated for large proportions of the individual tax base. In addition, the availability of technology solutions and approaches, such as electronic invoicing systems, allows tax administrations to start to go beyond PIT returns and pre-fill CIT, PAYE and VAT returns (see Tables A.49, A.57 and A.62).
The latest pre-filling developments in some jurisdictions are described in Box 4.2.
Australia – Activity statement prefill
The Australian Taxation Office (ATO) is harnessing employer-provided data to improve the employer reporting experience and simplify tax obligations.
An activity statement is used by businesses to report certain information to the ATO throughout the year, if the business is registered for Goods and Sales Tax, Pay As You Go instalments or Withholding Tax. When a taxpayer lodges an activity statement online through ATO services, the amount of Pay As You Go Withholding (PAYGW) Tax that they have reported to the ATO is prefilled at the appropriate label in the activity statement. The employer can choose to accept this amount or change it where the amount needs to be adjusted up or down.
The ATO is also piloting the use of employer-provided single touch payroll (STP) data to bring PAYGW amounts to account where a client has not lodged their activity statement by the due date. Where an employer has reported PAYGW amounts through STP and has not lodged their activity statement for the period, the ATO will remind the employer via a letter nudge to lodge the activity statement, or if there are no changes to the PAYGW amount, we will put that amount on their client account for them.
If there is no response the PAYGW amount will be put on account, and if the employer has no other reportable obligations, the activity statement will be set to finalised. The client will still need to lodge the activity statement if they have other reportable obligations, like Goods and Services Tax.
This strategy levels the playing field between compliant and non-compliant employers. Those who delay lodgement of their activity statements to avoid reporting and payment of PAYGW liabilities will no longer obtain an unfair advantage over those who report and pay in a timely manner.
Canada – Fully digital Disability Tax Credit application process
In May 2023, the CRA made it faster and easier for persons with disabilities and their Medical Practitioners (MPs) to complete the Disability Tax Credit (DTC) application form, by introducing a new fully digital application process.
Applicants can now complete the first part of the application form online via My Account. To simplify the application process further and save time, the applicant’s portion of the form is prepopulated with information already on file at the CRA. Once completed, the applicant will receive a unique, one-time use reference number to give to their MP who can use it to complete the second part of the form.
Based on previously received feedback from MPs that the current DTC form was not transparent enough about what information was required, the CRA introduced psychometric scales, drop-down menus, radio-buttons to make it more dynamic and to gather more relevant information through targeted questions using proactive disclosure techniques. By applying client and user experience design concepts, the digital application is more responsive to client needs.
Feedback from the medical community has been extremely positive with the most measurable results being a decrease of 60% to the number of clarification letters issued.
China (People’s Republic of) – Annual reconciliation of corporate income tax
To reduce the time that tax assessments take and to provide more convenient taxpayer services, the People's Republic of China launched a new model for the refunds resulting from the annual reconciliation of corporate income tax. This includes:
Simplifying the tax refund process so that after a taxpayer has filed, the system estimates the tax refund and sends the notification to the taxpayer, and as a result the taxpayer only needs to accept this through “one-click” in the system, instead of filling in the tax refund application information item by item. This information is also automatically transmitted to the treasury department, which also greatly increases efficiency.
Introducing the intelligent review mechanism where the system can automatically check the taxpayer’s risk, and if they can meet the requirement for a tax refund the tax refund will be handled automatically as described above; otherwise, it will be transferred to the traditional tax refund process by tax officials.
Shortening the tax refund cycle so the tax refund review could be completed on the day when the taxpayer files, which is much shorter than the traditional 30-day cycle.
Not only has this model improved the operational experience for taxpayers, it has also removed administrative burdens for tax officials.
Netherlands – Simplified tax return
Since 2022, the Netherlands has issued a simplified electronic tax return (PIT) for taxpayers with a straightforward fiscal situation.
In the past, these taxpayers had to fill out a tax return form with all possible questions about income, that were only partly pre-filled. Now these taxpayers only need to answer a minimal number of yes/no questions and confirm the pre-filled information about their income and, if applicable, their home ownership. If taxpayers disagree with the pre-filled information, they can switch to a normal tax return.
