The August 2021 update of the OECD’s Forum on Tax Administration (FTA) outlined recent developments.
Tax Administration 3.0
The FTA discussion paper entitled Tax Administration 3.0 sets out their view of the future of tax administration. With more interconnections between different systems used by taxpayers to run their business, undertake transactions and communicate, taxation processes and rules can be moved into these systems, with appropriate safeguards. Tax can be increasingly joined up with other parts of government and third parties, increasing tax certainty and reducing the compliance burden.
Enterprise Risk Management Maturity Model
A report outlining the Enterprise Risk Management Maturity Model (ERM) was published in February 2021 as part of the OECD’s Tax Administration Maturity Model Series. Maturity models are a tool allowing tax administrations to reach an understanding of their levels of capability in certain functional, strategic or organisational areas. This can help them develop a higher level of capability over time. The ERM Maturity Model aims to help tax administrations to identify and manage risks, and covers the organisational and operational aspects of risk management. The report gives an overview of the model and explains its use. It sets out the results of pilot self-assessments and describes the self-assessment process carried out by the pilot tax administrations. The report provides a model for use by tax administrations when they assess their own level of capability and explains how this can be used for international comparisons. The level of maturity in each area of tax administration can be categorised as emerging, progressing, established, leading and aspirational. These categories can then facilitate discussions as to the relative or overall level of maturity in different areas of administration. Areas that can be examined include strategy, governance, culture, risk identification, risk analysis, evaluation and risk treatment.
Capacity Building
In collaboration with the IMF, the Inter-American Center of Tax Administrations (CIAT) and the Intra-European Organisation of Tax Administrations (IOTA), the FTA has been developing e-learning courses dealing with important areas of tax administration. The courses are primarily intended to support developing countries, but feedback suggests they are also valuable for tax administrations in developed countries. Information on the courses can be found on the IMF website.
International Compliance Assurance Program (ICAP)
In February 2021, the ICAP handbook was issued to provide further information on the programme and to answer frequently asked questions. A list of tax administrations participating in ICAP has been published on the FTA website. MNEs wishing to participate in the next round of ICAP should submit their initial documents by 30 September 2021. They will then need to decide which risk assessments they can take part in; and identify transactions to be excluded from a risk assessment (for example if they have been included in an Advanced Pricing Agreement). The commencement time of each risk assessment will be agreed with the participating MNE group.
Other
Other FTA activities include the following:
- The FTA has been considering the possible expansion of the Tax Inspectors Without Borders (TWIB) initiative to support tax administrations at important decision points in relation to digitalisation. A proposal for some TIWB digital pilot programmes is being prepared.
- An FTA digital transformation maturity model is also currently being prepared as part of the Tax Administration 3.0 Actions, under the leadership of Singapore.
- The FTA also aims to develop a map of current leading administration practices enabled by digitalisation that could reduce the compliance burden. This initiative is being led by the Russian Federal Tax Service.