This has significantly reduced the compliance burden for taxpayers, with 86.5% stating that the new service is an improvement.
Source: Australia (2024), Canada (2024), China (People’s Republic of) (2024) and the Netherlands (2024).
As the levels of data available to support pre-filling grows, tax administrations are able to develop predictive techniques that can spot errors that taxpayers make as they finalise their return, and also prevent non-compliance. Examples of this have been included in previous editions. See, for example, Box 4.3. in Tax Administration 2022 (OECD, 2022[1]). These can be combined with techniques to prompt action, creating whole new approaches to compliance which are bringing the compliance work ‘upstream’ into tax administration processes, as Box 4.3. highlights.
Hungary – e-VAT system
On 1 January 2024, the National Tax and Customs Administration (NTCA) of Hungary launched the e-VAT system, which aims to reduce the administrative burden related to the preparation of VAT returns. The new return filing solution combines three innovations:
1. The transaction-based data collected by the NTCA will be sent back to the customer. This allows users to view and sort data from online cash registers, online invoice data reporting and customs declarations into a tax return.
2. Based on an algorithm for the available data, customers will receive a recommendation from the NTCA as to which line of the tax return each transaction should be included in.
3. In the context of the so-called pre-audit function, validation rules are run on the list of supporting documents and the draft tax return prepared as described above, which - before the return is submitted - draws attention to errors that were previously identified from a post-audit. This service should significantly reduce the number of incorrectly filed returns.
The system aims to meet the needs of a wide range of customers with two different interfaces. A user-friendly web interface has been developed for micro and small businesses, while a machine-to-machine solution is available for larger businesses, ensuring the compatibility required for automated communication between the e-VAT system and management software. The usage of the newly introduced service is currently optional for customers.
For further information, please see here: https://youtu.be/zqr8gHiBMnI (accessed on 25 October 2024).
Spain – Self-correction of errors for personal income tax returns
To increase compliance levels and reduce the administrative burden on taxpayers, from 2024 taxpayers have been offered the possibility to correct certain errors made when filing their personal income tax return. This is done through a complementary self-assessment pre-filled by AEAT, which the taxpayer is notified about upon receipt and can choose whether to accept or not. This will be offered both in the voluntary period and once the voluntary period has ended.
Not all self-assessment errors will be corrected through this system, instead it will only be those that arise from discrepancies between the data directly included in the personal income tax return calculated by AEAT, and those declared by the taxpayer.
Sources: Hungary (2024) and Spain (2024).
Even allowing for changes occurring because of pre-filled or no-return regimes, the filing of a tax return is still the principal means by which a tax liability is established and becomes payable. As a result, the on-time filing rate is seen as an effective measure of the health of the tax system as well as the performance of the tax administration itself.
Traditionally, the ISORA survey measured on-time return filing by putting the number of returns received on-time in relation to the total number of returns expected. ISORA 2023 introduced a new data point which allowed on-time return filing rate also to be measured in relation to the total number of returns received.
Table 4.8. summarises on-time return filing for those administrations able to supply information by tax type. As regards the on-time filing rate in relation to the number of returns expected, apart from CIT, the rates are around 85%. The picture is similar when calculating the on-time filing rate in relation to the number of returns received, where the rates for PIT, PAYE and VAT on-time return filing are around 90% while the CIT on-time filing rate is 5 percentage points lower. The lower rates for CIT may be explained through more complexity in the corporate income tax system and the preparation of financial statements and year-end reports.
As anticipated, the on-time filing rates expressed as the number of returns received on-time as a percentage of returns received, are noticeably higher than the on-time filing rates expressed in relation to the number of returns expected.
Note: The table shows the average on-time filing rates for those jurisdictions that were able to provide the information for the years 2018 to 2022 in relation to returns expected, and for the year 2022 in relation to returns received. The number of jurisdictions for which data was available is shown in the table.
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.22 Rate of returns received on-time: CIT, D.23 Rate of returns received on-time: PIT, D.24 Rate of returns received on-time: PAYE, and D.25 Rate of returns received on-time: VAT, https://data.rafit.org/regular.aspx?key=74180900 (accessed on 10 September 2024).
Table 4.9. shows the evolution of on-time filing rates which, due to the available time series, is expressed as a percentage of returns expected. On average, this has remained broadly static between 2014 and 2022, although the underlying data for on-time filing shows significant variation in the evolution of on-time filing rates between jurisdictions. It should be noted that the table only takes into account information from jurisdictions that were able to provide data for both years 2014 and 2022, which explains the differences in 2022 averages shown in Table 4.8. and Table 4.9.
Returns received on-time as a percentage of returns expected
Note: The table shows the average on-time filing rates for those jurisdictions that were able to provide the information for the years 2014 and 2022. The number of jurisdictions for which data was available is shown in parenthesis. For VAT, the table compares information for the years 2016 and 2022, as the underlying question was changed with ISORA 2018.
Sources: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.22 Rate of returns received on-time: CIT, D.23 Rate of returns received on-time: PIT, D.24 Rate of returns received on-time: PAYE, and D.25 Rate of returns received on-time: VAT, https://data.rafit.org/regular.aspx?key=74180900 (accessed on 10 September 2024), OECD (2017), Tax Administration 2017: Comparative Information on OECD and Other Advanced and Emerging Economies, Table A.6., https://doi.org/10.1787/tax_admin-2017-en, and OECD (2019), Tax Administration 2019: Comparative Information on OECD and Other Advanced and Emerging Economies, Table D.12., https://doi.org/10.1787/74d162b6-en.
The variation of on-time filing rates (expressed as a percentage of returns received) by jurisdiction are also visible in:
Figure 4.1. which shows the range of on-time filing rates across major tax types. For a number of jurisdictions this range is significant.
Figure 4.2. which shows the PIT and CIT on-time filing rates.
Returns received on-time as a percentage of returns received
Note: The figure shows for each jurisdiction the range in on-time filing performances in 2022 across the four tax types: PIT, CIT, Employer withholding and VAT (where applicable). It only includes jurisdictions for which information was available for at least two tax types.
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.22 Rate of returns received on-time: CIT, D.23 Rate of returns received on-time: PIT, D.24 Rate of returns received on-time: PAYE, and D.25 Rate of returns received on-time: VAT, https://data.rafit.org/regular.aspx?key=74180900 (accessed on 10 September 2024).
Returns received on-time as a percentage of returns received
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.22 Rate of returns received on-time: CIT, and D.23 Rate of returns received on-time: PIT, https://data.rafit.org/regular.aspx?key=74180900 (accessed on 10 September 2024).
Given the impact on compliance rates, many tax administrations are turning to behavioural insight techniques to try and encourage more timely and accurate filing. This is seeing promising results, with tax administrations reporting that ‘nudges’ at key points in the filing process can increase the timeliness of filing. Not only is this improving compliance rates, but it is also freeing up resources that can be used elsewhere. Chapter 6 contains further information on the use of behavioural insights.
Payment of tax constitutes one of the most common interactions between taxpayers and tax administrations, especially for businesses that are typically required to regularly remit a variety of payments covering both their own tax liabilities and those of their employees. Administrations continue to make progress in increasing the range of e-payment options available to taxpayers and to increase their use. This progress not only lowers the cost to the administration, it can also increase on-time payments and reduce the number of payment arrears cases by providing improved access and a better payment experience. One significant development is the growth of payment facilities being built into the natural systems of taxpayers. This is making payment more seamless for taxpayers, as they can use their existing banking or accounting software to make payments.
Traditionally, and similar to on-time return filing, the ISORA survey measured on-time payment by putting the value of payments received on-time in relation to the total value of payments due. ISORA 2023 introduced a new data point allowing the on-time payment rate to also be measured in relation to the total value of payments received.
On-time payment rates for those administrations able to supply information by tax type are summarised in Tables 4.10. and 4.11. Table 4.10. shows that the slight reduction in on-time payment rates (expressed as a percentage of payments due) that can be observed for years 2020 and 2021 is also visible in 2022 for PIT, PAYE and VAT. Only the average on-time payment rate for CIT is back to its pre-pandemic value. Apart from PIT, the rates are in the mid to high-80s. Similarly, when looking at the on-time payment rates in relation to payments received, the rates for CIT, PAYE and VAT are around 90%, while the rate for PIT is around 85%.
Note: The table shows the average on-time payment rates for those jurisdictions that were able to provide the information for the years 2018 to 2022 in relation to the value of payments due, and for the year 2022 in relation to the value of payments received. The number of jurisdictions for which data was available is shown in the table.
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.36 Rate of payments received on-time: CIT, D.37 Rate of payments received on-time: PIT, D.38 Rate of payments received on-time: PAYE, and D.39 Rate of payments received on-time: VAT, https://data.rafit.org/regular.aspx?key=74180902 (accessed on 10 September 2024).
Looking at Table 4.11. which shows the changes in average on-time payment rates between 2014 and 2022, it seems that the rates have declined across all tax types. However, looking at the data by jurisdiction it becomes obvious that number of jurisdictions with decreasing rates and those with increasing rates are almost split evenly. Also, the number of administrations that were able to provide on-time payment data is very low.
Payments received on-time as a percentage of payments due
Note: The table shows the average on-time filing rates for those jurisdictions that were able to provide the information for the years 2014 and 2022. The number of jurisdictions for which data was available is shown in parenthesis. Data for Costa Rica has been excluded from the calculations as it would distort the average ratios.
Sources: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.36 Rate of payments received on-time: CIT, D.37 Rate of payments received on-time: PIT, D.38 Rate of payments received on-time: PAYE, and D.39 Rate of payments received on-time: VAT, https://data.rafit.org/regular.aspx?key=74180902 (accessed on 10 September 2024), and OECD (2017), Tax Administration 2017: Comparative Information on OECD and Other Advanced and Emerging Economies, Table A.9, https://doi.org/10.1787/tax_admin-2017-en.
The range of on-time payment depicted in Figure 4.3. shows a significant gap in on-time payment across the main tax types for a number of jurisdictions, in some cases above 30 percentage points.
Payments received on-time as a percentage of payments received
Note: The figure shows for each jurisdiction the range in on-time payment performances in 2022 across the four tax types: PIT, CIT, Employer withholding and VAT (where applicable). It only includes jurisdictions for which information was available for at least two tax types.
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Tables D.36 Rate of payments received on-time: CIT, D.37 Rate of payments received on-time: PIT, D.38 Rate of payments received on-time: PAYE, and D.39 Rate of payments received on-time: VAT, https://data.rafit.org/regular.aspx?key=74180902 (accessed on 10 September 2024).
Future editions of this report will continue to track these trends, and recovering and increasing on-time payment rates will no doubt remain an area of focus for administrations given the amounts of revenue involved, with many tax administrations reporting investing additional resources in this area, to make payments easier and more in real time.
Given the underlying design of the major taxes administered (i.e. PIT, CIT and VAT), some element of over-payment by a proportion of taxpayers is unavoidable. Excess tax payments represent a cost to taxpayers in terms of “the opportunity cost”, which is particularly critical to businesses that are operating with tight margins where cash flow is paramount. Any delays in refunding legitimately overpaid taxes may therefore result in significant “costs” to taxpayers.
Table 4.12. shows the different treatment of VAT refunds, and highlights that the majority of administrations pay out refunds immediately. This is helpful to business, but tax administrations need to continue to be cognisant of fraud risks. Tax regimes with a high incidence of tax refunds are particularly attractive to fraudsters (especially via organised criminal attacks) necessitating effective risk-based approaches for identifying potentially fraudulent refund claims.
Source: CIAT, IOTA, IMF, OECD, International Survey on Revenue Administration, Table A.72 Treatment of most approved VAT refunds, https://data.rafit.org/regular.aspx?key=74180910 (accessed on 14 June 2024).
References
[1] OECD (2022), Tax Administration 2022: Comparative Information on OECD and other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/1e797131-en.
[3] OECD (2019), Tax Administration 2019: Comparative Information on OECD and other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/74d162b6-en.
[2] OECD (2017), Tax Administration 2017: Comparative Information on OECD and Other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/tax_admin-2017-en.